Simon O'Connor
Simon O'Connor
About 72% of funds in New Zealand qualify as responsible funds, according to RIAA, the highest proportion of any major investment market, the body said. New Zealand's uptake is said to be higher than markets including the US, Europe, and Australia.
At the Responsible Investment Benchmark Report 2019 launch in Auckland, RIAA CEO Simon O'Connor said the NZ results were "phenomenal", but said "work is yet to be done" in developing deeper responsible strategies.
RIAA identified eight fund management firms as "leading" on responsible investment; AMP Capital Investors, Devon Funds Management, Harbour Asset Management, HRL Morrison, Mercer New Zealand, Mint Asset Management, Pathfinder Asset Management, and Southern Pastures.
Most responsible funds in NZ are negative screens (44%), followed by ESG integration (36%), and corporate engagement & shareholder action (19%).
O'Connor said there was still a mismatch between the things retail customers cared about, and the exclusions in responsible funds. Human rights abuses were cited as one area for improvement, with the issue less frequently screened than in 2017. Junk food and predatory lenders are also rarely screened out by investment funds, the RIAA CEO said.
The next phase of responsible investing is likely to focus more on positive screens and impact investments, O'Connor said.
With responsible investing increasing, contributors to the RIAA report expect more legal requirements on fund managers and corporates. "I'd expect regulatory changes in place within a few years, if not sooner," said KPMG's Erica Miles.
O'Connor told Good Returns RIAA was keen to sign up more advisers and build retail customer awareness.
"Intermediaries and financial advisers need to understand just how important this is to New Zealanders," he said. "We've got a critical decade ahead of us from 2020 to 2030, and there will be a major focus on what role the finance sector plays delivering on environmental, social and economic objectives."
"If there's an area of work it's on the financial adviser level. There's lots of options out there and there's evidence responsible investing contributes to positive returns. We're targeting financial advisers as much as possible and have put out a guide to financial advice we're currently updating. We're trying to develop that part of the market."
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