Super funds have been the main force behind sustainability themed mandates growing from $8 billion to $23 billion over the past year – an increase of 179 per cent, according to research form the Responsible Investment Association Australasia (RIAA).
“What has effectively grown it is large mandates to green property funds. Property managers have a really deep commitment to sustainability and ESG (environmental, social and governance) management. Equally, mandates to low carbon and sustainability agriculture and forestry have helped the growth,” said Simon O’Conner, chief executive of RIAA.
“Super funds are really the nexus point of the [responsible investing] industry. They are feeling both of these big drivers; from the consumer and member, but also that really deep consideration of ESG as a fundamental value driver.”
In further good news for the responsible investing sector, the research also found 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 10 years.
“Every year we see more Australians 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,” O’Conner said.
Nearly half (47 per cent) of all Australia’s investments are now being invested responsibly – totalling $633 billion – with a significant step up in consumer demand cementing this rise, that has resulted in billions shifting from mainstream to responsible funds.
“We’re told again and again that Australians 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.”
The 2016 Responsible Investment Benchmark Report also found:
- ‘Core’ responsible investment – that part of the market most closely representing an ethical and socially responsible investment (SRI) approach – has reached its highest levels in both absolute terms and relative terms in the 15 years RIAA has been undertaking this research
- ‘Core’ responsible investment has increased significantly by 60 per cent in the past year to $51 billion in assets under management
- This part of the market – that best reflects consumer demand for responsible and ethical investment – has doubled over the last two years, reaching its highest relative level in a decade of 3.8 per cent of total assets professionally managed in Australia
- Representing a major force in the investment industry is fund managers implementing an ESG integration approach – the leading fund managers in this ‘broad’ responsible investment category now manage $582 billion.
Full copy of the report can be found here: www.responsibleinvestment.org/resources/benchmark-report/