Since 2020, the responsible investment market has recorded steady growth both overall and in comparison to the traditional investment market. However, 2022 brought new challenges.

The Australian total (consolidated) managed funds industry ended the year $40 billion lower than in 2021 as the global economy slowed to 3.5%. Despite this, the Australian economy fared relatively well, largely due to the mining sector’s exceptional performance, which yielded $54 billion in earnings— a 33.6% increase compared to a -3.3% decline in 2021.

At the same time, regulatory pressure on responsible investors has been mounting globally, including in Australia, with increased demands for improved ESG reporting. In the EU, investment managers marketing financial products have begun disclosing sustainability information to align with the Sustainable Finance Disclosure Regulation. In Australia, the Australian Securities and Investments Commission (ASIC) has turned its focus to greenwashing in the financial sector, filing several civil penalty cases against investment managers.

Evolving standards and increased regulatory scrutiny have led some large international investment managers to tighten their definitions of responsible investment, resulting in a smaller reported proportion of responsible investment assets under management in 2022 compared to 2021.