Environmental, social and governance research and ratings organisation Sustainalytics is expanding its Sydney office and building a team to better serve Australia and New Zealand, which is the second-fastest growing region for responsible investment, after Japan.
Sustainalytics is a multinational firm with 13 offices worldwide, employing 300 team members and more than 170 in-house research analysts with multidisciplinary expertise across 42 sectors.
Sydney-based Catalina Secreteanu, associate director of institutional relations, said there were now five team members in the Sydney office with a role being advertised for ESG analyst – Asia-Pacific research.
Ms Secreteanu said Australia and New Zealand were very dynamic markets and progressive on ESG investing.
“We are a growing global company with an interest in entering markets where the integration of ESG and corporate governance considerations into the investment process is increasing,” she said. “Australia and New Zealand are such markets.”
According to a recent Global Sustainable Investment Alliance report, there are $22.89 trillion of assets being professionally managed under responsible investment strategies globally.
There has been an increase of 25 percent since 2014, with Japan the fastest growing region, followed by Australia and New Zealand.
“Responsible investment assets managed by asset managers, asset owners, banks and advisors in Australia and New Zealand grew substantially, both at the retail and institutional level, across all responsible investment strategies,” Ms Secreteanu said.
“In both countries combined, responsible investment assets have grown from 2014 to 2016 to reach $515.7 billion, and to a point where in Australia, sustainable investments now account for 50 per cent of all professionally managed assets.”
In Australia, both asset managers and super funds are seeking Sustainalytics’ expertise.
“Our client base is really split between asset owners and asset managers,” Ms Secreteanu said. “What we are seeing is our clients using our ESG research to inform their ESG integration and exclusionary screening practices.”
According to Ms Secreteanu, Australian companies fare quite well compared with their global peers, and corporate governance standards are high compared with other developed markets.
“Australian companies have always been proactive in engaging with our research team members on their sustainability practices,” she said.
However, one area where Australian companies can enhance their disclosure practices is around climate change risk and how they are managing the transition to a low-carbon economy.
“Both regulators and institutional investors are pressing for change in this area, so overall we believe companies can enhance their efforts,” she said.
“From our perspective, companies that disclose more information around climate change scenario analysis will be well positioned given our global investor clients are looking at this more closely.”
Given the strong interest in ESG investing in the Australian and New Zealand markets, Sustainalytics believes it will experience organic growth here.
“With a meaningful presence on the ground, we are in a better position to serve our Asia-Pacific clients directly, as well as our global clients with portfolio holdings in the APAC region,” Ms Secreteanu said.
“As we begin to serve more investors in the region, our team will grow.”