- The Australian responsible investing market ballooned to $1.2 trillion in 2020, but a prominent industry body is warning of an accompanying trend in “greenwashing”
- Responsible investment assets grew at 15 times the rate of Australian professionally managed investments, according to RIAA
- The organisation has warned investment managers were coming under increased scrutiny for promises made to their investors
- RIAA’s Executive for Policy and Standards Nicolette Boele says “it’s not good enough to simply claim you’re investing responsibly”
The Australian responsible investing market ballooned to $1.2 trillion in 2020 but a prominent industry body is warning of an accompanying trend in “greenwashing”.
The report released today by the Responsible Investment Association Australia revealed responsible investment assets grew at 15 times the rate of Australian professionally managed investments.
The body defines responsible investing as “a holistic approach to investing, where social, environmental, corporate governance and ethical issues are considered alongside financial performance when making an investment”.
While observing a “soar in popularity” in investments of this nature, the report also affirmed “greenwashing” remains a pressing concern.
Head of ESG & Responsible Investment at KPMG Mark Spicer said promises made by investment managers were coming under increased scrutiny.
“With regulation on sustainable investment on the rise both in Australia and globally, investors face increasing risks from legal action if claims made about their responsible investment products are not accurate,” he said.
RIAA’s Executive for Policy and Standards Nicolette Boele said the message for investment managers was clear.
“It’s not good enough to simply claim you’re investing responsibly. If you’re not doing it well, then there’s a high risk of losing business,” she said.
The report drew attention to the fact that asset managers are leaning on voluntary reporting in this sector but observed increasing transparency in the industry.
Investment managers that report on activities and outcomes from corporate engagement and shareholder action increased from 21 per cent in 2019 to 31 per cent in 2020, according to RIAA.
“Increasingly responsible investment is being defined not just by the strategies involved, but by the short and long term social and environmental impacts that investors are targeting and generating through their responsible investment approaches,” Ms Boele said.