The new RIAA report researched in collaboration with KPMG, the Responsible Investment Benchmark Report Australia 2020 shows that in 2019, Australian and multi-sector responsible investment funds outperformed mainstream funds over 1, 3, 5 and 10 year time horizons. Further analysis shows the outperformance has continued amidst the major market disruption brought on by COVID-19.
The study reveals Australia’s responsible investment market continued its upward trajectory in 2019, with $1,149 billion in assets under management, a rise of 17% from 2018. Responsible investment now represents 37% of Australia’s total $3.155 trillion in professionally managed assets.
This growth reflects the preferences of consumers, as a RIAA study released earlier this year found the overwhelming majority of Australians now expect their savings (87%) and superannuation (86%) to be invested responsibly and ethically.
Of the 165 investment managers assessed in the study, just 44 (27%) are practising a ‘leading approach’ to responsible investment. Disclosure of fund holdings remains a key area for improvement, with 36% of investment managers not making any public disclosure of their holdings.
Consideration of environmental, social, governance (ESG) factors is now the expected minimum standard of good investment practice, with $1 trillion of Australia’s AUM managed using ESG integration as a primary approach. This approach is closely followed by corporate engagement and shareholder action. Negative screening remains an important responsible investment strategy, and weapons, tobacco, gambling and pornography are the most frequently screened categories.
The report also shows that the market for impact investments has continued to develop significantly, growing by 249% from 2017 to 2019 and increasing in size from $5.7 billion as at 31 December 2017 to $19.9 billion as at 31 December 2019.
The RIAA Benchmark Report is the most comprehensive review of the responsible investment sector in Australia. Read the report here: https://responsibleinvestment.org/resources/benchmark-report/