Australian investment in green projects surges despite drastic US policy reversal, report shows | Business

Australia booming Demand for pro-environmental investments has overcome a U.S. backlash, with potential global ramifications, against green finance sparked by Donald Trump’s re-election, although supporters of such projects are less vocal.

Green, sustainable and social investment has grown from $20 billion to $157 billion over the past five years, with $137 billion supporting projects with environmental benefits, according to new research from Impact Investing Australia (IIA) and the Center for Social Impact.

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That $157 billion included $25 billion in the first half of 2025, putting the year on track to surpass 2024’s record of nearly $40 billion, even as some global financiers pull back from climate-conscious projects to align with Trump’s avowed policy of “drill, baby, drill.”

IIA chief executive David Hetherington said local investment funds were reluctant to boast of their green credentials in the face of US-led backlash and greenwashing concerns, but had not slowed the flow of money.

“There are entrepreneurial companies that are tackling [challenges] and make money doing it,” Hetherington said.

“Where successful entrepreneurs seek capital, there will be funds seeking to deploy it. »

Dedicated impact investing funds held less than $3 billion in 2020, but collectively managed $12.5 billion as of June and have continued to grow.

The country’s second-largest fund, Australian Retirement Trust, invested almost $1 billion in a Macquarie Bank green energy fund in September and committed a further $1 billion to impact investments by 2030.

Investors also bought $145 billion worth of bonds dedicated to green, social and sustainable projects, up from $17 billion in 2020, with Australian investment on track to set a third consecutive annual record in 2025, the study said.

Green projects range from the expansion of renewable energy to the state government’s light rail upgrade and the federal government’s Murray-Darling Basin water purchases. The report reveals that Australian investments have collectively funded efforts to reduce 110 million tonnes of CO2 equivalent emissions, avoid 1.3 million tonnes from landfill, plant 3 million trees and recycle or return 363 million liters of water.

Head of private markets at Australian Ethical, Adam Roberts, said investors who once doubted renewable energy opportunities were now pursuing them because the projects were proving they could be profitable.

Government green bonds, designed to raise money for climate and environmental projects, now offer returns equal to or higher than their competitors in the market, the Reserve Bank has found.

“There’s obviously a lot of noise in the market about green investments or not, globally and here in Australia, [but] there is… sufficient need for capital and investment opportunities to continue,” Roberts said.

“Especially young Australians, but many Australians, [are] truly focused on doing well and doing well with their investments and retirement [savings].”

Australian Ethical has more than tripled its size since 2020, directing its $14 billion in funds from 134,000 members towards projects ranging from public electric vehicle chargers and solar and battery projects to soil recyclers.

Funding has also increasingly flowed to funds investing in housing assistance, such as Conscious Investment Management (CIM). Its investment director Matt Tominc said a lot had changed since CIM committed to Australia’s first large-scale privately financed social housing in 2021.

“Now it’s a very important sector, it’s the government’s Housing Australia Future Fund… so [there’s] familiarity, more investment opportunities to come,” Tominc said.

Danielle Logue, report lead and director of the Center for Social Impact at the University of New South Wales, said more professional and expert teams attracted larger cash reserves, thereby causing greater effects across a wider range of products.

But the sector is not without challenges, with the vague definition of the term “impact” limiting its growth. Unconvinced fund managers interviewed by Logue’s team said they needed more consistent metrics before investing.

The corporate regulator also took pension funds to court for misleading customers about whether their pension savings supported sustainable investments, as promised.

“Verification processes give confidence to investors and regulators regarding… greenwashing or impact-washing,” Logue said.

“As investors become more familiar with the different types of deals and products and the evidence base grows, we will start to see a change.”