An Australian local government superannuation fund has become the latest state-owned fund to invest in environmental funds.

Local Government Super (LGS), which manages around A$6 billion in assets for 100,000 local government employees in New South Wales,  has invested A$50 million ($45.96 million) into a portfolio which invests in small cap environmental technology stocks, run by London-based Impax Asset Management.

The portfolio will follow an investment strategy followed by one of Impax’s fund, which returned 47.71 percent in the last five years, versus 20.10 percent for the benchmark MSCI World Index.

A greater involvement by state-owned funds would give a boost to the Socially Responsible Investing industry, which has so far failed to give convincing returns (obviously Impax’s fund above looks like an exception).

As analysed here, investing in ethical investing serves a multitude of objectives, especially for sovereign wealth funds keey to be accepted in the West.