ESG

Responsible investment funds are continuing to outperform most mainstream Australian and international funds, according to the latest Benchmark Report issued by the Responsible Investment Association of Australasia (RIAA). With data compiled by KPMG, the 18th annual RIAA Benchmark Report highlights that investors in responsible funds are reaping financial rewards with higher than average returns across one, five and 10 year horizons. “The findings of our report refute any misconception that investing responsibly comes at a cost in terms of performance, and contributes to the mounting body of evidence showing that responsible and ethical investing leads to better investment outcomes, alongside benefiting people and the planet,” said RIAA Chief Executive Simon O’Connor. Australia’s responsible investment (RI) market continued to grow in 2018, with $980 billion in assets under management, a rise of 13% on the previous year.

Blended finance is an innovative approach for structuring an investment to mobilise greater amounts of capital towards impact. It is a strategy that combines capital with different levels of risk in order to ‘catalyse’ risk adjusted, market-rate-seeking capital into impact investments.

In November 2018 RIAA commenced an extensive review of our RI Certification Program. The following provides an overview of the new criteria and the most immediate timeline of events that will affect your certified products.

The Australasian region is leading globally in the uptake of responsible investing, with 63% of total assets under management in Australia and New Zealand using a responsible investment approach. The Global Sustainable Investment Alliance (GSIA) has released its biennial Global Sustainable Investment Review 2018, showing that global responsible investment assets reached US$30.7 trillion at the start of 2018, a 34% increase from 2016. In its fourth edition, the biennial Global Sustainable Investment Review brings together the results from regional market studies by the responsible investment forums of Europe, the US, Japan, Canada, Australia & New Zealand. It also includes data on the African responsible investing market and highlights from several countries in North, Central and South America. “It is pleasing to see the continuing growth of responsible investment, both in our region and globally” said Simon O’Connor, CEO of the Responsible Investment Association Australasia.

The leaders and senior executives of Australia’s major banks, superannuation funds, insurance companies, financial sector peak bodies, civil society and academia are coming together to set out a roadmap for realigning the finance sector to support greater social, environmental and economic outcomes for the country. The Australian Sustainable Finance Initiative has today been unveiled – an unprecedented collaboration to help shape an Australian economy that prioritises human wellbeing, social equity and environmental protection, while underpinning financial system stability, in what it says is a ‘critical decade’ ahead. Modelled on international best practice already seen in groups including the European Union’s High-Level Expert Group on Sustainable Finance and the UK’s Green Finance Taskforce, the Australian Sustainable Finance Initiative will be guided by a Steering Committee charged with developing a set of recommendations to enable the finance sector to contribute more systematically to the transition to a more resilient and sustainable economy. IAG Group Executive Jacki Johnson, co-Chair of the Initiative, said: “The roadmap we create will include pathways, policy signals and frameworks that will better enable the financial services sector to contribute to delivering on international commitments, such as the Paris Agreement on Climate Change and the UN Sustainable Development Goals, while underpinning economic stability and prosperity for Australia.”

The research is the result of over 470 interviews with workers in Australian fashion supply chains across Bangladesh and Vietnam, as well as over 130 interviews with factory owners, managers, union leaders and other key stakeholders and focus groups.

Hear from leading ESG experts from CAER, MSCI, Sustainalytics and FTSE Russell on the big ESG themes for the coming year.

In order to rebuild consumer trust in the financial services industry, we need to reassess what it means to act in the best interests of clients. As the ‘stewards’ of their clients’ investment portfolios, one effective way financial advisers can fulfil their role is by considering and analysing ESG information as part of investment decision making on behalf of their clients.

A large majority of New Zealanders expect their Kiwisaver and investment funds to be invested ethically and are ready to shift their funds if company practices are inconsistent with their values. A new Responsible Investment Association and Mindful Money consumer survey undertaken by Colmar Brunton has been released today revealing New Zealanders care deeply about how their savings are invested. The research was conducted online with 1,000 research panel members. The data has been weighted to ensure it is representative of the New Zealand population in terms of age, gender and regional spread. The maximum margin of error associated with this survey is ±3.1%. It shows that people expect managers of their Kiwisavers and other investments to consider issues important to them, as well as delivering strong financial outcomes. The survey shows concern over a much deeper range of issues beyond just tobacco and controversial weapons when it comes to where their funds are invested.

Responsible investment in New Zealand has hit a major milestone, with a new report finding the vast majority of professionally managed investments are now invested as responsible investments, with total assets under management having more than doubled in just two years. Environmental, social, corporate governance and ethics considerations now sit alongside financial as critical components informing the investment decisions of the majority of New Zealand’s professional investors. The 4thannual New ZealandResponsible Investment Benchmark Report 2018 (KPMG), the most comprehensive review of the sector,reveals the industry hitting new heights with $183.4 billion now managed as responsible investments, up from $131.3 billion in 2016 and $79 billion in 2015. “The single most significant driver of growth in responsible investment is coming from the demand and desire from clients to align investments to their values – which we can track to the 2016 revelations of many KiwiSaver funds being invested in weapons and tobacco,” said Simon O’Connor, CEO of Responsible Investment Association Australasia (RIAA). “In that short amount of time, we have seen nearly the entire investment industry move to put in place a responsible investment approach, from 2.5% of the industry two years ago.