47% of Australia’s investments – totalling $633 billion – are now being invested responsibly with a remarkable step up in consumer demand certifying this rise that has resulted in billions being repositioned from mainstream to responsible funds.
The new report launched today by the Responsible Investment Association Australasia (RIAA), shows it’s not only consumers who are benefiting, but financial advisors, superannuation funds, fund managers and banks who are leading the way in delivering great products with great returns, whilst creating a better environmental and social outlook for Australia.
“In observing the significant and consistent growth in responsible investment we can say without a doubt that this isn’t just a passing trend, but an evolution of the entire sector that is now being driven strongly by consumer demand and engagement with where they invest and bank their life savings,” said Simon O’Connor Chief Executive of RIAA.
Years of demonstrated long-term investment benefits to investors, who consider environmental, social and governance (ESG) factors, have quietly shifted around half of Australia’s investment industry to invest responsibly.
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“Now, it is consumer demand targeted at superannuation funds, banks and financial advisers that is creating unstoppable momentum with implications for all parts of the finance sector,” said O’Connor
In further good news from the sector, investors who have embraced the evolution have reaped the rewards with responsible investment outperforming and returning greater benefits than their mainstream peers over the last one, three, five and ten years.
“Every year we see more Australian’s opening their eyes to the opportunities to invest ethically and responsibly. You can invest with confidence, aligning your money with your morals, and it’s not just a ‘well-intentioned’ philanthropic approach, it is generating great returns for savvy investors,”
The growth in the responsible investment sector also shows a very deliberate approach from consumers indicating an increased engagement in investment and superannuation. “We’re told again and again that Australian’s don’t care about their super or what their money is invested in, but the results of this research showing significant amounts of money flowing into responsible investments mean that this is simply not true.”
With this continuing growth, responsible investing is becoming much more sophisticated in its approach, with an ever greater number of investors using multiple responsible investment strategies, with negative screens ever more common, alongside ESG integration, active corporate engagement and voting, as well as sustainability themed funds including low carbon funds on the rise.
“Although there has been much focus on the theme of divestment in the recent year, and this report confirms an ever stronger uptake of negative screening, the results also highlight how investment is increasingly being used to support environmentally and socially positive investments, as well as just removing support from damaging industries,” said O’Connor
Responsible investing is reaching maturity, with a growing range of investment products and styles across all asset classes – 70 investment organisations with 130 products were assessed for this research – which is a great outcome for consumers and financial advisers looking for responsible and ethical choices.
“As we can see from the report, responsible and ethical investment is now completely integrated within the financial sector. In fact, we welcome a time in the future where the differentiators of mainstream and responsible are redundant, as this will be the accepted and demanded way of investing.” concluded O’Connor.
Full copy of the report can be found here: www.responsibleinvestment.org/resources/benchmark-report/