Stewardship

The Responsible Investment Association Australasia (RIAA) today releases its annual Aotearoa New Zealand Benchmark Report, revealing the continued momentum of responsible investment. Assets under management (AUM) of the research universe grew to $294 billion in 2023, up 13% from the previous year. However, greenwashing remains a critical challenge as the industry continues to evolve. Concern about greenwashing has become the key deterrent to market growth, rising from 35% last year to 61% in 2023. At the same time, Kiwi’s lack of awareness of responsible investment dropped to 30% in 2023, from 43% the previous year. Transparency efforts, such as stewardship reporting, are gaining traction, with 51% of organisations now offering detailed disclosures, up from 40% in 2022. “The growth of responsible investment in New Zealand is representative of the increasing awareness of ESG issues in investment decision making, and the increasing scrutiny over how returns are generated. This year’s RIAA benchmark marks another significant milestone, with concerns over greenwashing top of the list of priorities,” said Pip Best, EY’s Partner, Climate Change and Sustainability Services.

NEW YORK CITY: CFA Institute, the Global Sustainable Investment Alliance (GSIA), and Principles for Responsible Investment (PRI) have issued a new resource that aims to bring greater understanding and consistency to terminology used in responsible investment, specifically: • Screening • ESG integration • Thematic investing • Stewardship • Impact investing For each term, CFA Institute, GSIA, and PRI have outlined a definition, detailed explanation, a list of definitions that served as the primary inputs, and guidance for using the terms in practice. The paper is intended for investors, regulators, policymakers, and other market participants. The collaboration was inspired by calls from regulators for voluntary standard setters to develop common terms and definitions to ensure consistency throughout the global asset management and wealth management industries. Promoting the consistent and precise use of terminology contributes to efforts to address greenwashing.

“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).

Stewardship, or active ownership, is being embraced by more and more investors as a means to deliver long-term returns while contributing to a more sustainable future. RI Australia 2023 explored current trends in stewardship, examined cases of best practice and explored whether stewardship really can deliver the outcomes we all need.

The Australian Prudential Regulation Authority (APRA) renewed expectations of superannuation funds in prudential guidance SPG 530 Investment Governance.

Demonstrating our collective willingness to work together to enable the finance sector to make a larger contribution to the climate, environment and social objectives of Australia, the organisations listed below issue this Joint Statement on Accelerating Sustainable Finance. As leading Australian financial services firms, we recognise our critical role in shaping Australia’s future. Our activities – which include finance and investment, insurance, investor stewardship, client relationships and advice, stakeholder engagement, and policy engagement – can provide significant support for the transition to a net zero, climate resilient Australian economy, the regeneration of Australia’s natural capital, and a more prosperous and fair society. We recognise the important role of strong partnerships between government, the private sector, and other stakeholders in achieving these goals. Private finance and investment alongside government funding is essential to accelerate progress, as is a supportive policy and regulatory environment. Demonstrating our collective willingness to work together to enable the finance sector to make a larger contribution to the climate, environment and social objectives of Australia, the organisations listed below issue this Joint Statement on Accelerating Sustainable Finance. As leading Australian financial services firms, we recognise our critical role in shaping Australia’s future. Our activities – which include finance and investment, insurance, investor stewardship, client relationships and advice, stakeholder engagement, and policy engagement – can provide significant support for the transition to a net zero, climate resilient Australian economy, the regeneration of Australia’s natural capital, and a more prosperous and fair society. We recognise the important role of strong partnerships between government, the private sector, and other stakeholders in achieving these goals. Private finance and investment alongside government funding is essential to accelerate progress, as is a supportive policy and regulatory environment. We welcome the Treasurer’s announcements today of the Australian Government’s plans to drive sustainable finance in Australia.