Responsible Investments Growing, Outperforming

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Under embargo until 12:00PM, 23 JULY 2014

New Report: Responsible Investments Growing, Outperforming And Giving Investors What They Want

Just released: Australia’s most comprehensive report into the responsible investment sector has found the market is undergoing a period of huge growth, with total funds under management in Australia and New Zealand in broad responsible investments increasing by 13% to $153 billion [ Up from $135 billion last year].

The 13th Responsible Investment Association Australasia’s (RIAA) 2014 Benchmark Report has also shown core responsible investment Australian equities funds have outperformed the ASX300 index and the average Australian equities fund over the last one, three, five and ten years.

For the first time in a decade the report also shows an increase in everyday public investors demanding to see their money invested responsibly [As measured by core responsible investments, this has increased to above 2% of TAUM for the first time in 10 years (2013: 2.3%; 2012: 1.6%)].

“Between the long-term delivered value, out-performing mainstream funds and increased demand for responsible investments, this report is again putting to bed the myth that responsible investments are the underperforming and undervalued younger brother,” said Simon O’Connor, CEO, RIAA

Many Australians took a hit in their personal savings during the global financial crisis and are looking for future-proofed investing. This report is great news for Australians investing with a focus for financial security, as responsible investments have outperformed average fund returns in all categories [Australian shares, international shares and balanced growth funds] over the last five and ten years.”

The Benchmark report has also found:

• Investments in core responsible investment – ethical, socially responsible, impact investments, community finance and sustainability themed investments – have grown by 51% year on year to just over $25 billion in assets under management

• Fund managers in Australia managing over $1 billion in core responsible assets have grown from one manager last year to seven fund managers, with two more knocking at the billion dollar door

Data from the report was gathered from a survey of more than 70 asset managers, super funds, financial advisers, banks and community investment managers, in addition to data from Morningstar, Mercer and RIAA’s own data and research.

“The context of this report also shows interesting times ahead for the sector at-large, with many major investors currently divesting from tobacco, assessing their exposure to fossil fuels [See here: theinstoreport.com.au/articles/super-funds-call-it-quits and here: fossilfree.com.au/bendigo_news_divestment], and at the same time there is a trend towards increased consumer interest and scrutiny on the sector [See here for more: businessspectator.com.au/article/2014/5/20/policy-politics/chipping-away-big-four-divestment and here: theage.com.au/victoria/customers-switch-banks-in-day-of-divestment-20140503-zr3wj.html],” commented O’Connor.

“We expect this to be a trend that increases and continues to shape the industry in the coming years.”

The report also shows the responsible investment sector is one of huge diversity, whereby a plethora of responsible investment approaches are being used.

“Increasingly investors are using a combination of approaches to get the best investment outcomes and indeed, we now have fund managers and asset owners who apply Environmental, Social and Governance integration, screen companies, use sustainability themed investments and are making impact investments whilst also generating strong financial results,” commented O’Connor

“Overall, it is an incredibly exciting time for the industry and investors alike if you want to see your life savings built on strong positive investments and not cost the planet. As this report highlights yet again, you can invest responsibly and achieve strong financial returns.” concluded O’Connor.

For a full copy of the report: responsibleinvestment.org/riaa-research

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About RIAA:

RIAA is the industry body representing responsible investors throughout Australasia. RIAA aims to promote responsible investment in order to accelerate its uptake and deepen its impact. RIAA acts as a hub for the responsible investment industry, supportingits members by amplifying issues, advocating on their behalf and delivering solutions with the goal of promoting stable markets, maximising financial returns and creating positive environmental, social, governance and ethical outcomes.

RIAA members representa cross section of the investment industry including asset owners, asset managers, asset consultants, research houses, brokers, financial advisers, community banks and trusts. RIAA’s membership consists of over 150 investment organisations and individuals, who have over $500 billion in assets under management.

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