Australian responsible investment grows with screening up 36% – RIAA

Latest annual benchmark report from industry group

Responsible investment continues to grow in Australia — buoyed by a rise in the number of funds employing screening, according to a new report by the Responsible Investment Association Australasia (RIAA).

The 16th annual Responsible Investment Benchmark Report 2017 , which assesses the responsible investment practices of 91 asset managers, claims that – despite fears to the contrary – funds employing some form of responsible investment strategy have outperformed equivalent mainstream counterparts over three, five, and 10-year horizons.

“It is a long out-dated myth that financial returns must be sacrificed to invest responsibly or ethically. The performance figures and trends we are now seeing each year are telling us the opposite story,” said Simon O’Connor, CEO of RIAA.

Funds employing negative and positive screening – which continues to be the most popular responsible investment strategy in Australia – have grown by 36% to A$33.6bn (€22.8bn) since 2015 according to the RIAA. The main issues screened are tobacco, weapons, alcohol, gambling, and fossil fuels.The uptake of screening strategies mirrors a general trend of Australian funds adopting “core” responsible investment strategies, which have grown by 26% to A$64.9bn since 2015.

“Core” responsible investment strategies are defined against ESG integration more broadly in the report and are separated into three categories: sustainability-themed investments; ESG screened products; and impact or community finance vehicles.

“A myth that financial returns must be sacrificed to invest responsibly”

The report also highlighted that the country’s superannuation funds comprise A$10.7bn employing a ‘core’ investment strategy – reflecting the recent finding of another RIAA report that superannuation funds are increasingly embedding responsible investment.

Aside from fears surrounding performance impact and a general lack of member awareness, a perceived lack of “core RI products” is cited in the report as a factor inhibiting growth. But the report finds the number of RI funds has grown from 128 to 200.