Advisers and their clients are reaping the benefits of strong performances by funds that focus on environmental, social and ethical factors, the Responsible Investment Association Australasia (RIAA) reports.
The RIAA’s 2015 Responsible Investment Benchmark Report, released this morning, revealed that ethical funds were outperforming their benchmarks over one, three, five and 10 years.
RIAA chief executive, Simon O’Connor, said the results had seen advisers, superannuation funds and fund managers increase their allocations to responsible investment options.
O’Connor said the Australian responsible investment sector accounted for more than $630 billion in assets.
“Growing consumer confidence in responsible and ethical investments, plus the finance sector taking ever-stronger positions on issues such as tobacco and fossil fuels are driving the strong uptake of responsible investing,” he said.
“Consumers in ever greater numbers are awakening to the fact that you can invest prudently and profit without compromising your values, which is resulting in the growing retail interest.”
The RIAA report found that interest in retail responsible and ethic investments had grown 24 per cent on 2014, to more than $32 billion, while Australia’s largest institutional asset managers have continued to integrate responsible investment strategies, with almost $600 billion in assets managed being held under environmental, social and governance integration strategies.
“There is currently a convergence of factors that are resulting in a very compelling case to invest responsibly, from consumers demanding investments that do no harm through to the evidence that investment value is inextricably tied to ESG factors,” O’Connor said.
“Off the back of these two factors, we’ve seen significant focus in particular around investor responses to climate risk and fossil fuels, an increase in funds excluding entire sectors from portfolios, as well as the emergence of impact investing attracting strong interest as another way to generate financial returns alongside social impact.”
