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The investment trend reaching new highs in Australia

  • July 03 2019
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Invest

The investment trend reaching new highs in Australia

By Cameron Micallef
July 03 2019

Ethical investing is becoming more mainstream as time goes on, reaching a money supply high of $980 billion dollars, according to a new report from the Responsible Investment Association Australasia.

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The investment trend reaching new highs in Australia

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  • July 03 2019
  • Share

Ethical investing is becoming more mainstream as time goes on, reaching a money supply high of $980 billion dollars, according to a new report from the Responsible Investment Association Australasia.

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This $980 billion is 44 per cent of the Australian Bureau of Statistics’ reported $2.24 trillion under managed funds. Overall, this is a 13 per cent growth on the $866 billion recorded at 31 December 2017. 

What counts as responsible investing?

Responsible Investment Association Australasia (RIAA) says all investments and businesses have an impact on the world.

Responsible investing, which is also known as ethical or sustainable investing, seeks to minimise the negative impact and promote the positive impact.

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It is a view where environmental, social and corporate governance (ESG) and ethical issues are considered alongside financial performance when making an investment.

Why is it growing so fast?

The RIAA believes the growth in responsible investment is due to it outperforming the mainstream funds.

Of the 120 investment managers assets, 34, or 28 per cent, are applying a leading approach to ESP integration (scoring >80 per cent). The number of leading ESG integration practitioners has risen from 24 last year, with several practitioners employing other responsible investment strategies as part of their primary strategy.

Human rights

Negative screening is the most common form of investing ethically. Controversial weapons and tobacco are the most prevalent exclusive screens.

Responsible returns online tool are searching mainly for funds that screen out fossil fuels and human rights violations.

As a primary strategy in Australia, it has grown to $16.6 billion from a standing start. 

Sustainability themed investing

These are investments in themes or assets specifically related to improving society or the environment.

Sustainability-themed investments are 4 per cent of AUMs when taking both primary and secondary strategies into account. As a primary strategy, it has doubled since last year and now represents $70.1 billion worth of investments. 

The most common themed investment are climate change (25 per cent), energy efficiency (24 per cent), building sector (16 per cent), water management (12 per cent), renewable energy and waste management (9 per cent each).

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The investment trend reaching new highs in Australia
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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