The latest Responsible Investment Benchmark Report says the value investments made with ethics and sustainability in mind have quadrupled in Australia over the past three years to $622 billion.
Australian responsible investment funds have also been outperforming average mainstream funds over three, five and 10 year horizons, the report shows.
Responsible Investment Association Australasia chief executive Simon O’Connor said the results undermine the “outdated myth” that investing responsibly means sacrificing returns.
“More and more Australians are wanting their investments and savings to align with their values, and are reaping the rewards with strong financial performance,” O’Connor said in a statement.
The report used data for 2016 from about 100 asset managers, super funds, financial advisors, banks and community investment managers.
It found that of the $622 billion in responsible investments from that year, the bulk – or $557 billion – were made by asset managers who incorporate environmental, social and governance considerations into their process.
The remaining $64.9 billion were ‘core’ responsible investments, up 26 per cent from the previous year, which involve screening for investments deemed ethically positive or negative investments or selecting them for their impact.
“The report shows an increase in negative screening across the market, particularly against weapons, tobacco, gambling, as well as significant increases in exclusions based on nuclear power and human rights,” O’Connor said.
The report found core responsible investment share funds in Australia outperformed large-cap Australian share funds, and the relevant benchmark, for all time periods except the one year term.
Responsibly invested international share funds outperformed their mainstream counterparts in the three and 10 year timeframes, but performed slightly worse over the one and five year horizons.
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