Key Participants in Environmental Investing in Australia
Environmental investing in Australia encompasses a diverse range of market participants and stakeholders, including superannuation funds, institutional investors, asset managers, banks, insurers, corporates, project developers, farmers and landholders, government, and a range of specialist environmental and financial professionals.
These participants play a range of roles, including supplying capital, developing environmental assets, creating demand for carbon and other environmental commodities, and facilitating the financing, trading, and operational risk of environmental investments.
Australia’s environmental investment landscape includes a range of established and emerging investment areas, including renewables and carbon, as well as nature repair, biodiversity, and transition finance.
What is environmental investing in Australia?
Environmental investing refers to investments in businesses, projects, assets, or financial instruments that either directly or indirectly contribute to or seek to benefit from environmental outcomes or the mitigation of climate and environmental risks.
Environmental investments in Australia may consist of:
Renewable energy and storage
Electricity and transport infrastructure
Energy efficiency and electrification
Low-emissions technologies
Sustainable agribusiness
Carbon abatement projects
Carbon credits or certificates
Biodiversity or nature-based projects
Green and sustainability-linked finance
Environmental technology companies
Environmental investing is distinct from, but relates to, environmental or carbon markets.
An environmental market is a market in which environmental commodities or units of account are exchanged, such as Australian Carbon Credit Units (ACCUs) or biodiversity certificates. Environmental investments may take the form of equity or debt financing, infrastructure funding, private equity, or funds, as well as the purchase of private or public environmental commodities, without direct exchange of environmental units.
Who are the key actors in Australian environmental investing? (no specific names)
1. Superannuation funds and institutional investors
Superannuation funds are a key source of long-term investment for Australia’s infrastructure and public and private equity markets. Superannuation funds may be impacted by climate change, regulatory, and environmental risk, and are starting to include these considerations in their investment decisions. Institutional investors may also directly invest in renewable infrastructure, businesses, and carbon assets that meet their risk-return objectives.
Environmental investing is not necessarily about ‘green assets’ – professional investors will assess the risks and rewards of any given asset, including its impact on the environment. Environmental considerations are just one part of a larger investment evaluation that includes risk, diversification, valuation, and liquidity.
2. Asset managers
Asset managers typically manage funds on behalf of superannuation funds, institutional investors, and other clients.
They may include managers of sustainable investment or environmental funds, infrastructure funds, private equity, impact investment, and listed equity and fixed-income funds.
Asset managers play a critical role in research, selection, and management of environmental investment funds.
Two funds that use similar-sounding ‘sustainable’ or ‘ESG’ language can have markedly different investment strategies – it is always important to understand what the fund actually invests in, what its objectives and risks are, and how it compares to similar funds.
3. Banks and other lenders
Banks provide debt finance for a range of environmental investments, including renewable energy, storage, and efficiency, as well as for carbon abatement projects, agribusiness, and sustainable transport.
Banks may have assets and liabilities directly impacted by environmental risk, and so have an interest in understanding and managing those risks. Lenders are also exposed to the credit risk of any given borrower and so should carefully assess the risks associated with any potential investment or lending facility.
4. Insurance companies
Insurance companies are both investors and risk managers in the environmental space.
By virtue of collecting and managing premiums, insurers may invest directly in a range of financial assets, including infrastructure, on behalf of policyholders.
At the same time, they are exposed to a range of environmental risks, including physical risk to their own assets and to those of their policyholders.
Environmental risks, such as extreme weather events, can impact on the affordability and availability of insurance, with flow-on implications for investments.
5. Corporates and businesses
Businesses may invest in a range of environmental assets, including renewable energy, efficiencies, low-emissions technologies, and carbon credit projects.
Businesses may be motivated to invest on the basis of reduced costs, regulatory compliance, or customer or community expectations, as well as overall investment returns.
Businesses with large electricity-using facilities subject to the Safeguard Mechanism have a direct interest in the carbon market, with emissions liabilities directly impacting on corporate taxation and cash flows. This mechanism also creates opportunities for businesses to invest in carbon abatement projects as a source of income, as well as to reduce their own emissions intensity and exposure to carbon pricing.
6. Environmental project developers
Project developers play a critical role in the environmental investment value chain by identifying, designing, and building specific projects.
Many carbon projects involve planting trees or managing emissions from agricultural production – developers can specialise in carbon accounting and project management to help investors navigate the complexities of building a carbon-offsetting project.
Given the significant up-front investment required for many carbon projects, developers and investors may take on considerable risk in order to realise revenues from the carbon market.
