Blog

Calendar year 2024 was strong for Green Bonds, outperforming conventional bonds by nearly 2%, and achieving record issuance of US$447bn.

Active investment is challenging at the best of times, but the Trump presidency has added a new level of complexity to this global challenge.

The Responsible Investment Association Australasia (RIAA) is pleased to announce ISS STOXX is continuing its valued partnership as a Principal Partner of our Nature Working Group.

ESG as an acronym is often misunderstood. There are many ways that environmental, social and governance factors are considered by companies and investors, but at its heart, ESG integration is a risk-management tool which is now mainstream.

Corporate spending plans for artificial intelligence (AI) remain bullish, with investment expected to double by 2025. While companies remain optimistic, investors and regulators may be less so. As the initial hype fades, the pressure to deliver a return on investment grows, alongside demands for transparency and responsibility. One of the biggest—and perhaps least expected—challenges may be data.

ESG is fundamentally about risk management. Just as no investor would fund a beachfront hotel without considering rising sea levels, responsible investors assess ESG (environmental, social and governance) factors to understand and manage financial risks and identify opportunities.

The effects of climate change are a megatrend on a global scale, influencing the expected risk-return profile of real assets investments and the opportunity set for investors. The increasing frequency and severity of physical climate hazards, as well as nature loss resulting from changing ecosystems requires new ways of thinking about financial risk and return in real assets investments. As addressing these challenges becomes increasingly important, a growing set of real asset investment opportunities are appearing, designed to mitigate and even begin to reverse climate impacts and nature loss.

If done right, Australia’s financial product labelling regime will help avoid greenwashing and channel capital to more sustainable outcomes. But it must be principles-based and be anchored in widely accepted industry standards.

As the world stands at a crucial crossroads in its efforts to combat climate change, recent discussions among industry leaders emphasise the importance of strategic investments and partnerships in fostering a sustainable future. The urgency of transforming our economy to achieve net-zero emissions cannot be overstated, and the path forward is filled with opportunities that can drive growth, innovation, and job creation.

The Impact Investing Network (IIN) and Responsible Investment Association Association (RIAA) boards have been in exploratory discussions on deepening integration between the two organisations. With an aim to have the IIN sitting as an integrated portfolio within RIAA by mid-2025.

Whether you like it or not, if you are an investor, you are already investing in nature. Across Aotearoa New Zealand and around the world, all global gross domestic product depends, either directly or through supply chains, on nature: clean air and water, productive land and diverse and thriving flora and fauna.

On 19 September at the Responsible Investment Association Australasia (RIAA)’s annual conference in New Zealand, I have the wonderful privilege of moderating a panel of three CEOs from prominent New Zealand listed companies: Simon MacKenzie (Vector), Jolie Hodson (Spark), and Grant Webster (THL Holdings). We are going to be talking about what it takes to lead an organisation in a world that needs to transition to a low carbon, sustainability focused economy. While generally society understands and broadly agrees on the importance of this transition and the need to separate emissions growth with business growth, it is by no means an easy feat to achieve – especially while economic conditions are tough.

People with superannuation accounts or investment portfolios have immense power. With substantial amounts of money invested – such as the $4 trillion in Australia’s superannuation funds (the 5th largest pool of pension assets in the world), consumers are in the driver’s seat when it comes to the allocation of that money to different industries and companies. Our research shows that 88% of Australians expect their super and banking to be invested responsibly and ethically. Similarly in Aotearoa New Zealand, 74% expect responsible and ethical management of their investments, and 59% are willing to move their funds if their investments do not align with their values.

This FAQ page aims to answer common questions about our certification and how consumers can be better informed when starting their ethical investment journey.

It is with great pleasure that the Responsible Investment Association Australasia (RIAA) announces ISS ESG as a Principal Partner of our Nature Working Group. ISS ESG, the responsible investment arm of ISS STOXX, is a global leader in providing environmental, social and governance solutions for asset owners, asset managers, hedge funds and asset servicing providers.

