The 17th benchmarking report of the Responsible Investment Association Australasia (RIAA) has found 55 per cent of professionally managed assets in Australia now qualify as ‘responsible’.
As at 31 December 2017, responsible investment in Australia constituted $866 billion, up 39 per cent from the $622 billion recorded in the previous year.
The report, conducted for RIAA by KPMG, divided total responsible investment (RI) into ‘Broad’ RI ($679.3 billion) and ‘Core’ RI ($186.7 billion).
Launching the report in Sydney, RIAA chief executive Simon O'Connor noted that Core RI increased “dramatically” throughout 2017, which was almost solely down to the launch of a new ethical strategy by AMP Capital.
Core RI was up 188 per cent, jumping from $64.9 billion at 31 December 2016 to $186.7 billion at 31 December 2017.
Mr O’Connor noted that Core RI is defined as funds that have two or more negative screens.
“If we to include everyone who had divested tobacco or excluded tobacco [Core RI] would be trillions of dollars,” he said.
“We wanted to set as a bar two or more negative screens or exclusions to have that data be more meaningful. That’s not to downplay the 35 super funds that have excluded tobacco,” Mr O’Connor said.
Commenting about responsible investment more generally, he said consumers are becoming much more engaged when it comes to their investments.
“The investment management industry is trying to keep up with rapidly shifting norms and expectations and either adding screens to existing products or bringing out addition products,” Mr O'Connor said.
“It’s not sufficient any more to just have a weapons and tobacco screen and call yourself an ethical fund. It’s really gone well beyond that – multiple screens are expected. We risk focusing too much on screens, but it’s the entry point for many consumers,” he said.
The RIAA report follows its impact investing report in July 2018 that found Australian impact investments are approaching $6 billion.
