Media releases

Responsible investing has emerged as a fundamental practice for New Zealand’s funds managers, and now accounts for more than 70 percent of total assets under management (AUM), according to the latest Benchmark Report issued by the Responsible Investment Association of Australasia (RIAA). The fifth annual NZ RIAA Benchmark Report, released today by RIAA Chief Executive Simon O’Connor, shows a deepening commitment and more diverse range of offerings by asset managers, confirming responsible investing is now the bedrock of good investing. With data compiled by KPMG, the Report shows the sector grew three percent to reach $NZ188 billion in 2018. This represents a threefold increase on the NZ$58 billion invested in responsible funds only five years ago, at the end of 2013. Assets managed in accordance with responsible environmental, social and governance (ESG)_ principles now represent 72 percent of New Zealand’s total NZ$261.4 billion in AUM. By comparison, responsible investment funds in Australia represent just 44% of total AUM, according to RIAA’s latest Australian Benchmark Report released last week. “Over the last year, we’ve seen responsible investment practices continue to mature as the focus shifts beyond avoiding investing in the most harmful industries, to seeking out investments that contribute positively to New Zealand communities and the planet, alongside delivering better financial outcomes,” Mr O’Connor said.

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.

The Responsible Investment Association Australasia (RIAA) has welcomed the Government’s 2019-20 budget announcement of $5 million for the establishment of a Social Impact Investment Taskforce. “Government has a critical role to play in the development of the market for impact investment and we welcome this announcement of a Taskforce to develop a strategy for Government’s future engagement” said Simon O’Connor, CEO of RIAA. “RIAA’s Benchmarking Impact report showed that the market for impact investing quadrupled between 2015 and 2017. With nearly $6 billion of capital now being put to work to deliver a better society and environment through impact investing, we are now getting an insight into the potential of capital markets as a force to be harnessed for achieving a more prosperous and sustainable Australia.

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 Responsible Investment Association Australasia (RIAA) has welcomed the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, saying it is a clarion call for the finance sector in Australia to reflect upon its purpose and do more to service and benefit the Australian community. “The Royal Commission has revealed widespread incidences of illegal behaviour, misconduct and unethical practices across the financial services sector. These have devastated the lives of many Australians, and highlighted diverse failings of our sector”, said Simon O’Connor, CEO of RIAA. “This is a watershed moment for the finance sector. The industry and entities involved must reflect and remedy these wrongs, and address the gaps spanning leadership, culture and systems. From this stronger base, we can transform our industry for the better and start to align capital markets with achieving a healthy and sustainable society, environment and economy for all Australians. “From banks to super funds, financial advisers, and insurance companies, we must work collectively to restore the trust of Australians. By concertedly placing consumer interest at the centre of the financial services sector, we can start on this path back to regaining people’s confidence. “Acting in the best interests of clients means knowing our clients first, their financial needs, their life stage, goals and, importantly, their personal values. Only through this can we deliver on community expectations and ensure finance is acting in the best interests of clients, as was a core tenet of the terms of reference for this Royal Commission.” Consumer research conducted by RIAA shows that 9 in 10 Australians expect their money to be managed with consideration of their personal values and ethics, alongside their financial interests. This includes consideration of the social and environmental impact of their investments, whether it be avoiding investments that contribute to human rights violations and animal cruelty, or supporting investments that deliver improved healthcare, education and renewable energy. “Australians are concerned about fees and performance, but are also increasingly wanting to know how their investments and savings are working to improve the world they will retire into. “With Commissioner Hayne’s final report, the real work must now start, to rebuild community trust in the finance industry, to improve the culture within the sector, and to truly deliver services and outcomes that Australians expect from finance. “As we emerge from the Royal Commission, the finance industry is recognising the connectivity between contributing to a better society and environment, and achieving strong financial performance for Australians. “Now, more than ever, the finance sector must commit to and deliver upon a responsible and ethical approach to finance.”

Executive pay and climate change are among the key issues being researched and valued within the finance industry to inform and drive more responsible investment in Australia. At the 9th Annual ESG Research Australia Awards held at the RI Australia 2018 conference in Melbourne tonight, Citi and Bank of America Merrill Lynchtook out the awards for excellence in ESG research by a broker. A new award from RIAA was also jointly presented to MSCI and the Centre for Policy Development for new ESG research by a non-broker. The ESG RA Awards, attended by Australia’s leading superannuation funds, fund managers and broking firms, recognise excellence in environmental, social and governance (ESG) research published by broking firms. The winners of this year’s ESG Research Australia Awards are: Best Piece of New ESG Research by an Individual Analyst or Team: Bigger, Badder and more Opaque: The Task ahead for Investors Undertaking 2 Degree Scenario Analysis, by Zoe Whitton and Edward McKinnon, Citi Best Piece of Ongoing ESG Research by an Individual Analyst or Team: CEO Incentives and Analyst Expectations for ASX100 Companies, by Sameer Chopra et al, Bank of America Merrill Lynch Best ESG Broking Firm: Citi The 2018 joint-winners for RIAA’s new ESG Research Award – recognising excellence in investor relevant ESG research by a non-broking firm are: Best Piece of Investor Relevant ESG Research (non-broking firm): Climate Horizons Report: Scenarios and Strategies for Managing Climate Riskby Sam Hurley and Kate Mackenzie, Centre for Policy Development (with input from ClimateWorks Australia) AND Alignment to climate regulatory scenarios: A case study of Australian companiesby Brendan Baker and Morgan Ellis, MSCI ESG Research

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.

Investments that deliver positive social and environmental impact alongside a financial return are on the rise, with the market for impact investing quadrupling between 2015 and 2017, reveals a new report launched today by the Responsible Investment Association Australasia (RIAA) in partnership with the Centre for Social Impact (CSI) at Swinburne University. Benchmarking Impact: Australian Impact Investment Activity and Performance Report 2018 presents the findings from analysis of impact investment activity and performance for a data-set of 51 Australian impact investment products active at 31 December 2017, with a total product value of $5.8 billion (up from $1.2 billion at 30 June 2015). “The report reveals a diverse market delivering positive financial returns for investors while also benefiting the environment and impacting the lives of tens of thousands of people through employment pathways, education, and health services among other activities” said Simon O’Connor, CEO of RIAA. “With nearly $6 billion of capital now being put to work to deliver a better society and environment through impact investing, we are now getting an insight into the potential of capital markets as a force to be harnessed for achieving a more prosperous and sustainable Australia.”