Environmental, social and governance (ESG) factors are increasingly determining investment strategies, with almost half of Australian investors saying their investments are determined by ethical principles.
The survey of 17,000 investors across 17 global markets tracked asset allocation, views on ESG investment approaches and the broad view of the current market environment.
According to the latest Legg Mason Global Investment Strategy, 43% of Australian investors say they choose investment funds based on ESG principles, while 55% of investors actively avoid businesses with controversial track records.
Legg Mason Australia’s Managing Director, Andy Sowerby, said that there is increasing evidence that companies that run on ESG principles consistently show better long-term perforamance.
“In addition, when we asked Australian investors which ESG factors they considered to be the most important, environmental considerations were cited as the most important (30%), with social factors at 19% and governance by 27%, while 24% said the three factors are equally important,” Mr Sowerby said.
“Companies need to take note of the greater scrutiny placed on them by consumers and investors. For instance, investors are most likely to avoid businesses with a controversial track record (55%), to buy from businesses with a good social responsibility record (49%) and to buy from local businesses rather than those that transport over long distances (56%).”