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Australian Ethical adds $2b in green investing boom

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But notwithstanding the solid investment returns reported, Australian Ethical chief executive John McMurdo attributed much of its growth to political and cultural motivations from its customers.

“There is a very well-established consumer demand for climate-friendly portfolios, as evidenced by the astronomical growth in our FUM and flows,” Mr McMurdo told The Australian Financial Review.

“This indicates a massive, and continuously growing, groundswell of public support for policies that reflect the same commitment to decarbonising our future.

“Whilst we are waiting for the government to play a more active role in this, we will continue to provide ethical investing opportunities for investors because these are powerful tools that will affect long-term and lasting change.”

The release of the fund’s annual FUM figures comes one day after the federal Parliament rejected a bill proposed by Zali Steggall, independent MP for Warringah on Sydney’s northern beaches, that would have enshrined in law the goals of the Paris agreement to reach net zero emissions by 2050.

‘Absolute myth’

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Ms Steggall told The Sydney Morning Herald and The Age she was “disappointed but not surprised” the Liberal-dominated committee recommended rejecting her bill.

Mr McMurdo said the bill’s failure was a missed opportunity to “unlock massive economic benefits”, citing a Deloitte paper from November last year warning ignoring climate change would hit Australia’s economy by $3.4 trillion and result in 880,000 fewer jobs by 2070.

“Our government seems to consider it a binary situation where we can only choose between a decarbonised future, or a robust economy,” he said.

“This is an absolute myth – there is no trade off here. There are plenty of policies that will allow us to support both. By not taking climate action seriously, the government is not just failing to manage risk adequately, but also missing out on grasping a sizeable opportunity for the country.”

The growth coincided with a period in which the size of the global market for investment products with a focus on environmental, social and governance (ESG) issues grew by 18 per cent, according to research house EPFR Global. There are now more than 2000 sustainable and ethical sharemarket funds available around the world.

In April, assets in listed ESG funds tracked by EPFR crossed over $US1 trillion ($1.3 trillion) in assets for the first time, an elevenfold increase in five years.

With Richard Henderson