NZ embraces responsible investing with record growth in 2016

NZ embraces responsible investing

Investment funds in New Zealand have shifted towards responsible investing in droves over the past year, with negatively screened funds growing by over 2500% and reaching a total of $42.7 billion in 2016, the latest Responsible Investment Benchmark Report 2017 has found.

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Director – Environment, Health & Safety and Sustainability

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Responsible Investment Benchmark Report 2017

Launched this week by the Responsible Investment Association Australasia (RIAA) the Report, based on survey results researched and collated by KPMG’s Sustainability Services team, is the most comprehensive review of the responsible investment sector in New Zealand.  

The 2017 Report shows a dramatic increase in responsible investments over the past year.  Much of this growth is attributable to stakeholder pressure requiring KiwiSaver investments to reallocate funds invested in undesirable investments (such weapons and tobacco companies).  

The 2017 Report also found the value of: 

  • total responsible investment grew by 67%, from $78.7 billion assets under management (AUM) in 2015 to $131.3 billion assets under management as at 31 December 2016, and 
  • broad responsible investment – those primarily undertaking an environmental, social and governance (ESG) integration approach – grew by 15% to reach $88.6 billion AUM. 

This 2017 Report looked into the top drivers of responsible investment.  These were identified by asset managers to be:  

— The increasing importance of ESG risks. 
— Alignment of investment strategy with underlying investors’ values/beliefs. — Increased demand from institutional and retail investors.  

Simon O’Connor, CEO of RIAA commented “While it’s a huge step to see the implementation of negative screens across mainstream and default products, responsible investment can still extend far beyond this”.  KPMG New Zealand concurs with this sentiment, and encourages the investment community to integrate ESG throughout all stages of the investment lifecycle, not only at the screening stage.  Read the full report.

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