Over half of Australian assets managed responsibly, RIAA says
Responsible investments have been on the rise among Australia investors, with more than half of all professionally managed assets being currently invested in line with environmental, social and governance (ESG) and ethics considerations, the Responsible Investments Association Australasia (RIAA) said.
The RIAA’s newest report found that $866 billion was managed as responsible investments, representing a 39 per cent growth from 2016, with ESG factors positively impacting portfolio performance and serving as the greatest driver of its growth.
The study also showed investable impact investment product grew to $5.8 billion at the end of 2017, with growth being driven largely by the increase in green bonds, which accounted for $4.9 billion of the 2018 data set.
At the same time, fixed-income investments dominated the data set by dollar weighting and excluding green bonds, the highest concentration of investments by dollar weighting was in real assets, including property and infrastructure.
As far as the number of investments was concerned, most investments comprised private debt, made up of loans to social enterprises.
According to the report, investors displayed a growing demand for ethical, sustainable and impact investments as well as a further embedding of negative screens across mainstream financial products and mandate, in particular across tobacco and controversial weapons.
RIAA’s chief executive, Simon O’Connor, said the numbers proved that the industry had reached a major milestone, with the majority of Australian funds now being invested under commitments to responsible investments.
“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,” he 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.”
AUTHOR
Oksana Patron
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