ESG Focus: From Ambition To Monetisation

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This story features ORIGIN ENERGY LIMITED, and other companies.
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The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

ESG is evolving from an ideological investment label into a collection of economically measurable risks and opportunities. More examples showed up during the August reporting season.

• Pragmatic ESG moves beyond the backlash as investment commitments remain resilient
• Batteries and EVs turn the energy transition into tangible earnings opportunities
• AI and data centres reshape sustainable investment around power, grids and infrastructure

By Danielle Ecuyer

FNArena’s dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future: 
https://www.fnarena.com/index.php/financial-news/daily-financial-news/category/esg-focus/

ESG’s relevance remains tangible  

While ESG has become more of a whisper than a roar amidst global political pushbacks, beneath the surface the thematic remains relevant and real, with tangible markers of ongoing growth and success.

Such is the conclusion by LGT Capital Partners’ 2026 ESG report, conducted for more than 13 years across multiple markets, both public and private, with more than 400 managers assessed.

The survey findings identified a “clear” difference between sentiment and what is being put into practice.

LGT found 65% of respondents say ESG has become more negative in their primary region, but 92% maintained or increased their ESG commitments.

Out of the total, 77% of respondents indicated the significance of ESG in their investment decision-making had not altered.

Amongst the 300 surveyed in private markets, climate is the environmental topic that is considered most frequently. Biodiversity is also becoming more apparent in manager policies and assessment processes.

Climate and biodiversity have become more apparent, particularly where there are real-world considerations for infrastructure, real estate and other physical asset-based strategies.

Notably, the recent extreme heat and drought in the northern hemisphere has offered a tangible reminder of how physical risks can impact businesses and assets.

LGT explains flooding, wildfires, storms and other physical climate risks can impact asset values, operating costs, insurance costs and future capex needs. For longer-dated assets, these risks are both real and salient.

In real estate, energy efficiency standards and demand for green building certifications can affect rental demand and the reliability of long-term income streams.

Overall, the survey found the ESG “backlash” has impacted language and positioning more “visibly” than the underlying investment processes.

There is a more pragmatic approach, LGT notes, with a bigger emphasis on materiality, risk management, data quality, client expectations and long-term value creation.

A casual observer might even surmise ESG has moved to real-world applications without the noise around its implementation.

Transitioning from the LGT global survey, there are real investing examples which have emerged from the August earnings season.

Australia’s August reporting season revealed profitable outcomes on ESG

As highlighted by UBS, the most robust outcomes have and continue to be evident and evolve in technologies that are meeting energy security needs as well as lowering emissions.

Multiple levers are driving Australia’s energy transition, with the domestic EV market having appeared to have “shifted gears” and illustrative of a clear example of change.

In the latest monthly update, BEVs now represent around 22% of new vehicle sales and have grown around 3-times year-to-date. Including hybrids, they represented nearly 49% of new vehicle sales.

UBS points to a mix of energy-security concerns and higher fuel prices post the start of the US/Iran war as catalysts for the Australian consumer becoming more BEV friendly.

The transition opens a suite of burgeoning opportunities across vehicle management, electricity retailing and charging infrastructure.

In the case of Australian consumers’ shifting preference towards non-combustion engine vehicles, the latest earnings update from Eagers Automotive ((APE)) exemplified the trend.

UBS highlights BYD (EV) deliveries for Eagers Automotive rose 124% y/y at the interim 2026 result. August saw 8,231 units, a rise of 68% y/y and compared to July at 7,857 units, up 71% y/y.

Ex-BYD, the core portfolio for the vehicle retailer/distributor fell, declining against last year for the 17th consecutive month, down -15% in August y/y and down -12% on a 3-month rolling basis.

Electrification value chains via EV charging are a positive for Origin Energy ((ORG)), AGL Energy ((AGL)) and Ampol ((ALD)).

The second positive flow-on is lowering the operational costs for fleets via the replacement of combustion engines with electric/hybrid alternatives for Woolworths Group ((WOW)) and Ventia Services Group ((VNT)).

Kelsian Group ((KLS)), by way of example, operated 204 zero-emission buses as of FY25, of which 144 in Australia and 60 internationally.

Both batteries and EVs are already contributing to earnings and customer growth.

Battery implementation is accelerating for both utility-scale projects and home usage in behind-the-metre markets.

UBS notes utility-scale battery capacity has risen 7.6x since 2024, with AGL and Origin representing 48% of capacity.

While there is some debate around whether batteries can offset lower wholesale electricity prices from the transition, what is apparent is AGL’s FY26 battery EBITDA rose 10% y/y to $57m.

UBS is forecasting battery EBITDA to rise to $145m in FY27 and $209m in FY28.

