Australian asset owners and fund managers lead the world in ESG integration best practice, according to the Canadian based research and analysis firm Sustainalytics.
The prominence of domestic mining companies in Australian equity portfolios has forced Australian investors to engage on climate change and the issue of stranded assets, rather than simply divesting. While he added that the scale of investors in Australia allowed for a greater research and policy development on ESG.
Michael Jantzi, chief executive of Sustainalytics, who travels the world providing advice on how ESG factors can pose risks and opportunities for investments, said: “Australia is at the leading edge of dealing with some of the most challenging questions in ESG. You are an resource based export economy and you are living the direct impacts of the greatest environmental challenges of our time.”
As evidence of the advanced nature of ESG practice in Australia, Jantzi cited how it was being applied across infrastructure, property, fixed income and equities, but also in the way investors combined to tackle issues at Australian companies.
Jantzi added that in his assessment of how seriously investors were taking ESG, he noted that the burden and onus of proof on factors such as climate change and good governance has shifted to the sceptics. “They have to show that it leads to underperformance. Portfolio managers and investors ignore these issues at their peril,” he said.