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Global Sustainable Investement Alliance

Australia/New Zealand Sustainable investment in Australia amounted to US$ 178.5 billion, representing approximately 18 percent of total assets under management, a figure similar to the Canadian sustainable investing industry12. Compared to 2010, there was 8 percent growth in the overall sustainable investing market. Australia is also one of only two regions in the report, the other being Africa, where integration is the single largest strategy employed by sustainable investors13. All told, integration is employed on behalf of US$ 127 billion in assets, or 71 percent of all sustainable investing assets in Australia. The second largest strategy practiced in the region is corporate engagement, and as in other jurisdictions, this strategy is a mainstay of institutional investors. In Australia, there are two specialist engagement organizations, Regnan and the Responsible Engagement Overlay offered by F&C Management. These organizations provide corporate engagement services on behalf of superannuation funds and institutional investors with total shareholdings of US$ 57.6 billion. This is up a modest 4 percent from 2010 in local currency terms. It is interesting to note that negative/exclusionary screening represents a small part of the Australian sustainable investing industry, putting it in contrast to the major markets of Europe, the US and Canada. However, from 2010, this strategy grew by 30 percent. This is mainly due to Local Government Super (which manages pension assets of local government and related employers throughout NSW Australia) expanding its sustainable investing overlay to its large international equities portfolio. The Local Government Super sustainable investing overlay now excludes investments in companies that derive more than 10 percent of their revenues from a number of areas including: armaments, gambling, nuclear/uranium, old growth logging, tobacco, poor mining practices, questionable work- place practices, and questionable environmental, social or corporate governance practices. Impact investing and sustainability themed investing, as in other markets, are represented by relatively few assets. Looking at the portfolio management industry in Australia, between 2010 and 2011, managed sustainable investing portfolios rose by 33 percent from US$ 13.2 billion to US$ 17.5 billion. The increase in sustainable investment portfolios in Australia fared better than the broader market with total assets under management of all types of managed portfolios rising 1.8 percent in that same period, compared to a 7 percent increase of sustainable investments in local currency terms. The main factor contributing to this growth is the number of new funds adopting sustainable investing policies amounting to US$ 1.42 billion and net inflows to existing portfolios of US$ 186 million. The average responsible investment fund delivered higher returns than the average mainstream fund across one, three, five and seven years, and for Australian, overseas and balanced funds. Direct asset portfolios managed by financial advisers also increased from US$ 1.25 billion in 2010 to US$ 1.63 billion, up 30 percent. This reflected the recovery in the Australian stock market as well as a trend towards direct share portfolios, both in responsible investment and across the financial services industry. 12 Australian assets were measured as at June 30, 2011. 13 The ESG integration segment in Australia, as determined by RIAA, counts the relevant assets under management of fund managers that achieve an above average ESG rating of 22 percent. Global Sustainable Investment Review 2012 26


Global Sustainable Investement Alliance
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