ESG

Diversification is key for building long-term, sustainable wealth and managing risk. While no single approach is best, using several diversification strategies offers sound protection against portfolio volatility, writes Selfwealth brand and content lead Robert Marfell.

The ethical investment house believes consumer credit can be positive for society if it is used to buy useful items. But companies like Afterpay focus on impulse purchases that are more likely to push vulnerable Australians into financial over-commitment.

While 2022 was a tough year for ethical and sustainable investors, the multiple compression that occurred – and a possible moderation of inflation – means they have plenty to look forward to in 2023.

What investors often misunderstand is that despite having ‘environmental’ in its description, ESG integration screens often don’t exclude companies that damage the environment according to the 2022 Sustainability Report.

Private debt has several key advantages over equities and other forms of fixed income investing when it comes to influencing companies in the development and implementation of ESG commitments.

“Sometimes, the market thinks we prioritise ESG factors above investment fundamentals,” says Perennial’s Emilie O’Neill. “But the reality is that it’s just another investment lens.”

For ESG discourse to matter, it must translate into quantifiable action. That means broadening the conversation beyond the close circle of sustainability converts and having tough conversations about capital flows.

It now sits aside recycling, reducing energy consumption and using biodegradable products as one of the most common methods of making a positive impact according to research from Australian Ethical and Investment Trends.

The continuation of an economic world built on linear consumption, LGT Crestone’s Rachel Etherington says, will further burgeoning social and economic issues that threaten to destabilize the global system.

Jan Anton van Zanten, SDG strategist at Robeco, speaks with The Inside Investor about the asset manager’s new SDG scoring framework aimed at measuring companies’ sustainability impacts.