Greenwashing concerns front of mind for Aussie investors

By Jon Bragg

March 11 2022
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The vast majority of Australians expect their savings to be invested responsibly.

A new study from the Responsible Investment Association Australasia (RIAA) has found that 72 per cent of Australians are concerned that responsible investors engage in greenwashing.

The RIAA said that awareness and knowledge of responsible investment among Australians had grown significantly over the past two years with 67 per cent of the population having heard of or knowing what responsible investing is, up from 50 per cent in 2020.

83 per cent of Australians now expect the money in their bank accounts and superannuation to be invested ethically and responsibly while 80 per cent expect their savings to have a positive impact on the world.

“Australians are demanding more transparency from their providers, with 75 per cent wanting to know which companies their super fund, bank or other investments are invested in,” said RIAA CEO Simon O’Connor.

“They are attuned to the threat of greenwashing, and it is holding many people back, particularly when it comes to switching to an ‘ethical’ bank.”

The RIAA found that the concerns surrounding greenwashing prevented 65 per cent of those surveyed from making the switch to an ethical bank.

74 per cent of Australians said they would consider moving to another provider if their current fund was investing in companies engaged in activities inconsistent with their values, rising to 87 per cent for Gen Z (aged 18-24) and 82 per cent for Millenials (aged 25-39).

“Independent verification of sustainability claims is becoming key to winning trust,” said Mr O’Connor.

“Three-quarters of Australians say they would be more likely to invest in responsible investment products that have been independently certified by a third party.”

The number of Australians investing responsibly rose from 17 per cent in 2020 to 28 per cent in 2022 and 64 per cent believe that responsible and ethical super funds and investments perform better over the long term.

Most respondents said it was important for their bank or super fund to act on climate change including reducing greenhouse gas emissions (84 per cent), setting targets for emissions reductions (83 per cent) and pledging to reach net zero by 2050 (81 per cent).

Knowledge about responsible investment was found to have become the number one expectation that Australians have of financial advisers (64 per cent), ahead of prioritisation of investment returns (58 per cent).

“As this important report shows, Australians are opening their eyes to the power of their money and where it’s invested,” said Australian Ethical chief customer officer Maria Loyez.

“This is nothing short of a seismic shift that investment managers cannot afford to ignore. As this report says, Australians can spot greenwash and will only reward those companies that are truly committed to a better future.”

Alongside concerns about environmental issues, 74 per cent of Australians said that social issues were important to consider when investing, up from 64 per cent in 2020.

The RIAA also identified a disconnect between the social and environmental concerns of respondents and the products that are currently available.

67 per cent of those surveyed said they wanted to avoid animal cruelty, testing and animal products, however only 32 per cent of investment providers currently offer products that meet these expectations according to the RIAA.

Additionally, 63 per cent of Australians stated that they wanted to avoid investments that violate human rights but only 39 per cent of providers were found to meet this requirement.

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