ESG (Environmental, Social and Governance), Socially Responsible Investing, Greenwashing and Corporate Responsibility are all becoming common terms and areas to consider for both Australian investors and Corporates.
Although the use of the term ESG has only occurred within the last 20 years, sustainability has been considered by investors as far back as the 1960’s with the use of socially responsible investing.
Socially Responsible Investing or ESG Investing involves socially conscious investors such as Not-For-Profits using ESG criteria to screen potential investments and assess whether they fit their values, mission or sustainability mandate.
With the announcement of new climate reporting requirements, the focus has shifted from Corporates voluntarily considering their ESG and sustainability positions, to now being faced with mandated reporting requirements, audited sustainability reports and potential director penalties for non-compliance.
Australian companies will need to be carefully considering their ESG strategy, climate related risks and plans, with stakeholders including investors placing more interest in companies that have a sustainable, climate aware businesses.
The recent 2023 ASX Investor Study found that 31% of investors are ESG conscious, with those investors focusing on companies that make a positive impact and avoiding companies that create social and environmental harm. This view was more prevalent in younger generation investors (18 to 25 years) and those in wealth accumulation phase aged between 25 to 49 years.
Although the Environment or ‘E’ in ESG has been a high focus, it is now becoming common for companies to be closely considering their social impact and governance strategies as these have a wide impact across all stakeholders including investors, suppliers, customers and employees.
Morgans has a specialist Not-For-Profit and ESG team that can assist you on all your ESG and negative screening questions. Get in touch with your Morgans adviser to find out more.
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