7. Farmers and landholders
Many farmers and landholders are able to participate in carbon and nature-based projects that value the environmental outcomes on their land.
There may also be opportunities for farmers to diversify and adopt more sustainable practices to gain access to new markets and generate extra income.
However, farmers considering such opportunities must evaluate the risks of long-term changes to land use and management, as well as ongoing compliance and reporting obligations, alongside any financial benefits.
8. First Nations people and organisations
First Nations peoples and organisations are critically important participants in Australia’s environmental investment landscape and may play a range of roles.
Many First Nations people and organisations have a deep and longstanding connection to Country and to the ecosystems and lands that are the source of many environmental commodities.
The Nature Repair Market formally acknowledges the contribution of First Nations peoples and organisations in biodiversity projects and provides for the use of First Nations knowledge, where appropriate and authorised, in the development of biodiversity credit schemes.
Environmental project developers need to understand the role of First Nations peoples and organisations and the potential impacts of any project on First Nations people and their rights.
9. Governments and public sector entities
Governments play a number of roles in environmental investing, including regulator, market designer, investor, and buyer. Government policy is also a critical factor in many environmental investments, including carbon compliance and nature-based schemes. The Safeguard Mechanism and the proposed Nature Repair Market are both examples of government initiatives that directly impact on the viability of carbon and biodiversity offset projects and so influence a range of investment decisions.
10. Biodiversity project proponents
Biodiversity project proponents develop projects that aim to improve, maintain, or restore biodiversity. Many Australian businesses are considering nature-based approaches to carbon abatement. The Nature Repair Market will see the issuance of biodiversity certificates for eligible projects. Initially, these are likely to be focused on the regeneration and protection of native forests and woodlands.
Biodiversity project proponents need to consider the particular risks associated with each project and ensure that they are considering appropriate measurement, reporting, and verification (MRV) requirements. Unlike carbon projects, a critical consideration for biodiversity projects is the impact of location-specific factors on the outcomes for ecosystems and the ability to measure these.
11. Carbon market participants and intermediaries
The Australian carbon market consists of carbon project developers, corporates with compliance obligations, government, voluntary buyers, investors, and a range of intermediaries that facilitate trading and provide a range of services to market participants.
Intermediaries can provide a range of services to buyers and sellers, including researching and sourcing units of compliance or voluntary offset credits, as well as facilitating transactions and providing market intelligence.
An example of the scale of broking in carbon markets is given by the Australian Carbon Credit Unit (ACCU) market. For the first quarter of 2026, 8.8 million ACCUs were surrendered for compliance with the Safeguard Mechanism, while 5.5 million ACCUs were added to the supply balance for the ACCU market.
These are large volumes, and illustrate the scale of trading in environmental commodities.
12. Registries, auditors, and specialist advisers
Environmental markets require a range of supporting services, including registry systems that record ownership and transactions, and auditing and assurance services to verify project emissions or biodiversity outcomes. Specialist advisers can provide a range of services to assist with understanding markets and products, evaluating project viability, and navigating legal, tax, and accounting issues.
Environmental investments often require specialist knowledge and advice, including from environmental scientists, ecologists, engineers, carbon specialists, lawyers, accountants, and financial analysts.
Their expertise is often essential in assessing technical, environmental, legal, tax, and financial aspects of any given investment.
How do these participants fit together?
Environmental investing typically takes place within a wider investment context. An example is the development of a renewable energy project, which will typically involve a project developer, equity investors, a lender, project engineering and other specialists, insurers, and government regulators.
The developer will identify a project, such as a wind or solar farm, which will then be evaluated by equity investors and lenders. Specialist engineers will provide a technical assessment of the project, while insurers will assess the risks that can be reinsured. Government regulators will set the rules for any connection to the electricity grid.
Once the project is built, it will generate electricity and revenues, and potentially environmental attributes such as carbon credits.
Each of these market participants has different objectives, but together, they make up a cohesive investment in a renewable project.
Environmental Markets versus Environmental Investments
Environmental investments and environmental markets are closely related, but there are some key differences.
The list below shows some examples of different types of investment and the main risks associated with them.
Activity - Main Exposure
Renewable energy shares - Company and market risk
Renewable energy infrastructure - Project cash-flow and construction risk
Green bonds - Interest rate and credit risk
Environmental investment funds - Fund performance risk
ACCUs - Price risk
Carbon projects - Project and carbon-market risk
Biodiversity projects - Ecological, project, and emerging-market risk
While all of these would be classed as forms of “green investing”, each has different risks and rewards.
