Investor demand for responsible investment (RI) products has almost doubled, with ethical adviser portfolios growing from $972 million in 2009 to $1.46 billion this year, according to a benchmark report by Responsible Investment Association Australasia (RIAA).
The annual study found responsible investment (RI) in Australia and New Zealand largely outperformed the average mainstream funds over one, three, five and seven years for Australian shares and international shares.
The report indicated that core RI – which is a combination of specialised managed funds, community finance, green loans, RI charity investments and financial adviser portfolios – rose 13 per cent from $16.15 billion in 2009 to $18.19 billion in 2010.
Furthermore, managed RI portfolios rose 10 per cent from $14.02 billion to $15.41 billion, compared to the broader market of managed portfolios which rose 9 per cent in that same period.
The RI strategy of community finance also continued on a steady growth path, increasing 15 per cent to $1.33 billion.
The report also found that over half of all funds under management in Australia are now signed to the United Nations-backed Principles for Responsible Investment, with a 29 per cent rise in Australian signatories from 2009.
“We continue to see world-changing events in areas which are deeply interconnected, such as climate change, energy security, water scarcity, food shortages and environmental risk, which are all driving responsible investment,” RIAA executive director Louise O’Halloran said.
“These issues have serious implications for societies, economies and the entire investment chain.
“The 2010 benchmark report figures exemplify the disappointment experienced by more and more people about the inability of traditional financial models to recognise the inherent impact of environmental, social and governance issues on investments.”
