The Responsible Investment Association Australasia (RIAA) has released their 2015 report comparing the size and growth of the responsible investing market relative to the investment market as a whole, with encouraging signs for impact investing.
‘Responsible investing’ is defined by the report as ‘a systematic investment process that takes into account environmental, social, governance and/or ethical issues into the investment process of research, analysis, selection and monitoring of investments.’
According to the report, as at the end of the 2014 calendar year, the total responsible investment industry encompassed $629.5 billion in assets under management.
Significantly, the report details that impact investing grew by over 40% during 2014 with strong contribution by governments. In particular, the New South Wales State Government issued its first two social bonds, impact investment intermediaries experienced strong growth and numerous banking products are also captured in the data.
The report attributes the growth of responsible investment to four main drivers:
- increasing examples of poor management of environmental, social, governance (ESG) and ethical issues impacting shareholder value
- growing demand from consumers to align retirement savings with their beliefs and values
- an increase in activist and civil society groups engaging the finance sector
- an increasing awareness by fiduciaries that consideration of ESG issues is an important element of their responsibilities
RIAA is the peak industry body representing responsible and ethical investors across Australia and New Zealand. The full report can be accessed here.