Responsible Investment Benchmark Report: 2020 Australia

This is the 19th annual Responsible Investment Benchmark Report prepared by the Responsible Investment Association Australasia (RIAA). The report details industry data on the size, growth, depth and performance of the Australian responsible investment market over 12 months to 31 December 2019 and compares these results with the broader Australian financial market.

To do this, RIAA reviewed the practices of 165 investment managers known to be applying responsible investment to some or all of their investment practices. These managers control approximately $1,900 billion in assets under management (AUM), which is 60% of total professionally managed AUM (TAUM). Fifty-four of those responses were assessed directly via survey, and supplementary desktop analysis was undertaken for the remaining 111 investment managers.

Key findings include:

• The responsible investment market continues to grow, with associated assets under management (AUM) up 17% over the course of 2019 to $1,149 billion.
• Ever more investment managers apply responsible investing approaches, of which a quarter can demonstrate practising leading responsible investing.
• The responsible investment approaches that most influence the final construction of responsible investor portfolios is environmental, social and governance (ESG) integration, and corporate engagement and shareholder action
• ESG integration is now considered business as usual by survey respondents
• Investment managers are demonstrating a commitment to systematically implementing responsible investing through the development and disclosure of responsible investment policies
• Of the 165 investment managers in the Responsible Investment Research Universe, 36% disclose their full fund holdings and 28% disclose some holdings
• Seventy-nine percent of investment managers in the Responsible Investment Research Universe have at least one asset class (or 50% AUM) covered by an explicit and systematic approach to ESG integration
• Investment managers in the Responsible Investment Research Universe are demonstrating transparency through their stewardship activities
• Negative screening of fossil fuels is beginning to catch up to consumer interest.
• Sustainability-themed investing has grown as a responsible investment approach.
• Impact investment growth has accelerated
• Australian and multi-sector responsible investment funds outperformed mainstream funds over every time horizon.