Portfolios with purpose: A multi trillion-dollar opportunity

This article first appeared in Money Management

By Gillian Gordon, Head of Responsible Investing at JBWere

Australia’s private wealth sector is contributing to a significant surge in the country’s responsible investment markets.

In recent years responsible investments in Australia topped $1.6 trillion and, alongside this rapid growth, private wealth clients have looked beyond traditional wealth preservation to seek greater influence on investments that deliver long-term impact and legacy.

How private wealth firms harness this change alongside new societal expectations, the intergenerational wealth transfer and the potential for innovative investment options is a multi-trillion-dollar opportunity worth exploring.

Shifting societal norms: The future of responsible investing

Responsible investing is no longer a niche way to invest; it is embedded in Australia’s investment landscape at both the public and private level. In 2021, JBWere was one of the first Australian wealth firms to release a comprehensive responsible investment policy and in recent years more firms have committed to formal policies or frameworks that reflect private clients increasingly seeking investments which align with their values.

Historically, philanthropy and investing were distinct – one focused on giving, the other on generating returns. Today those lines are increasingly blurred. Clients now recognise they can earn financial returns and deliver positive impact, and that responsible investing can complement their philanthropic goals.

The evolving dynamics among high-net-worth families is an example. Many of our private clients are families that run small businesses, and according to NAB Private Wealth’s Beyond the Business report released earlier this year, we also know that only two in five small business owners are likely to transition their business to their children. It is creating conversations among families about how best to manage the handover of wealth.

More families are prepared to back their children’s entrepreneurial and impact-driven spirit, and the flipside sees younger generations seeking to embed their family’s ethical principles into portfolios – even if it is not investing in the family business.

As the 2024 JBWere Bequest Report notes: “Leaving children the right share of the full family balance sheet can better equip them to achieve purpose in their own lives. Leaving them enough to achieve purpose and guiding them with the values and family ethos exhibited during your life may be the best gift to pass on.”

The scale of wealth expected to move between generations is significant. JBWere estimates that Australia is on track for a $5.4 trillion intergenerational wealth transfer over the next two decades. Recognising (and meeting) the investment expectations of Millennial and Gen Z will be key in unlocking opportunity. The rise of private markets investments is just one example highlighting a move away from traditional investment structures that has helped shift responsible investments from the margins to the mainstream for next generation investors.

Creating impact close to home

While impact investing opportunities exist across the globe, we find that private wealth clients typically prefer impact investment opportunities in their own backyard. More recently, popular investment themes with JBWere clients have included specialist disability accommodation (SDA), affordable housing and social housing, climate related investments and an emergence of investments focused on advancing First Nations economic outcomes.

What continues to make Australia an attractive market for responsible investing is a favourable policy environment where government-led initiatives can drive competitive investment returns and positive impact. An example is the $10 billion Housing Australia Future Fund which is helping fund the building of 40,000 social and affordable homes, and increasing the range of impact investment opportunities in this space.

For climate related investments, private wealth clients are looking for responsible investment solutions that address the transition to net zero and other climate concerns.

The entire industry, from wealth firms and clients to regulators, is continually pushing for greater transparency and accountability on climate related investments and their impact.

Evolving investor motivations: Performance versus purpose

Private wealth clients are diverse in their motivations when it comes to investments. Some remain focused on investment performance to preserve wealth while others are driven by purpose – and the majority fall somewhere in between.

Increasingly, though, we see far greater emphasis on a dual goal of performance and purpose. There are numerous ways to achieve this goal, and it’s imperative that private wealth and advice firms encourage pathways for their clients to engage in responsible investing. This includes but is not limited to:

• ESG integration: This remains highly important to responsible investing and is embedded among many wealth managers’ processes to assess risks and opportunities within an investment. However, it is no longer the gold star, with combinations of the following approaches seen as generating stronger impact.

• Portfolio screening: Using negative and positive screens to align investments with personal ethics and values (e.g. excluding tobacco, or including further exposures to clean energy, etc.)

• Stewardship and advocacy: Engaging directly with investment managers and companies to drive better performance and outcomes. This can include requesting investment exclusions or refining governance models.

• Impact investing: Targeting measurable social or environmental impact, with options for market-rate or concessional returns. This is where the boundaries between philanthropy and investment may blend. Well beyond charitable giving, impact investments allow clients to “do good”, align to their values and ethics, while earning a return.

The critical piece for financial advisers and wealth firms will be how they tailor responsible investment solutions as well as influence key decision makers to address bigger picture goals such as purpose,performance, retirement and wealth transfer planning.

As societal expectations evolve and investment choices expand, Australia’s high-net-worth individuals are seeking to align their portfolios with their values. An emphasis on fiduciary duty, personalisation and ongoing innovation will assist meeting clients’ diverse needs in this dynamic segment—and capture the multi-trillion-dollar opportunity ahead.

To discover more call 1300 683 106 or email us on investordesk@nab.com.au

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The information contained in this article is believed to be reliable as at March 2026 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, property, financial and taxation advice before acting on any information in this article.

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