Environment and investment: the role of personal investment choice in creating sustainability

Traditionally most investors have sought only financial returns from their investments. The idea of reaping environmental benefits from investment is not widely accepted, primarily because ecology and economy have long been considered mutually exclusive by financial markets. However, as social values change growing numbers of investors are beginning to identify the potential role of investment in assisting moves towards ecologically sustainable development (ESD). With a focus on the sizeable Australian investment market, examples are drawn from overseas of recent research and environmentally screened investment funds providing evidence of a positive correlation between environmental and financial performance. The implications of the deregulation of the investment market in Australia and the importance of corporate environmental reporting (CER) and other methods of communicating environmental performance to investors, both individual and institutional 1 , are discussed. The paper concludes that while the trade-off between ecology and economy remains within the dominant paradigm, and despite a lack of widespread CER, changes in investment patterns are occurring. As this gathers momentum, aided by more transparent corporate environmental behaviour, both environmental and financial returns can be achieved. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.