Investing

Responsible investments outperform mainstream funds

Australian responsible investment funds have outperformed their average mainstream counterparts, as the responsible investment market continues to grow, according to the Responsible Investment Association Australasia (RIAA).

According to its study “Responsible Investment Benchmark Report 2017”, responsible investments have more than quadrupled over the last three years to $622 billion, with almost 44 per cent of Australia’s assets under management currently being invested through the strategies that included negative screening, impact investing, sustainability themed funds and the integration of ESG (environmental, social, governance) considerations.

The report also found that investments in ‘core’ responsible investments had grown by 26 per cent over the past year and represented 4.5 per cent of total assets under management.

At the same time, ESG integration was identified as the primary ‘broad’ responsible investment approach while the use of screening, both negative and positive was the most popular strategy for ‘core’ responsible investments.

RIAA’s chief executive, Simon O’Connor, said: “It is a long, outdated myth that financial returns must be sacrificed to invest responsibly or ethically”.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.

“The market is recognising the opportunities to create value for clients, with a strong surge in responsible investment products over the past year, including many focused on delivering positive social and environmental impact.” O’Connor also stressed that the report proved an increase in negative screening across the market, particularly against weapons, tobacco, gambling, as well as significant increases in exclusions based on nuclear power and human rights.

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