Invest
What does ESG integration mean for your investments?
Choosing investments based off a set of environmental, social and governance (ESG) related factors is a core part of responsible investing, but these principles also make sense purely from a financial standpoint.
What does ESG integration mean for your investments?
Choosing investments based off a set of environmental, social and governance (ESG) related factors is a core part of responsible investing, but these principles also make sense purely from a financial standpoint.
Data collected by the Responsible Investment Association of Australia has found ESG integration, referring to when a fund considers the social and environmental impacts of a company (as well as how well it is governed) before investing, is becoming more common, and now accounts for $557 billion in assets.
To explain what this means, Australian Ethical’s Stuart Palmer (the company’s in-house ethics researcher) told a media event in Sydney that ESG integration guides the way a fund invests its capital.
“A fund which does ESG integration might, for example, reduce its valuation on a stock to take into account per cent risks of environmental claims against the company or risk of workforce disruption if there’s a concern the company’s not managing those issues well,” he said.
However, Mr Palmer noted that ESG integration’s role as a responsible investment tool is one which focuses primarily on looking for a better balance between taking on risk and the payout that risk will ultimately offer to an investor.
“The environmental and social impacts are important to the extent they affect the risk/return profile of an investment in a company,” he explained.
“If I’m adopting an ESG integration approach and I’m considering further investment in fossil fuels, then I’m going to think about how likely it is that governments are going to take strong climate policy action; are they going to introduce a price on carbon?
“Then I need to think about given what I expect is going to happen there, what impact will that have on fossil fuel companies and associated projects.”
The UN Principles for Responsible Investment (UNPRI) offers a similar explanation of ESG integration and its role as an investment tool, noting that inclusion of such a strategy “does not require ruling out investment in any sector or company” but rather make a more informed decision based on a broad set of criteria.
“While these approaches seek to combine financial return with a moral or ethical return, responsible investment can and should be pursued even by the investor whose sole purpose is financial return,” the UNPRI said.
“To ignore ESG factors is to ignore risks and opportunities that have a material effect on the returns delivered to clients and beneficiaries.”
RELATED ARTICLES
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
