One in five Australians over the age of 18 have responsible investments in their portfolio, which is around 4.3 million people.
Netwealth’s Investing for Good report shows that 22% of Australians invest responsibly and that figure is set to rise, with 34% planning to increase their allocation over the next five years.
Netwealth further said that 66% of Australians consider responsible investing for various options, 61% said they care deeply about environmental issues, and 54% said they also care deeply about social issues.
Motivations among those who have invested responsibly include positive environmental 43%, social 41% and humanitarian 34% potential. Other popular motivations include a desire to stop investing in companies involved in controversial activities such as gambling and guns 36%.
Meanwhile, lack of education is a factor that prevents Australians from making responsible investment decisions.
About 71% of respondents rated their understanding of responsible investing as average or non-existent.
The report says there is a clear opportunity for financial advisors to step in and dispel misconceptions.
“There is growing evidence that responsible investing can lead to better long-term investment results because it is an approach to allocating capital that tends to seek out and favor companies that have more sustainable business models, practices and products or services,” Netwealth chief executive Matt Heine said.
“The real challenge for advisors and the industry as a whole is to clearly demonstrate and quantify the positive impact and financial benefits.”
Meanwhile, KPMG’s Me, My Life, My Portfolio report also highlighted responsible investing as an opportunity, but flagged the need for further education.
The global report found that nearly two-thirds or 74% of environmentally conscious consumers will pay more for sustainable products and 69% will pay more for a product when they agree with the companies’ principles.
About 38% look for companies that proactively adopt a sustainability agenda, but 64% of consumers globally want to be able to understand the environmental impact before buying something.
Lisa Bora, head of retail at KPMG Australia, said the role and responsibilities of retailers in society are becoming increasingly important when it comes to sustainability.
“They must do good for the environment, but not position a focus on sustainability as a high cost to consumers. Above all else, transparency is important and a clear roadmap to net zero emissions is at the heart of market expectations and ensures that there is no greenwashing,” she added. concluded.