20 Years of RIAA

In 2020, the Responsible Investment Association Australasia (RIAA) celebrates its 20 year anniversary.  As we reach this milestone, we reflect on the development and evolution of the responsible and ethical investing industry, and distil our foci for the future.

In 2020, the Responsible Investment Association Australasia (RIAA) celebrates its 20 year anniversary.  As we reach this milestone, we reflect on the development and evolution of the responsible and ethical investing industry, and distil our foci for the future.

 

Over the past twenty years, our world has changed remarkably and the field of responsible investing has grown significantly, becoming embedded in mainstream investment practice and establishing a record of strong performance.

 

Throughout this time, RIAA’s purpose has remained steadfast: to ensure capital is aligned with achieving a healthy environment, economy and society. This means working towards all investing being responsible investing.

“The growth of responsible investment has meant that we are now achieving critical mass. It's happening in all the pockets of the investment industry and that starts to affect the way that the mainstream markets run. It's really exciting because responsible investment is actually shaping financial markets.”
RIAA Chair, Susheela Peres da Costa

Our genesis

RIAA was originally called Ethical Investing Australia (EIA) when it formed in 2000. The organisation was founded by a group of concerned investors – led by financial advisors – who recognised the powerful impact that conscious investors could have by steering their capital towards companies that were aligned with their values. Ross Knowles (Ethinvest) from Sydney and Janice Carpenter (formerly Ethical Investment Services) from Melbourne were founding co-Presidents.

 

From our early days, RIAA had impact. Our first benchmarking report came out in 2002 and has been published every year since and expanded into a distinct report for New Zealand. We lobbied Government to get fund managers to disclose environmental, social and labor related issues (an early iteration of ESG integration). This work was successful and this remains law in Australia, enforced by ASIC.

 

A broad church

RIAA’s early pioneers and practitioners were focused on ensuring their investment portfolios didn’t include companies that they perceived were having a negative impact. The early focus on negative screening soon expanded, as the potential for using capital to shift our economy and improve society gained traction.  Mainstream investors began to recognise the benefits of analysing their portfolios on metrics beyond the financial. They saw that social and environmental factors could also be vital indicators of risk. These two camps, the ‘values-based’ investors, and those focused on managing risk – came together through RIAA.

 

In 2007 we changed our name from EIA to RIAA to reflect our breadth of membership. This diversity remains a key source of strength, demonstrated by the cross-pollination of many responsible investment approaches and concepts. For example, there are few mainstream investment managers that haven’t adopted the ‘values-based’ approach of a negative screen, and very few ethical investors who don’t engage in risk management through ESG integration, or corporate engagement and voting.  Additionally, impact investors have brought a focus on metrics, data and measurement, which continues to influence our membership. Debate in these forums is often vigorous, and such dialogues help us to continually learn, adapt and evolve.

“What's hugely exciting is we're on the cusp of seeing very large institutional asset owners start to embrace impact investing much more seriously, and that will unlock many billions of dollars to make a hugely positive difference for the world.”
Richard Brandweiner, CEO of Pendal Group

Much more than an industry body

Many industry bodies exist solely to progress their members’ interests. RIAA has a strong member focus, but does much more in its ultimate pursuit of a healthy and sustainable society, environment and economy.

 

Much of our history mirrors the pioneering nature of the Australasian market, which has been at the forefront of responsible investing development and growth.  In the early days RIAA received a grant to build RI training modules. We were ahead of our time, and as Europe put new regulation in place, our training was soon in high demand.  And we kept pioneering. In 2005 we established a certification program that is world-leading, and the longest running accreditation program of its kind.

 

Connected globally and locally, we help drive industry collaboration through fora such as through the Australian Sustainable Finance Initiative (ASFI) and NZ Sustainable Finance Forum, set up to promote economies that prioritises human wellbeing, social equity and environmental protection, while underpinning financial system stability.

 

People power

Our work going forward recognises and harnesses the power lying in the hands of consumers, as they increasingly choose to place their money where their mouth is.  This is why we engage in regular consumer research and in 2016, launched the online tool Responsible Returns, helping consumers find responsible and ethical investment providers and products.  Similarly, as financial advisors see a huge evolution of their industry, RIAA is providing them with tools and resources to integrate responsible investment into their practice.

 

From avoiding harm to positive impact

Responsible investment in its early years was focused largely on avoiding or minimising harm through investing. In 2018 we established a dedicated Impact Investment Forum and actively broadened the conversation to one about the ‘impact’ of the investor more generally, including how they are contributing positively to a more sustainable society and environment.

 

Optimism and energy for the future

Early 2020 we postponed our RI Australia conference as the COVID-19 pandemic took hold, hot on the heels of Australia’s devastating and ‘unprecedented’ summer bushfire season.

 

These crises are a wake-up call, showing us the fragility of our financial structures and economic systems, but also testing our capacity to adapt. Over 2020 and beyond, RIAA will bring the responsible investment community together to reflect upon and consider the opportunities these events bring, so that as we reset and rebuild our economy and society, we simultaneously lay the foundations for greater inclusivity, equality, sustainability and resilience.

 

Our strength is in our community. With united effort, and common goals, we are taking the progress of the past 20 years and using it to reshape the world of finance and investing as we know it. There’s never been so much energy for investing with impact, and our vision for the future has never been clearer.

“We've worked for 20 years together as a sector to align with a more responsible and ethical approach to finance. The next 10 years is more important than ever; as an industry, we need to step up and ensure that finance becomes a force for good; to shape, a better world and a better environment for us, our children, and our grandkids.”
Simon O’Connor, RIAA CEO