RIAA 2026: Australian investors stand firm on ESG despite US backlash
Speaking at the RIAA conference, investors reaffirmed their focus on energy security and long-term investing
The growing backlash against ESG and climate investing has been a dominating theme for responsible investment events across the globe in recent years. This was unsurprisingly the case when Australian investors gathered in Melbourne last week.
Investors attending the Responsible Investment Association Australasia (RIAA) annual conference reflected on the implications of America’s ESG backlash and allocators down under have responded.
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Against a backdrop of geopolitical risks, investors stood firm on defence of sustainable investing.
Big picture
“There is no doubt that the responsible investment industry is changing”, said RIAA co-CEO Estelle Parker in her opening remarks. Parker – a former diplomat – set the tone for the conversations that followed.
“In the US, politicians have been willing to use litigation and interference in the market to prop up industries like fossil fuels”, she warned – noting the Trump administration’s use of anti-ESG lawsuits and regulatory reforms.
For an audience comprising of institutional allocators from Australia and New Zealand, Parker had timely advice, “Zoom out”, she affirmed. “Across most jurisdictions, ESG investing and sustainable finance are on an upward trajectory”.
Michael Clancy, CIO at Rest – a large Australian superannuation fund – was amongst those Parker directed queries toward. Clancy stressed Rest’s stance on long-term investing in the best interests of members.
“We have a long-term perspective. Over that long term, ESG risk and return marry up with our time horizon. ESG risks may not be evident next week but certainly over decades, they are”, Clancy explained.
Parker pressed Clancy on whether the US-led backlash had changed the fund’s beliefs in that regard. “The short answer is no”, Clancy responded. “The longer answer is those criticisms don’t change our investment beliefs around the importance of managing ESG risks and opportunities”.
He noted that the behaviour of large US asset managers has indeed changed. A development he hinted resulted in the wheat being separated from the chaff.
“They’ve had to be cautious in their language. It has sorted out those organisations who truly had a commitment from those organisations that just had a commitment on paper”, Clancy noted.
Energy security
That the war in Iran has catapulted energy security into the spotlight was not lost on investors in attendance.
“There’s a view that geopolitical events are one-off events. The past five or six years have demonstrated that is no longer true”, said Jonathan Armitage, CIO at superannuation investor Colonial First State.
Armitage’s comments highlighted a concerning trend with geopolitical energy shocks – recurrence. The war in Iran and Russia’s invasion of Ukraine have both occurred barely four years apart.
“This is not new and it is becoming part of the environment we’re all investing in”, he told the audience.
Looming concerns over energy security strengthen the investment case for the energy transition. Andrew Driscoll, director for corporate finance at Fortesque offered a view from the ground.
The Australian miner has stuck to its climate targets of ‘real zero’. A goal that Driscoll says goes beyond net zero by removing any space for offsetting. By 2030, Fortesque is aiming for real zero scope 1 and 2 emissions.
“In the current environment, with the conflict in the middle east, energy security is in sharp focus”, said Driscoll.
Investing in renewable infrastructure, electrifying fleets and installing 3600 solar panels a day in the Pilbara in Western Australia are all part of the miner’s response.
“It solves for energy security, there is a significant reduction in operating costs, it mitigates risks around policy and makes the business more resilient and cost competitive”, he explained.
RIAA’s latest annual gathering gave the investor group an opportunity to assess where members stood in their sustainability journeys. “Was sustainability just a passing trend”, asked RIAA’s Parker.
Investors speaking at the event seemed convinced it was anything but. Asset owner expectations of managers have not budged, nor has the financial materiality of energy transitions. The war in Iran has added to it all – giving investors more reasons to disagree with Washington’s ESG hostility.
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