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Sustainalytics’ New Research Report Examines the ESG Risks and Opportunities Facing Australian Equity Investors

Research reveals that Australian investors are exposed to slightly less unmanaged ESG risk than their US, UK and Canadian counterparts

October 17, 2019, Sydney –  Sustainalytics, a leading provider of ESG research, ratings and analytics, today released a new thematic research report titled, Navigating ESG Issues in Australia: Identifying Risks, Seizing Opportunities. Over the past 15 years, responsible investing in Australia has evolved from a fringe practice to one of the top investment trends with responsible investing assets now on the cusp of AUD 1 trillion. To support this growing market, the report offers a comprehensive ESG risk assessment of the S&P/ASX 200.

Sustainalytics’ report also provides an analysis of three dominant ESG themes in Australia – energy and climate policy, modern slavery in supply chains, and ethics in the financial sector. The final section of the report explores how investors could potentially integrate ESG data into three equity strategies, including high conviction, enhanced passive and a thematic climate change approach.                                                                                           

The key takeaways from Sustainalytics’ report include: 

  • Market insights: A benchmark investor in Australia is exposed to slightly less unmanaged ESG risk than their counterparts in the US, UK and Canada. However, the materials sector is a notable weak spot for Australian investors.
  • Energy & climate policy: Australia’s emissions-intensive economy, policy vacuum and renewables boom create a complex set of risks and opportunities for investors to monitor. Companies we consider to be relatively well-positioned to compete in a carbon-constrained economy include AGL EnergyQantas and Brambles.
  • Human rights in the supply chain:The country has adopted historic legislation on modern slavery, however Sustainalytics has tracked a five-fold increase in the number of modern slavery-related incidents by Australian companies in recent years. Firms that are relatively well- positioned to manage human rights in their supply chain include Telstra, Wesfarmers and Woolworths

“Well-informed investment decisions increasingly hinge upon taking ESG considerations into account,” said Doug Morrow, director of Thematic Research at Sustainalytics. “We believe this study provides useful comparative analytics for Australian investors to consider and offers unique insight into some of the dominant ESG themes within the Australian market.” 

To access the Sustainalytics’ report, Navigating ESG Issues in Australia: Identifying risks, seizing opportunities, please visit here

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Tim Benedict

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