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Responsible investors ahead of the game

A new report shows that the vast majority of New Zealand investors now have a commitment to responsible or ethical investing.

Tuesday, September 15th 2020, 6:51AM

The landmark annual study from the Responsible Investment Association Australasia (RIAA) has found that companies which look after their employees, minimise their impact on the environment, have good governance and protect human rights across supply chains have become a key focus for New Zealand investors.

The Responsible Investment Benchmark Report 2020 New Zealand, shows that the vast majority (94%) of New Zealand investors now have a commitment to responsible or ethical investing. However just over half (52%) can demonstrate a leading approach that is contributing to real world outcomes.

At today’s conference RIAA CEO Simon O’Connor put the statistics into perspective showing that in terms of global markets New Zealand is leading the way. In Australia for instance, only at 30 percent of managed assets demonstrating responsible investing principles.

O’Connor points out that “investors in New Zealand have shifted their focus from screening out harmful industries such as tobacco and armaments, to considering broader environmental, social and corporate governance (ESG) factors when investing, as well as making impact investments which aim to deliver positive outcomes for society and the environment”.

“The Covid-19 pandemic has resulted in significant economic turmoil, severely impacting many people’s livelihoods and financial markets globally. But it’s become clear that responsible investors are ahead of the game. Companies are unlikely to thrive if they ignore issues such as environmental degradation, animal welfare, health and safety, climate change, corruption and lack of diversity. Investors are fast realising that consideration of these issues provides more informed investment decisions, such as valuation and asset allocation."

“The responsible investment market in New Zealand was worth $153.5 billion in 2019. This represents 52% of the estimated $296 billion of total professionally managed assets under management in New Zealand.”

During the conference Kiwi Invest head of quantitative strategy Steffan Berridge suggested that if current trends continued then RIAA might need to change their name, as responsible investment, may just become investment.

The report shows that impact investing has grown over 13 times from $358 million in 2018 to $4.74 billion in 2019. Green, Social and Sustainability (GSS) Bonds account for 88% of products using this approach. 2019 has also seen the launch of several pioneering impact funds investing in healthcare, regenerative agriculture, sustainable food production and social housing.

However, more can be done by the majority of asset managers to demonstrate how RI strategies are embedded into their investment approach and to measure and report on the associated impacts. “Clients want it and investment mandates are increasingly demanding greater transparency” said Justine Sefton, Head of Sustainable Finance at KPMG NZ.
The growth in responsible investment domestically reflects offshore trends, with global responsible investment assets reaching $US30.7 trillion at the start of 2018 (a 43% increase from 2016), according to data from the Global Sustainable Investment Alliance.

The RIAA Benchmark Report is the most comprehensive review of the responsible investment sector in New Zealand. The 2019 report reviewed the investment practices of 58 financial institutions.

Tags: responsible investing RIAA

« Bond specialist raises concerns over recent FMA guidelinesNew Zealand to require financial sector to report on climate risk »

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AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 ▼3.34 ▼2.99 ▼3.34
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
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China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.45 2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
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SBS Bank 4.54 2.99 ▼3.09 ▼3.15
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Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
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Westpac Special - 2.49 2.69 2.79
Median 4.54 2.95 2.99 2.97

Last updated: 1 December 2020 10:07am

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