Ethinvest, which offers clients ethically screened investments, has just tipped into the $100 million assets bracket. In the CBDs around Australia, tenants are pushing for ESG outcomes.
And yet another bunch of investors are pushing up the ante by asking the federal government to demonstrate strong climate targets that will unlock the clean energy success stories so they can soar.
According to Fiona Thomas, general manager of Ethinvest, there’s been strong investment performance and continued client inflows across three of its key portfolios – conservative, balanced and growth.
“We never guarantee outperformance,” Thomas said, “But nor should clients expect ethically screened portfolios to lag traditional funds.”
Historic Returns as of 30 September 2024 were:
| 1 year returns | 5 years returns | |
| Ethinvest Conservative | 10.55% | 4.44% |
| Ethinvest Balanced | 13.53% | 5.18% |
| FE Cautious Index | 8.01% | 2.13% |
| FE Balanced Index | 13.25% | 4.64% |
| Ethinvest Growth | 16.61 | 6.01% |
| FE Growth Index | 16.14% | 6.12% |
Office vacancies are down
At the top end of town, office vacancies seem to be improving, and money is flowing again thanks to overseas investors and tenants who are showing they want a sustainable outcome mixed in with the glamour of new builds.
A report from Knight Frank released on Wednesday found that investment flowers were up by 21 per cent in the 12 months to the end of September compared with the previous year.
Chief economist Ben Burston said that the growth in transaction flow was thanks to “improving sentiments” (finally) driving greater liquidity in the office markets around the nation’s capital cities after COVID-19 slammed office landlords with widespread work-from-home rules and later preferences.
Notable was that after two consecutive years of negative net absorption (more vacancies and less occupancy) in the nation’s CBD market, Australia has recorded its first positive net absorption of 31,826 square metres. Net absorption is calculated as the total of “total space leased” minus “vacated space”, minus “new space.”
CBD office vacancy rates were also stabilising, the report found, remaining at 13.6 per cent over the first half of this year. Canberra and Brisbane were doing well, with vacancies at 9.5 per cent, while Melbourne lagged at around 18 per cent.
Tenants were leaning towards new, quality spaces close to public transport, cafes, restaurants, independent grocers, green spaces and wellness activities.
But in good news for sustainability tenants also demand new spaces with high ESG ratings that encourage high productivity, collaboration and employee wellbeing – a trend that’s mostly evident in Sydney and Melbourne, which outperform other precincts.
Underpinning increased sales were overseas investors, which account for 47 per cent of the total deal volumes in 2024.
Making the biggest impact were funds companies such as Mitsui Fudosan, one of Japan’s largest property developers, which acquired a 66 per cent stake in 55 Pitt Street in Sydney, Singapore’s Keppel Real Estate Investment Trust, with an acquisition of 255 George in Sydney and PAG from Hong Kong, which purchased 367 Collins Street in Melbourne.
Tell a great story, and they will listen
Investors were also paving the way forward on the clean and green transition. The Investor Group on Climate Change (IGCC) group shared the news on Wednesday that it was encouraging governments to support sustainable investments through a new national campaign to showcase clean energy success stories invested in through its network.
Members of the group, who are climate conscious investors, manage the retirement savings of 14.8 million Australians and have more than $35 trillion in assets under management. The group said that the federal government passing strong climate policies will be the key to unlocking the next wave of multibillion-dollar investment into local industries.
IGCC chief executive Rebecca Mikula-Wright said:
“With appropriate policy settings, including a strong 2035 carbon emissions target, we can continue building the future industries and help Australia become a clean energy powerhouse.”
The new “climate action pays off” campaign will tell the stories of new green companies providing jobs for local workers and building businesses that will quickly become the “clean energy powerhouses of tomorrow” – that received investments from group members.
People and companies featured in the campaign include:
- 5B, a solar array manufacturer and deployer
- Energy Renaissance, which owns the nation’s first lithium-ion battery gigafactory in the Hunter region
- MCi Carbon, a company working on transforming carbon emissions from heavy industry to create buildings and other materials
- SA Power Networks, a company developing innovative solutions to integrate solar panels, batteries and electric vehicles into the grid
- Verdant Produce, a startup by a generation farmer and business owner educating the NSW agricultural industry on how to cut power bills by 70 per cent through clean energy
“This is only the tip of the iceberg, with Aussie companies across our nation showing how clean industries are simultaneously creating new jobs and export opportunities,” Mikula-Wright said.
“This shift to a clean economy is the biggest economic opportunity for our nation and the retirement savings of millions of Australians”.
“We have the best clean energy resources in the world, which will lower the cost of living and power bills, keep the lights on, and provide secure job opportunities.”
Mikula-Wright said investors required a strong 2035 climate target to give investors the certainty to keep investing in Australia and ensure the nation doesn’t miss out on economic opportunities, including jobs.
“We know that the failure to plan and act on climate change is already resulting in more extreme weather events, causing costly disruptions for our farmers, economy, businesses and local communities.
“On one hand, we have a remarkable opportunity to get ahead of the curve to support and future-proof Australia’s economy now, or otherwise risk further economic pain through a lack of investment and climate costs.”