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Strong rise in trading for ESG-related stocks and ETFs

 — 1 minute read

Trading volume is currently well above previous years but below the highs of 2021.

The trading value of equities and ETFs associated with sustainability has surged 134 per cent since January 2019, new data from AUSIEX has revealed.

According to the firm, $1.04 billion has been traded in climate and ESG-related securities during the first five months of the year, close to the $1.26 billion traded in 2019 overall.

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ESG-related trades reached a peak in November last year, just as the COP26 summit was taking place, with nearly $3 billion worth of trades in ESG-related securities during 2021.

“This year, against a backdrop of rising inflation, monthly ESG trading figures have not been as high as 2021 but are still well over 100 per cent higher than in 2019,” commented AUSIEX CEO Eric Blewitt.

“COP26 affirmed the leading role the private sector will need to play to help reduce global warming. Given this as well as the likelihood of greater focus on climate action as a result of the recent Federal Election, it is likely Australian investors’ interest in ‘green’ securities will grow even more dramatically.”

Hydrogen was highlighted by AUSIEX as the most popular green sector, representing about 80 per cent of all ESG-related trades since 2019.

Battery and clean tech securities have also found popularity, particularly among older investors, with trading in these sectors outstripping broader sustainability-themed securities during 2021.

AUSIEX also noted that ETFs were viewed as the preferred method for ESG-related investing by Millennials and Generation Z.

“A large portion of the trading by these generations has been in ETFs such as BetaShares FAIR and ETHI and we are seeing a raft of new ESG-related investment opportunities coming into the market,” said Mr Blewitt.

“Generation X and Boomers are more likely to invest in shares which may suggest they are seeking to directly influence or support specific ESG-related company activities.”

Tying in with the ‘teal wave’ seen during the recent federal election, AUSIEX also discovered that the suburbs which supported Teal independents had higher levels of ESG-related trading than the rest of the country.

In comparison to other electoral divisions, the nine seats won by teal candidates had on average 200 per cent more investors trading ESG-related securities and 151 per cent more trades placed which were worth 188 per cent more in value.

“This is an interesting observation and seems to suggest that Australians are using their power as investors to express their values, not just investing in green sectors for potential return,” concluded Mr Blewitt.

Strong rise in trading for ESG-related stocks and ETFs

Trading volume is currently well above previous years but below the highs of 2021.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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