The number of investment managers holding companies to account on environmental and social issues has more than doubled in the past two years as investors demand more from their managers.
According to the Responsible Investment Benchmark Report Australia 2022 from the Responsible Investment Association of Australasia (RIAA) and EY, 45% of investment managers were holding companies to account, up from 21% in 2019.
This included a high-profile campaign earlier this year against the de-merger of energy firm AGL.
Corporate engagement saw the greatest increase out of any responsible investment strategy in 2021 and now represented the second-largest responsible investment approach in terms of value at $726 billion.
RIAA said: “The growth can be attributed to a growing awareness that asset owners are expected to engage on ESG and climate change issues with their investment managers and investee companies and report on these engagements.
“Global pressure from events such as The United Nations Climate Change Conference (UN COP 26) held at the end of 2021, along with continued implementation of net zero trajectory business practices, has spurred reporting on activities and outcomes in the market.”
However, there were still 39% of companies which did not report at all which RIAA mused was due to the fact that corporate engagement was deemed relevant to all types of organisation.
“Regular disclosure involves collecting and monitoring relevant data and publishing them. While stewardship reporting and impact reporting are on the rise in Australia, as evidenced by numerous investment managers that published inaugural reports in 2021, it requires time and resources that some investment managers, trusts or foundations currently do not have.”
Emma Herd, climate change and sustainability services partner at EY said: “Investors are facing more demand and increasing scrutiny on their approach to responsible investment and the market is responding, with more funds being managed responsibly than ever before. As a wave of mandatory reporting and product disclosure regimes come into force, understanding the current state of the market and the range of approaches being adopted by responsible investors is critical”.