On 5 June 2024, the Federal Court in Australia largely found for ASIC in its case against the trustee of the superannuation fund Active Super (Australian Securities and Investments Commission v LGSS Pty Ltd [2024] FCA 587). The judgment contains important developments in the application of the law of misleading or deceptive conduct to the field of responsible investment and it also challenges certain industry practices.

Imagine: You’re a portfolio manager for a 30-stock portfolio within the Weak Governance Exchange (WGX). One of your investments is in bottled water company, Water Power. The business model is simple: selling bottled water. What is different about this business is that half of their costs come from having the most influential Government Affairs team across the whole index. While the team operates within the realms of what is lawful, their only incentive is to increase the company’s quarterly earnings.

The last decade has seen an increased focus on environmental, social, and governance (ESG) policymaking and implementation, and a rise in new investment funds to match. The past few years, however, have also exposed ESG fractures in the industry. One of the areas of growing concern is greenwashing and how investors can weed out funds that have been overstating their sustainability credentials. While not an exclusive solution to the problem of greenwashing, impact investing can help solve for some of these concerns.

There is little evidence that Australia’s Modern Slavery Act 2018 (Cth) has contributed to reducing the prevalence of modern slavery, which the UN estimates affects 50 million people globally. With the proliferation of regulation internationally, it’s time for Australia to ask hard questions about the success of its modern slavery reporting regime.

Investors should care about this topic, not just because of the reporting requirements, but because of the potential investment impacts, including brand risk, the implied social licenses under which exist, earnings sustainability risks and many other operational factors… It is time to step away from a ‘compliance’ mindset around modern slavery and tackle the issues with decisive action.

We’re reaching a tipping point, with people pushing the planet beyond many of its boundaries. The result will be escalating geopolitical conflicts over resources, a cycle of human rights issues, and continued planetary warming, resulting in what many scientists and policymakers are calling a Polycrisis. It’s no wonder RIAA’s latest research report ‘From Values to Riches 2024’ reveals Australians are concerned about so many different issues we are facing as a society.

The year 2023 has proven to be a tumultuous period for corporate Australia, marked by a series of corporate scandals and significant shareholder dissent at AGMs. Notably, a record number of ASX300 companies recorded strikes against their remuneration reports, marking the highest tally since the introduction of the two-strike rule in 2011. Analysing these vote results is crucial for investors, corporate leaders, and governance bodies alike, offering key insights into the future of responsible investment and corporate accountability in Australia.

Have you ever wondered if your organisation’s commitment to diversity goes beyond gender? Let’s explore the compelling case for embracing inclusion across diverse groups, including individuals with disabilities, and how it can revolutionise Diversity, Equity, and Inclusion (DEI) efforts.

What are materiality thresholds? Derived from financial accounting, materiality thresholds are set limits for exposure to certain industries. By setting these thresholds, funds define how much a product will be exposed to these industries. Materiality thresholds may be used in combination with chosen approach(es) to responsible investing and, risk/return considerations. They allow for greater flexibility to progress their responsible investment strategy (i.e., integrating Environmental, Social and Governance (ESG) factors into the process).

RIAA disagrees with the recent article, “Watering down super fund tests risks lower returns” published by the The Australian Financial Review. The Your Future, Your Super (YFYS) performance test is having a direct impact on the movement of capital to climate transition and achieving a net-zero economy.

The Responsible Investment Association Australasia (RIAA) is pleased to announce Pollination as the Principal Partner of our Nature Working Group for the financial year of 2024.

Where to start? How do we process the decision that Australia will not change our constitution and enshrine a Voice to Parliament for Aboriginal and Torres Strait Islander peoples? Perhaps we need to go further back, to Paul Keating’s famous Redfern speech, some 30 years ago.

With the election coming up, it’s critical that Aotearoa New Zealand doesn’t lose focus on sustainable finance.

