Four out of five Australians (83 per cent) expect their superannuation and bank savings to be invested responsibly and ethically, according to the report released on Wednesday.
Super funds that steer clear of environmental damage, human rights abuses, animal cruelty, weapons and tobacco are also financially outperforming their peers, the Responsible Investment Association Australasia (RIAA) survey found.
Funds implementing responsible investment practices outperform their peers financially - by 87 basis points over one year and 56 basis points over seven years.
After years of being a "niche play", ethical investing has gone mass market, Maria Loyez, chief customer officer at wealth management firm Australian Ethical, told AAP.
But there's still a mismatch between what people want and the financial products that are available.
Nearly two-thirds (63 per cent) want to avoid investments that violate human rights, for example, but only 39 per cent of responsible investment providers deliver products that meet this criterion.
Similarly, the 67 per cent who want to avoid animal cruelty, testing, and animal products in their super portfolio find their options are limited.
Sounding a warning for the wider $3.5 trillion pool of superannuation savings, the report shows almost three-quarters (74 per cent) surveyed would consider moving to another bank or fund if they found out their money was being used for activities that don't match their values.
The inclination to switch for ethical reasons was much higher for Millennials (82 per cent) and Generation Z (87 per cent).
These "motivated individuals" typically have $5,000-$150,000 in their super fund, the report said.
But Baby Boomers (aged 60 and above) living in capital cities are the least likely to invest responsibly, with 60 per cent saying they will never consider it or not in the foreseeable future.
Most consumers are also clear about which financial products should be invested responsibly.
Simon O'Connor, CEO of RIAA, said the number one expectation Australians now have of financial advisers is to know about responsible investment - for the first time overtaking prioritising investment returns.
For most Australians (70 per cent), the top responsible investment priority is superannuation, followed by savings accounts (54 per cent) and investments in shares (50 per cent).
Ms Loyez said the report shows investors want decisions to exclude the "nasties", not just reduce the risk.
"ESG (focused on environmental, social, and governance risk factors) is a good start but people want to invest in line with their values.
"Many ESG portfolios that are claiming to be sustainable are still invested in legacy fossil fuel economy companies."
Although climate change remains a top concern, investors are increasingly concerned about social issues - health, local economies and community infrastructure - and not just environmental concerns.
But while renewable energy and energy efficiency are the top environmental theme for most, only 35 per cent want to exclude investments in fossil fuels.
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