Over half of all Aussie investments now responsible, RIAA says
Over half of all professionally managed investments in Australia are now invested responsibly, according to a report from KPMG and the Responsible Investment Association Australasia (RIAA).
Environmental, social, corporate governance and ethics considerations are now critical components informing the investment decisions of the majority of Australia’s professional investors, alongside financial considerations, the report said.
The 17th annual Australian Responsible Investment Benchmark Report 2018 revealed the industry hitting new heights, with $866 billion now managed as responsible investments, representing 55 per cent of all professionally managed assets in Australia, up from $622 billion in 2016.
“This is a major milestone to reach with a majority of funds invested in Australia now being invested under commitments to responsible investment,” said Simon O’Connor, chief executive of RIAA.
“We are now at a stage whereby issues such as climate change, human rights, corporate culture, diversity and a whole range of other important sustainability issues are right at the forefront of consideration by Australia’s finance community.”
O’Connor attributed the uplift in assets to mainstream investment funds making a switch to responsible investment practices, by incorporating negative screening, systematically assessing environmental, social and governance (ESG) factors, as well as engaging directly on these issues to influence corporate Australia.
“Nearly two decades of progress in responsible investment has this year reached an important tipping point, which we believe will only gain further momentum in light of growing calls for transparency and accountability across finance along with a growing consumer demand for investments that align with their values,” O’Connor said.
“Our research continues to show us Australians don’t want to build their retirement savings and other investments off the back of harmful activities without compromise to financial performance. The investment industry is responding, by providing more investment opportunities that align with these values, but also building these considerations into the bulk of the market.
“While it’s hugely positive to see responsible investment now with the lion’s share, our aspiration is to see this number grow as the understanding of ESG factors on positive portfolio performance increases.”
Recommended for you
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
Responsible investment performance concerns have lessened as the market hits $1.6 trillion in AUM, according to RIAA’s annual report, but greenwashing fears among asset managers are on the rise.
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
