Australia, November 19, 2024 – A Responsible Investment Association Australasia (RIAA) report shows responsible investment in Australia has reached a record $1.6 trillion, marking a significant shift in the investment landscape. However, greenwashing remains a critical concern, with over half (52%) of respondents identifying it as the top barrier to responsible investment, up from 45% in 2022.
The report highlights how the industry continues to gain momentum, with the number of responsible investors increasing by 26% and the proportion of responsible investment assets under management (AUM) rising from 36% to 41% of the market in 2023. This growth reflects a powerful shift towards mainstreaming responsible investment across the market.
Estelle Parker, Co-CEO of RIAA said, "This is a pivotal moment for the industry. Our data shows that 99% of respondents now integrate ESG principles into their framework, embedding responsible practices into the fabric of their operations. Concurrently, regulators are rightfully pushing for greater transparency, and the public wants proof that investment claims lead to real-world impact. Credibility in responsible investment depends on demonstrating measurable, impactful action, not just good intentions.”
According to the survey, institutional investors were the top driver of market growth, followed by risk mitigation/the expectation of improved long-term performance and growing acceptance of the impact of ESG factors on investment performance.
The performance of responsible investment products remains strong, with RIAA-certified products reaching $167.7 billion AUM, up by 24% from 2022, and showing a ten-year return of 13.9%, compared to 9.19% for the rest of the market (Australian shares funds).
Key approaches shaping the responsible investment landscape
A majority (75%) of investment managers continue to incorporate sustainability-related themes, with climate change remaining the dominant theme. Renewable energy, energy efficiency, and carbon reduction received 64% of respondents' focus, representing $122 billion in AUM. Biodiversity sees a surge, becoming the second most integrated theme, with $75 billion of AUM dedicated to it by 34% of those surveyed.
ESG integration also sees broader adoption, with 81% of asset managers now applying it across multiple asset classes, marking a 6% increase over the previous year.
Greenwashing: the biggest challenge to trust
Greenwashing concerns have surged, yet apprehensions about responsible investment performance have eased, decreasing from 52% in 2022 to 45% in 2023. Estelle added, "It’s encouraging to see growing confidence around performance. Investors are realising that responsible investment and profitability can go hand in hand. Now, the focus is on proving impact, adapting to feedback, and consistently driving the positive outcomes we know responsible investing can achieve.”
Transparency has become crucial for building trust: a record 60% of fund managers now disclose full portfolio holdings, a 10% increase from last year.
“Transparency could be improved more if full portfolio holdings disclosure for super funds was introduced as RIAA has been calling for years”, Estelle said.
Emma Herd, EY's Co-lead of the EY Net Zero Centre and Partner, Climate Change and Sustainability Services said, “With mandatory climate change reporting set to commence on 1 January 2025, investors are more committed than ever to integrating ESG into their portfolios. The intense focus on greenwashing concerns in this year’s results underscores growing investor demand for better quality, better performing ESG opportunities in the market.”
RIAA lifts standards of responsible investment
RIAA continues to drive positive change through its Responsible Investment Certification Program, which sets principles-based and rigorously assessed expectations of products seeking certification. This year, RIAA is reinforcing its commitment to meet the public’s rising expectations for standards of responsible investment and accountability.
"As responsible investment grows, so too does the responsibility to uphold high standards of practice and disclosure. RIAA is committed to holding product providers to account for responsible investment with integrity and transparency."
RIAA encourages organisations and individuals to explore its resources, including the Responsible Returns tool, which can be found here.
For the full report and further insights, please visit our website.
For further information, please contact:
Jyoti Minhas
BlueChip Communication
jyoti@bluechipcommunication.com.au
+61 0412 542 788
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Australia, November 19, 2024 – A Responsible Investment Association Australasia (RIAA) report shows responsible investment in Australia has reached a record $1.6 trillion, marking a significant shift in the investment landscape. However, greenwashing remains a critical concern, with over half (52%) of respondents identifying it as the top barrier to responsible investment, up from 45% in 2022.
The report highlights how the industry continues to gain momentum, with the number of responsible investors increasing by 26% and the proportion of responsible investment assets under management (AUM) rising from 36% to 41% of the market in 2023. This growth reflects a powerful shift towards mainstreaming responsible investment across the market.
Estelle Parker, Co-CEO of RIAA said, "This is a pivotal moment for the industry. Our data shows that 99% of respondents now integrate ESG principles into their framework, embedding responsible practices into the fabric of their operations. Concurrently, regulators are rightfully pushing for greater transparency, and the public wants proof that investment claims lead to real-world impact. Credibility in responsible investment depends on demonstrating measurable, impactful action, not just good intentions.”
According to the survey, institutional investors were the top driver of market growth, followed by risk mitigation/the expectation of improved long-term performance and growing acceptance of the impact of ESG factors on investment performance.
The performance of responsible investment products remains strong, with RIAA-certified products reaching $167.7 billion AUM, up by 24% from 2022, and showing a ten-year return of 13.9%, compared to 9.19% for the rest of the market (Australian shares funds).
Key approaches shaping the responsible investment landscape
A majority (75%) of investment managers continue to incorporate sustainability-related themes, with climate change remaining the dominant theme. Renewable energy, energy efficiency, and carbon reduction received 64% of respondents' focus, representing $122 billion in AUM. Biodiversity sees a surge, becoming the second most integrated theme, with $75 billion of AUM dedicated to it by 34% of those surveyed.
ESG integration also sees broader adoption, with 81% of asset managers now applying it across multiple asset classes, marking a 6% increase over the previous year.
Greenwashing: the biggest challenge to trust
Greenwashing concerns have surged, yet apprehensions about responsible investment performance have eased, decreasing from 52% in 2022 to 45% in 2023. Estelle added, "It’s encouraging to see growing confidence around performance. Investors are realising that responsible investment and profitability can go hand in hand. Now, the focus is on proving impact, adapting to feedback, and consistently driving the positive outcomes we know responsible investing can achieve.”
Transparency has become crucial for building trust: a record 60% of fund managers now disclose full portfolio holdings, a 10% increase from last year.
“Transparency could be improved more if full portfolio holdings disclosure for super funds was introduced as RIAA has been calling for years”, Estelle said.
Emma Herd, EY's Co-lead of the EY Net Zero Centre and Partner, Climate Change and Sustainability Services said, “With mandatory climate change reporting set to commence on 1 January 2025, investors are more committed than ever to integrating ESG into their portfolios. The intense focus on greenwashing concerns in this year’s results underscores growing investor demand for better quality, better performing ESG opportunities in the market.”
RIAA lifts standards of responsible investment
RIAA continues to drive positive change through its Responsible Investment Certification Program, which sets principles-based and rigorously assessed expectations of products seeking certification. This year, RIAA is reinforcing its commitment to meet the public’s rising expectations for standards of responsible investment and accountability.
"As responsible investment grows, so too does the responsibility to uphold high standards of practice and disclosure. RIAA is committed to holding product providers to account for responsible investment with integrity and transparency."
RIAA encourages organisations and individuals to explore its resources, including the Responsible Returns tool, which can be found here.
For the full report and further insights, please visit our website.
For further information, please contact:
Jyoti Minhas
BlueChip Communication
jyoti@bluechipcommunication.com.au
+61 0412 542 788
