Responsible Investment Association Australasia (RIAA) chief executive Simon O’Connor said there has been rapid growth in the number of investors wanting to align their investments and savings with their values with total responsible investment in Australia now at $622 billion.
The Responsible Investment Benchmark Report 2017 indicates that in the three years to 31 December 2016 responsible investments more than quadrupled with 44 per cent of Australia’s assets under management now invested through some form of responsible investment strategy.
“Within the private wealth area, retail investor market and SMSF market we’ve seen a real interest with investors wanting to ensure their own values are being reflected in the way they invest money,” said Mr O’Connor.
“People are asking questions around whether they’re invested in tobacco, fossil fuels or coal or if they’re invested in companies that are breaching human rights. We’re also seeing a lot of interest in people avoiding investment in controversial weapons such as landmines.”
Mr O’Connor said there is still a portion of the adviser community, however, that believes this is not the best way of investing and that investors shouldn’t go down this path.
A study conducted by financial services company Aviva in the UK found that advisers were underestimating the demand for responsible and ethical investments with 87 per cent of advisers under the assumption that less than 10 per cent of their clients were interested in an ethical investment approach.
“Yet in surveys with consumers, 50 per cent of consumers actually took ethical issues very seriously,” said Mr O’Connor.
“We often hear stories of advisers and wealth managers losing mandates to clients because we see more and more clients actually caring how their money is invested. If you can’t provide those services it’s become something of a risk to your practice.”
We found this with our initial roll out. At no time was our ethical screening capability advertised to the 1400 or so initial expressions of interest, and yet over 2/3rds of investors in the first month chose at least one ethical screen. Remarkable.