Responsible investment outperformed its benchmark and mainstream investment in 2012, accounting for 16% of total assets under management in Australia, according to the Responsible Investment Association Australasia (RIAA).
RIAA’s 2013 Responsible Investment Benchmark report found that factoring in ethical and responsible criteria delivered higher returns than both the benchmark and the average mainstream funds in almost all categories.
Chief executive Simon O’Connor told Money Management, “With eight of the top 10 investment managers in Australia having now declared themselves responsible investors by signing on to the UN Principles for Responsible Investment, it would be fair to say that responsible investment has become mainstream.
“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.”
Eighty-nine per cent of the ethical market relies on environmental, social and governance (ESG) integration policies. New Zealand also experienced a remarkable growth, with ethical funds growing by 17%, accounting for the 38% of total assets under management (TAUM).
The report demonstrates that the main objection that is usually made against ethical investment – that it is not beneficial in terms of financial returns – is simply not true.
It says, “Core responsible investment funds are delivering better returns than both the benchmark and the average of all mainstream funds in all but one category across time periods (1, 3, 5 & 10 years) in three major investment categories – Australian equities, international equities and multi-sector growth funds.
“Responsible investing across Australia and New Zealand is truly coming of age.”