Impact Investing Reaches Record Levels

Impact investing and responsible investment have grown to record levels in Australia, with more than $629 billion in assets being managed under responsible investment strategies, according to a new report.

The report, Responsible Investment Benchmark Report 2015 by the Responsible Investment Association Australasia, found that impact investing had also grown by over 40 per cent in 2014.

CEO of RIAA, Simon O’Connor, said growing consumer confidence in responsible and ethical investments plus the finance sector taking ever-stronger positions on issues such as tobacco and fossil fuels were driving the strong uptake of responsible investing.

“Consumers in ever greater numbers are awakening to the fact that you can invest prudently and profitably without compromising your values which is resulting in the growing retail  interest in responsible investment,” O’Connor said.

“For institutional investors, whilst rising consumer interest is playing a part in driving take up of responsible investment, this is being helped by environmental, social, governance and ethical factors proving themselves to be ever more important drivers of investment outcomes – with numerous recent ASX listed companies losing shareholder value from mismanaging ESG factors.”

“These results are good news for investors seeking to have strong positive impact and strong financial returns from their retirement savings,” the report said.

“With polling indicating that 69 per cent of Australians believe it is important that super funds make responsible investments and avoid harmful investments, these strong results show that a responsible investment approach is clearly consistent with good investment outcomes.”

The report also found that impact investment grew by over 40 per cent as investors demanded more than just a financial return.

“Impact investing became a hot topic in 2014, with strong contribution by Governments,” the report said.

“The New South Wales State Government issued its first two social bonds and the New Zealand Government launched a pilot social bond program in the second half of 2013.”

It was also found that that the myth of underperformance of responsible investments was unfounded.

Last month the CEO of Impact Investing Australia, Daniel Madhavan, told Pro Bono Australia News that if the growth of impact investing in Australia was “a three hour movie (then) we’re 10 minutes in”.

“A lot of people ask, ‘how big is it going to be?’ And all I can do is guess. I’m watching the same movie you are and I don’t have those answers yet. All I can do is tell you what we’ve seen in the first 10 minutes and how the story is starting to shape up,” Madhavan said.

“There is a lot of willingness to want to do this and the other side of that narrative is the investor side.

“There’s a whole generation of millennials who don’t think about the world as making money over there and doing good over there. They don’t have those hard lines that they separate things with.

“That generation is going to inherit all of the wealth that has been accumulated since World War II in this country and beyond and they are going to want to think about how they use that capital in a very different way to the way that generations previously did.”