5 Best ESG Funds in Australia

  • By: Josh Palmer
  • September 8, 2023
ESG Funds in Australia
Reading Time: 4 minutes

Investors and corporations recognise the importance of Environmental, Social, and Governance (ESG) metrics in shaping the future of investment decisions. With a rapidly changing climate and a growing awareness of the impact of industrial activities, investors increasingly seek companies aligning with sustainable practices.

The emergence of board management meeting software supports the shift toward sustainable practices. These technological solutions revolutionise corporate governance by fostering transparency, efficient communication, and sound decision-making. By facilitating the circulation of ESG-related information, software empowers boards to uphold high standards of accountability and oversight.

What is ESG?

ESG stands for Environmental, Social, and Governance. It’s a set of criteria that investors and stakeholders use to evaluate a company’s sustainability and ethical impact. Each of the three components of ESG represents a different aspect of a company’s operations:

  • Environmental (E): This category assesses a company’s impact on the natural world. It includes factors such as carbon emissions, water usage, waste management, pollution, and the overall ecological footprint of the company’s activities.
  • Social (S): The social aspect of ESG looks at a company’s relationships with its employees, customers, communities, and other stakeholders. Factors include employee diversity and inclusion, labor practices, human rights, community engagement, product safety, and contribution to social welfare.
  • Governance (G): This pertains to a company’s internal structure, policies, leadership, and decision-making processes. It encompasses aspects such as board composition, executive compensation, shareholder rights, ethical leadership, and transparency in financial reporting.


Why is ESG Important?

ESG goals guide businesses toward sustainable practices and responsible operations, acknowledging that long-term success hinges on more than just profit margins. Some of the benefits of being ESG-compliant include:

  • Sustainability and long-term viability: ESG factors offer a holistic view of a company’s operations, enabling it to capitalise on opportunities and manage risks.
  • Enhanced reputation and brand value: Embracing ESG practices demonstrates a commitment to ethical behavior. A positive reputation can attract employees, investors, and customers with the same values, enhancing company brand value.
  • Innovation and efficiency: ESG considerations encourage the development of sustainable technologies, products, and business models, leading to reduced costs and improved competitiveness. 
  • Access to capital: Companies prioritising ESG are more likely to attract investments from those seeking financial returns and positive societal impact.

However, while the importance of ESG is universally recognised, Australia has a different approach to ESG reporting. Mandatory ESG reporting isn’t currently required at the federal level. Rather, Australian companies are encouraged to voluntarily report on ESG factors.

Disregarding ESG principles exposes companies to ESG risks with significant consequences. Environmental negligence can result in regulatory penalties, lawsuits, and damage to natural resources, directly impacting a company’s bottom line and long-term viability.

In addition, a lack of a well-defined ESG policy can lead to employee discontent, protests, boycotts, or loss of consumer trust, damaging a company’s reputation and eroding customer loyalty.

ESG ratings, now vital to investor decisions, reflect a company’s commitment to responsible conduct. Failure to uphold these standards may lead to diminished investor confidence, restricted access to capital, and even potential divestment.

Product Overview

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5 Best ESG Funds in Australia

Australia is a hub for some of the best ESG funds, where financial growth and positive social impact meet. The following funds embody a commitment to responsible investing, aligning with ESG principles. 

1. Australian Ethical Investment

Renowned for its unwavering adherence to sustainability, the Australian Ethical Investment allocates investments to companies that exhibit exceptional ESG practices. The portfolio spans various sectors, including health care, education, technology, and renewable energy. 

This diversification helps to mitigate risks associated with sector-specific fluctuations and shows the fund’s devotion to driving change across multiple sectors. 

2. Betashares Global Sustainability Leaders ETF

Esteemed for its commitment to a sustainable future, Betashares Global Sustainability Leaders ETF actively contributes to a paradigm shift in how investors navigate the market. The fund presents a comprehensive approach that resonates with socially responsible investors. 

By meticulously considering ESG factors, the fund ensures its portfolio companies prioritise financial gains and environmental stewardship, social equity, and exemplary governance practices.

3. VanEck MSCI Australian Sustainable Equity ETF

This ETF presents an invaluable avenue for those who seek investments aligned with their ESG values, fostering a harmonious balance between financial growth and responsible decision-making. 

VanEck MSCI Australian Sustainable Equity ETF offers exposure to companies that have passed the litmus test of sustainability, allowing investors to navigate the market with a sense of purpose and alignment.

4. UBS IQ MSCI Australia Ethical ETF

For investors seeking financial growth and ethical stewardship, the UBS IQ MSCI Australia Ethical ETF provides a compelling avenue. It amplifies portfolio diversification within the Australian market and promotes positive change by adhering to ESG principles.

This fund tracks MSCI Australia IMI Select SRI Screened Index, which includes companies with favorable ESG attributes. 

5. Perpetual ESG Australian Shared Fund

This fund epitomises a proactive approach to ESG integration, empowering investors to champion ethical practices and promote change. The Perpetual ESG Australian Shared Fund pursues companies through a multifaceted lens, covering critical areas like gender equality, climate action, and corporate governance.

Through the fund, investors become agents of transformation, fostering a world where profit and purpose intersect seamlessly. This contribution shapes the business environment, making it more sustainable and equitable.

Achieve Complete Board Alignment With OnBoard

Companies trying to navigate responsible investing and ESG considerations should prioritise using a comprehensive board meeting management software like OnBoard. OnBoard bridges the gap between ESG goals and strategic decision-making by streamlining board processes. 

With OnBoard’s core features, board members can:

  • Centralise ESG Information: OnBoard’s platform allows easy consolidation of ESG data, making it readily accessible for informed decision-making.
  • Enhance Collaboration: Collaborative features facilitate seamless communication and collaboration among board members, enabling efficient ESG policy formulation.
  • Track Progress: OnBoard’s tracking capabilities help monitor ESG metrics, ensuring accountability at every step.
  • Promote Transparency: The software promotes transparency by giving stakeholders insights into the organisation’s ESG goals and achievements.

Download our free board meeting agenda template to see what OnBoard can do for your organisation.

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About The Author

Josh Palmer
Josh Palmer
Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.