We are in the midst of significant change in the way finance operates in Australia and with the Treasurer set to shortly release a draft Sustainable Finance Strategy, this change is about to accelerate further.

In an age where climate concerns and social consciousness dominate headlines, it’s no surprise that investors are increasingly seeking investments that align with their values. With several high-profile cases recently exposing alleged greenwashing practices, many investors are left wondering if they can trust a company’s sustainability claims.

With the ASX 300 staring down the barrel of a 4.5-degree temperature rise, it is critical that Australia’s largest leading companies incorporate more sustainable practices into their business operations. At the RI Australia Conference 2023, representatives from ASX listed companies Mirvac, Wesfarmers and the A2 Milk Company unpacked ‘Transitioning the ASX: Company Insights into Progress towards Net Zero’ with Nathan Parkin, Investment Director and Co-Founder of Ethical Partners Funds Management.

The starting gun has fired in the global clean energy race and Australia stands at a crossroads – will we soar as a competitive force or falter at the starting line? Worldwide there is a scramble for capital to fuel the transition to a cleaner global economy and governments are locked in fierce competition, vying for investments crucial to sustainability.

Modern slavery has become a key issue for the responsible investment community in recent times. At the RI Australia 2023 conference, Tomoya Obokata, the United Nations’ Special Rapporteur on Contemporary Forms of Slavery presented on the global state of modern slavery. During his keynote speech and interview with RIAA Chair, Ross Piper (CEO of Australian Ethical Investments), Tomoya reflected on current trends, provided an update on efforts to combat contemporary forms of slavery, explained international laws and norms, and explored what investors can do to reduce instances of modern slavery in their portfolios and supply chains.

As investors and owners of firms, whether as principals or fiduciaries, we are responsible for addressing the varied potential impacts of continued greenhouse gas emissions. The projected cost of climate change is significant, affecting individuals, society, the environment, and the companies operating within it. While we all might agree to these essential facts, they do not help us define the best methods to achieve our desired climate outcomes. Over the last decade, Scientific Beta has been integral in the development of a carbon transition framework in Europe. What we have learnt can be distilled into three core principles of climate impact investing; shun the alpha-washing trend, utilise divestment as a powerful capital allocation tool, and fund the transition to a low-carbon future.

On 11 August, the Australian Securities and Investments Commission (ASIC) initiated civil penalty proceedings against LGSS Pty Limited (Active Super). The regulatory action alleges misleading conduct and misrepresentations made by Active Super regarding its ethical and responsible investment claims.

RIAA takes greenwashing incredibly seriously. We work on a daily basis to articulate, review and strengthen responsible investment standards, policies and products in Australia and Aotearoa New Zealand, with a goal to reduce greenwashing. For the last 15 years, RIAA’s Certification Program has been verifying the disclosures and practices of financial services products in our markets, to ensure products are clear, transparent and truthful in their claims – ie. not misleading.

“Early engagement and focusing on a key list of issues rather than a generic list of asks, will help ensure engagement is effective,” said Mark Rigotti, CEO of the Australian Institute of Company Directors (AICD).

RIAA supports the Uluru Statement of the Heart, and we welcome and are supportive of moves for a First Nations Voice to Parliament protected by the Constitution.

The Responsible Investment Association Australasia (RIAA) Human Rights Working Group, in collaboration with international experts, has developed a comprehensive toolkit to empower investors and companies in safeguarding human rights and mitigating risks associated with armed conflict.

Super funds with a responsible, ethical or sustainable focus will soon be subjected to the same performance test as their ‘default’ MySuper peers, as the Government confirms the extension of these superannuation performance test rules.

Culture is widely acknowledged as a critical element that can either catalyse or undermine business success. But it is complicated to manage for a company, let alone measure as outsiders.

Last week saw the most significant greenwashing action taken to date by regulators in Australasia. A court action was launched by Australian Securities and Investments Commission (ASIC) against Mercer Superannuation (Australia) Ltd alleging greenwashing conduct in a number of their superannuation investment options.