Australia’s sustainable finance taxonomy
Australia’s sustainable finance taxonomy is an important development for investors in environmental assets. The taxonomy, initially released in June 2025, sets out what economic activities are considered to be sustainable. It covers six priority sectors – electricity, minerals, construction, manufacturing, transport, and agriculture – and includes social criteria and minimum social safeguards. While it doesn’t mean that any given investment is necessarily good, it does help provide further structure and guidance for analysing environmental investments.
Why is environmental investing taking off?
There are a number of trends that are contributing to the rise of environmental investing in Australia.
Climate-related financial risk
Extreme weather events, along with longer-term climate shifts, pose a range of risks to assets and business operations.
Changes in policy, technology, and markets also present transition risks, particularly to high-emissions industries and firms.
The energy transition
The move towards net zero will see investment across the board in renewable energy, storage, transmission, electrification, and low-emissions technologies.
Nature and biodiversity
Biodiversity is gaining recognition as a key priority for Australia, and the launch of the Nature Repair Market provides opportunities for engaging in private investment in nature-based carbon abatement.
Improved environmental information
Environmental and climate-related information is increasingly being incorporated into financial analysis – providing investors with more information on the risks and opportunities of different assets and investment options.
What are the key risks in environmental investing?
Environmental assets are not inherently less risky than other assets, so it is important to evaluate the risks specific to any investment, including the following:
Regulatory risk: Changes in policy or market rules can impact returns.
Technology risk: New technologies can make existing ones obsolete.
Project risk: Projects can encounter unexpected costs, delays, or challenges.
Market risk: Prices for carbon, energy, and other relevant assets can fluctuate.
Liquidity risk: Private investments may be difficult to sell.
Environmental integrity risk: Projects may not deliver the expected environmental benefits.
Greenwashing risk: Projects or funds may make unsubstantiated or misleading environmental claims.
Physical climate risk: Weather patterns and climate change can damage assets.
Transition risk: Changes in policy, technology, and markets can impact the value of assets.
FAQs
Who are the main participants in environmental investing in Australia?
Superannuation funds, institutional investors, asset managers, banks, insurers, corporates, project developers, farmers, landholders, First Nations organisations, government, market intermediaries, auditors, consultants, and environmental data providers.
What is the difference between environmental investing and environmental markets?
Environmental investing refers to the range of investments in assets, projects, or businesses that either directly or indirectly contribute to or seek to benefit from environmental outcomes. An environmental market facilitates the exchange of units of account for environmental commodities or emissions reductions. Examples of environmental markets in Australia include the ACCU market and the proposed biodiversity market.
Can individuals participate in environmental investing?
Yes – individuals can participate in a range of environmental investments, depending on their circumstances. Individuals can invest directly in listed shares or bonds, or indirectly through managed funds or superannuation. Individuals can also gain exposure to carbon markets by buying and selling Australian Carbon Credit Units (ACCUs). Eligibility to participate in particular carbon or nature-based markets may depend on specific requirements.
What is the Nature Repair Market?
The Nature Repair Market is Australia’s proposed voluntary national biodiversity market. It will see the issuance of biodiversity certificates for eligible projects.
Are ACCUs and biodiversity certificates the same?
No – ACCUs relate to carbon emissions reductions or removals, whereas biodiversity certificates will relate to biodiversity benefits.
Is environmental investing automatically sustainable?
Not necessarily – an environmental label does not always indicate that an investment has been made using appropriate due diligence to assess risks and opportunities. Any investment requires careful consideration of its financial, regulatory, and environmental aspects.
Conclusion
Environmental investing in Australia encompasses a range of market participants and dynamics.
Superannuation funds and institutional investors provide capital, asset managers manage funds, and banks provide debt and other financing – all play a role in facilitating investment in Australia’s low-emissions future.
Meanwhile, corporates, project developers, farmers, and landholders help to realise the environmental benefits represented by these investments. First Nations peoples and organisations have an important role to play as advisers, participants, and market enablers. Finally, governments regulate and design the systems that support environmental markets and investments.
The release of Australia’s taxonomy and the Nature Repair Market represents an important opportunity to expand the range of environmental investments.
However, it is critical to remember that “green” investments still require appropriate due diligence in order to realise value.
Understanding the investment product, analysing the underlying asset, and conducting the necessary risk assessment are always essential.
The most important questions to ask when evaluating an environmental investment are about the returns, the risks, and the environmental benefits.
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