While investment returns have strengthened to levels last seen before the Global Financial Crisis, responsible investment funds have surged even higher, outperforming both the benchmark and the average of mainstream funds over both short and long-term periods, in both Australian and international equities, according to the 2013 Responsible Investment Benchmark Report released today.

This 12th annual Benchmark Report, produced by the Responsible Investment Association Australasia (RIAA), maps the growth in funds under management (FUM) and the sector’s performance against mainstream investment funds across Australia and New Zealand.

“With eight of the top ten investment managers in Australia now declaring themselves responsible investors by signing on to the UN Principles for Responsible Investment, it’s fair to say that responsible investment has become mainstream,” said RIAA CEO Simon O’Connor. “The strong outperformance of ethical and responsible investment funds should finally put to bed the myth that a more responsible approach to investing leads to lower returns.”

O’Connor added, “With more of the region’s investments being made under responsible investment mandates, the extra analysis undertaken for every investment decision means responsible investors have a deeper understanding of their investments. So, it should be no surprise they are earning better returns.”

Responsible investment spans a range of practices, from ethical investment to integrating environmental, social, and corporate governance (ESG) factors into mainstream portfolios, proving itself to be the benchmark of good investment practice. The Benchmark Report highlights responsible investment as a blossoming subsector within the finance industry, covering superannuation, funds management, banking, community finance, and financial advisory services. The report also highlights growth in responsible banking, impact investment, and community finance.

Increasingly, there is a wide array of offerings from ethical funds through to the region’s largest investors integrating ESG across their entire portfolios, resulting in greater choice for consumers.

Key Findings of the 2013 Responsible Investment Benchmark Report:

• As of 31 December 2012, funds under management in responsible investment portfolios in Australia totalled $152 billion, or 16% of total assets under management (TAUM). This includes all ethical and socially responsible funds, as well as funds managed under ESG integration rated as above average. (2011: 13% of TAUM and $117 billion).
• Core responsible investment funds are delivering better returns than both the benchmark and the average of all mainstream funds across all time periods (1, 3, 5, and 10 years) in three major investment categories: Australian equities, international equities, and multi-sector growth funds. The 5-year returns post-GFC have been stronger in all responsible fund categories compared with the benchmark and average mainstream funds.
• In Australia, ESG Integration has proven to be the dominant method of responsible investment, representing 89% of the overall market total ($135 billion), with 33% growth between 2011 and 2012. Ethical and socially responsible investment funds grew only modestly by 4.2% during 2012, from $14.6 billion to $15.2 billion, despite some of the strongest fund performances in many years. Notably, the best-performing Australian equities fund in 2012 was an ethical fund.
• New Zealand also showed a very strong responsible investment story this year, with responsible funds in New Zealand totalling NZ$22.6 billion, a 17% growth and a massive 38% of TAUM across the country.

Notes to the Editors:
A copy of the 2013 Responsible Investment Benchmark Report will be available after the embargo at www.responsibleinvestment.org.

For interviews with RIAA CEO Simon O’Connor, please contact:
Claudia Guinness, Communications & Marketing
+61 2 8228 8100 / +61 439 893 098
claudiag@responsibleinvestment.org

About the Responsible Investment Benchmark Report 2013:
The 2013 Responsible Investment Benchmark Report is the 12th annual benchmark report published by the Responsible Investment Association Australasia. The report was made possible with the generous support of Advance/BT Financial Group, Australian Ethical Investment & Superannuation, bankmecu, and Perpetual Investments. Research for the report was conducted by CAER – Corporate Analysis Enhanced Responsibility. Research support was provided by Morningstar and Mercer. The report presents data on the current state of the industry, compiled from 117 funds, over 100 advisers, and 20 community finance organisations.

About RIAA:
RIAA is the industry body representing responsible investors throughout Australasia, with the aim of promoting responsible investment, accelerating its uptake, and deepening its impact. Our members represent a cross-section of the investment industry, from super funds and fund managers to service providers and financial advisers. RIAA’s membership consists of 158 investment organisations and individuals, managing over $500 billion in funds under management. RIAA acts as a hub for the responsible investment industry, supporting its members by amplifying issues, advocating on their behalf, and delivering solutions to promote stable markets, maximise financial returns, and create positive environmental, social, governance, and ethical outcomes.

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