Responsible investments still in vogue
Wednesday, 19 November 2008 12:35pm
Investors have pumped $4.1 billion into responsible investments in the last year, bringing the sector's figures to $57.1 billion, according to the Responsible Investment Association Australasia.
The Responsible Investment 2008 report found that broad responsible investment grew eight per cent from $52.8 billion to $57.1 billion, mirroring the increase in assets of fund managers and superannuation funds that have integrated environmental, social and governance (ESG) issues into their investment processes.
Meanwhile, community finance maintained a healthy growth rate over the year to 30 June 2008. Twelve community finance providers had total assets of $863m in June 2008, an increase of 27 percent on last year's figure of $682m.
This includes microfinance loan schemes and organisations dedicated to providing financial services to disadvantaged communities and not-for-profit organisations.
However funds under management for responsible investment funds fell by seven per cent. This is two per cent less than the fall of total investment management across the industry.
"The main factors contributing to this fall were negative investment performance and negative net flows to existing managed portfolios," noted RIAA.
Thematic funds had more success in the past year, with $128m of new money flowing into products which focus on the themes of climate change, carbon liability, water, waste, clean energy, sustainable agriculture and sustainable property.
Louise O'Halloran, executive director of RIAA, said it had been a difficult year for the investment markets and the shockwaves have rippled across the responsible investment sphere. However, the sector has so far managed to hold its own.
"Performance in the mid to long term is healthy, well outperforming mainstream funds. Our society is now awash with examples of the way in which environmental, social and governance issues can affect profitability and prosperity.
"For many in the finance sector, the move to responsible investment has become a practical matter.
"Put simply, environmental, social and governance research helps us to draw a more accurate picture of what's really driving company value in the 21st century. This is reflected in the eight percent growth of those that have integrated ESG into mainstream investment processes and also the number of Australian signatories to the UN PRI which is now 68, up from 36 in 2007," she said.
Ruth Liew
