Ethical investment sector hit by ‘green fatigue’

Summarised by Centrist

Interest in ethical and ESG-focused investments has fallen sharply in Australia and New Zealand, according to new analysis from investment-tracking platform Sharesight.

The company said trading activity in ESG-related products had dropped between 60 and 70 per cent from peak levels seen around 2021.

Sharesight chief executive Douglas Morris said enthusiasm for ethical investment products had declined significantly, with many ESG-focused funds disappearing from the platform’s top 250 traded instruments by the end of 2025.

The decline comes despite exchange-traded funds generally increasing as a share of investor portfolios, growing from roughly 8 per cent to 30 per cent of Sharesight member investments.

Investors have instead shifted toward large US technology companies, artificial intelligence stocks, cryptocurrency, uranium and nuclear energy, defence and aerospace firms, and leveraged Nasdaq-linked exchange-traded funds.

Morris said ESG investments had underperformed expectations, with only one in seven active ESG equity managersoutperforming market benchmarks.He also said younger investors, often viewed as the strongest supporters of ethical investing, were still primarily motivated by returns.

The report noted that ESG investing has increasingly become entangled in US political and cultural debates, particularly around criticism of “woke capitalism” from Republican politicians and commentators.

Despite declining enthusiasm, some industry figures argued ESG investing remains stable in Australia and New Zealand compared with sharper declines in the United States.

Read more over at 1News

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