For more discussion on the AGL outlook, check out https://fnarena.com/2026/09/14/treasure-chest-agl-energy/

On a smaller scale, the Cheaper Home Batteries Program has underpinned installed capacity growth of 6.6x since its introduction.

Regarding EVs, AGL’s EV-plan customer base has risen 89% y/y and Ampol’s AmpCharge Australia network has expanded charging bays by 98% y/y, with charging sessions rising 116%, as EV adoption is evident in infrastructure demand, bringing forth revenue opportunities.

AI/Data Centres become embroiled in ESG mandates

Artificial intelligence, arguably the most contested and debated investment thematic in the last year, has also slipstreamed into the ESG debate.

The ESG risk assessment transcends multiple factors, with LGT pointing out 43% of survey respondents already have a formal or informal framework for AI investment, and 60% say the relevance of AI risks and opportunities to ESG/risk management has risen.

The debate around data centres has become more pronounced both domestically and in the US in the run-up to the mid-term elections.

Macquarie explains the National Cabinet is developing mandatory standards for data centre construction, which are intended to sit alongside state planning and approval processes, rather than supplant or duplicate the regulations.

Commonwealth legislation is anticipated in early 2027.

The NSW Government has released its Data Centre Policy Framework to streamline assessment processes in order to meet performance measures across environmental, consumer cost protection, energy and water supply, community infrastructure, supply chain investment and skills.

The framework incorporates data centres funding electricity network upgrades, aiming to limit the cost transfer to households and small businesses.

IPART will review full water-service cost recovery, including water scarcity and drought impacts. Guidelines will seek to prioritise water efficiency and recycled water where possible.

Regarding renewable energy generation, wind projects are to supply a minimum 40%. The aim of the framework is to connect data centre demand to additional renewable generation via PPAs and firming agreements.

NSW has 19 data centre projects valued at $50.3bn in the State Significant Development pipeline, and a further 60-plus operating or under construction.

As noted by Macquarie, compliant projects will receive a commitment to assessment within 75 days.

For the Commonwealth, a uniform renewable energy requirement was not agreed, with Queensland maintaining a technology-neutral approach, permitting the use of coal or gas.

The Northern Territory has suggested gas could assist with new projects as it operates outside of the NEM (National Electricity Market) and has its own Territory-owned and operated system.

Renewables are anticipated to remain the main source nationally, but flexibility for different jurisdictions will result in different emissions outcomes and development requirements.

Sustainable Funds tick higher

Aligning to the thematic around energy-transition strategies and selected electricity infrastructure, Macquarie also highlighted US sustainable funds recorded nearly US$3bn of net flows in 2Q26.

This marks a return to positive inflows for the first time since 2022 and post 14 consecutive quarters of outflows.

US sustainable fund assets rose to a record US$398bn at the end of June, up 13% since the March quarter at around US$350bn.

Passive assets rose to nearly US$199bn from US$167bn and represented around 50% of US sustainable fund assets. Equity remained the largest segment at 85% of assets, followed by fixed income at 14%.

The analyst notes electricity infrastructure was a major contributor to the quarterly inflows. The First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index ETF attracted US$3.1bn in 2Q26.

Morningstar has linked demand for the fund to investor interest in electricity grid infrastructure and technologies aligned with boosting power for AI and data centre demand, alongside the integration of renewable energy.

Macquarie details global sustainable fund flows were mixed in 2Q26, with an estimated US$3.7bn of inflows excluding China. Europe attracted US$3.5bn and the US around US$3.0bn, while Canada, Japan, A&NZ and most of Asia ex-China recorded outflows.

Global sustainable fund assets increased to an estimated US$3.73trn from US$3.50trn, largely reflecting market appreciation rather than fund flows.

Westpac dives into data centres and renewables

Westpac is the latest financial institution to highlight the growing correlation between Australia’s data centre pipeline and the development of renewable energy.

When the bank first looked at the data centre pipeline, it was worth an estimated $155bn over the next decade. With the following announcements and approvals, the expected pipeline has grown to $175bn, including the Nvidia-backed developments and the likes of Firmus’ planned 2GW rollout.

The growth has come in faster than expected, with most of the investment anticipated to take place over the next three years, to the end of 2029.

Westpac’s estimates suggest associated energy and network investment could add an additional $20bn-$50bn, which is aligned with the renewable energy sector.

FNArena’s dedicated ESG Focus news section zooms in on matters Environmental, Social & Governance (ESG) that are increasingly guiding investors preferences and decisions globally. For more news updates, past and future: 
https://www.fnarena.com/index.php/financial-news/daily-financial-news/category/esg-focus/

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