Events & News

Alongside the tumultuous ride that is COVID, one notable development in financial markets has occurred. Ethical and responsible investing has become firmly embedded across the Australian financial system. There remain few money managers or super funds without a public commitment to responsible investment, based on a clear acknowledgement of how it helps deliver better risk management, better financial returns and meets their clients’ or members’ expectations.

Over the years, I’ve had many a discussion with the New Zealand financial advisory community on the merits (and otherwise) of responsible investing.

KPMG Australia and Responsible Investment Association Australasia (RIAA) are today launching Human rights and climate change: a guide for institutional investors, highlighting the devastating human rights impacts of climate change and the importance of institutional investors considering these impacts when addressing climate change risk in their portfolios. KPMG/RIAA research indicates that institutional investors are still prioritising environmental impacts over harm to people when addressing climate change risk in their portfolios. Despite increasing attention being paid to ESG, environmental and social risk assessments are often siloed, meaning that climate-related human rights impacts are inadequately addressed. The guide points out that this gap is a risk to institutional investor trustees that must be addressed as an urgent matter of prudent risk management. Richard Boele, Chief Purpose Officer, KPMG Australia, said: “COP26 reinforced that we are at a critical moment. Technological and regulatory shifts are urgently required to achieve decarbonisation and the transition towards a sustainable global economy. For the transition to be made in a way that minimises harm to people, human rights must be at the centre of the response”.

Super funds demonstrating leading practice responsible investment are taking a bigger share of the market and financially outperforming their peers, according to a new study from the Responsible Investment Association Australasia (RIAA). The study finds that one-quarter of super funds are demonstrating leading practice responsible investment, but these super funds hold 42% of total assets, compared with 28% in 2019. The study also shows that the majority (77%) of Australia’s largest super funds still have work to do in terms of transparency if they are to meet new legislative requirements to disclose their portfolio holdings publicly in 2022. The fourth edition of RIAA’s Responsible Investment Super Study 2021, sponsored by PIMCO, presents the results of a biennial survey of Australia’s largest super funds – accounting for $1.9 trillion in assets under management. The Super Study shows super funds that implement leading practice responsible investment continue to outperform their peers financially (87 basis points over 1 year and 56 over 7 years). The average performance of leading responsible investment super funds’ My Super products is better than non-leaders over 3-, 5- and 7-year timeframes.

If there is one thing a UN Climate Change Conference always delivers, it is bucketloads of pledges. But if we sift through the various announcements which came out of COP26 in Glasgow, has the needle on the dial shifted on climate action?

Nuclear weapons production and the manufacture of nicotine alternatives will no longer be permitted in more than 200 investment products certified by the Responsible Investment Association Australasia (RIAA) following an update to the minimum requirements of its Responsible Investment Standard. RIAA’s Responsible Investment Standard – which informs investment-related legislation and policy, and underpins its pioneering Responsible Investment Certification Program – specifies that a responsible investment product must, at a minimum, avoid significant harm. This means investors must exclude producers of tobacco, manufacture of nicotine alternatives and tobacco-based products, controversial weapons and nuclear weapons from their portfolio. The addition of nuclear weapons to the minimum requirements of ‘avoiding significant harm’ is a result of a changing international norm, with the Treaty on the Prohibition of Nuclear Weapons entering into force in January 2021. As a result, investors seeking Responsible Investment Certification will no longer be able to invest in companies which derive revenue from the development, production and maintenance of nuclear weapons, effective 1 January 2022.

A number of large Australian investor and business groups have expressed serious concerns that the WA Aboriginal Cultural Heritage Bill 2021 tabled on Tuesday 16 November will fail to make a meaningful change in cultural heritage protection and is insufficient for protecting the invaluable cultural heritage of Australia’s First Nations people and our nation. The Dhawura Ngilan Business and Investor Initiative – led by the First Nations Heritage Protection Alliance in partnership with Global Compact Network Australia (GCNA), and the Responsible Investment Association Australasia (RIAA) – together with the Australian Council of Superannuation Investors (ACSI) – have expressed strong criticism with the Bill which passed the Lower House yesterday. “It is critical that any new heritage protection legislation takes on board the lessons learned from the tragic destruction of the Juukan Gorge, so that such harm doesn’t occur again. This Bill falls far short of providing that confidence,” said Cath Brokenborough, Executive Lead, First Nations engagement, Lendlease and Chair of the Dhawura Ngilan Business and Investor Initiative. “In the wake of Juukan Gorge, investors have stated unequivocally that businesses and legislators need to ensure comprehensive protection of cultural heritage. Upon review of this Bill, we remain concerned that this protection has not been sufficiently strengthened, and investors will continue to see Western Australia as having elevated risks of the type seen in the tragic destruction of Juukan Gorge” said RIAA CEO Simon O’Connor.

The Australian Government’s announcement that superannuation funds will be required to disclose their holdings from 31 March 2022 has been welcomed by the Responsible Investment Association Australasia (RIAA). Under the new regulations, super funds will be required to disclose information about the identity, value and weightings of their investments, with portfolio holdings disclosure to occur every six months thereafter. “RIAA is supportive of and welcomes the introduction of mandatory portfolio holdings disclosure for super funds. We have advocated for many years that portfolio holdings disclosure is a critical element of transparency and accountability for super fund members and beneficiaries,” said RIAA CEO Simon O’Connor. “Disappointingly though, super funds will not be required to disclose the holdings of funds that are managed externally. Given almost three-quarters of super funds use external managers for over 90% of their assets, we would have expected the requirements to include these underlying holdings.”

Ministry for the Environment (MfE) on Te hau mārohi ki anamata - Transitioning to a low-emissions and climate-resilient future, aka Emissions Reduction Plan (ERP).

Standing Committee on Indigenous Affairs inquiry: How the corporate sector establishes models of best practice to foster better engagement with Aboriginal and Torres Strait Islander consumers.