RI Certification – a spring clean and re-launch in order to move markets #shiftingcapital
We spent a big chunk of last year spring cleaning our 10-year-old Responsible Investment Certification Program – the program designed to verify and maintain the quality of responsible and ethical investing products and to make it easier for consumers to navigate towards the growing range of responsible investment products and suitably experienced financial advisers.
The responsible investment market of a decade ago had fewer products and fewer responsible investment strategies, as opposed to today where we see a wildly diverse range of responsible and ethical products coming to RIAA for Certification – ETFs, SMAs, fixed interest, private equity, property, low carbon, banking, wholesale cash, smart-beta and beyond – in addition to our Certified Financial Advisers.
So here in 2016 we want to ensure the program is fit for purpose, based on strong governance and is in step with the best global certification programs. In short, it is timely that this program enjoys a thorough review and refresh so it can be well known, trusted and user-friendly.
This week we are very pleased to announce the re-launch of our Certification Program (see media release here).
Each month over the last two years RIAA Certification program webpages have received around 1,500 visitors reflecting the massive surge in consumer interest in responsible investments. This interest is not only from retail investors, but we know that much of this traffic is also coming from financial advisers, charities, NFPs and family offices who are increasingly looking for options to grow their wealth responsibly.
So what’s changed?
We embraced a design-centred review methodology which told us that for our members and their consumers (institutional and retail), our program needed to be well known, trusted and user-friendly.
Central to the program refresh, we clarified our processes and procedures firming up the precise criteria and program requirements for all categories of certification and set in place principle-based threshold criteria that must be met (see Program Requirements here).
We strengthened the governance, including the process by which applicants are assessed, reviewed by a RIAA board level committee and verified by external auditors (Grant Thornton and KPMG).
What does it mean to be certified?
Today, being certified means all investment products have met strict requirements including:
- A commitment to transparency and disclosure (full portfolio holdings by July 2016)
- Verifiable responsible investment processes
- Being subject to an external audit of the investment process
The program requirements aim to ensure consumers can much more easily differentiate between products, the different approaches being used, and importantly, the products providers do not mislead the consumer.
In effect, the Program provides consumers with confidence to purchase certified responsible investment products and services, knowing that these have passed strict quality process. Our goal here is to help consumers more easily navigate towards investment options that meet their values and beliefs.
But most importantly, we see this program as key to unlocking demand for responsible investment products, across all styles, that will be a critical component of us heading towards our organisational target to grow the funds flowing into responsible investments from 2.5% of AUM today to 10% in 3 years. (You’ll have to read the next blog to hear more about that target.)
We know from our own polling that the two biggest impediments to investing in a responsible investment options are the lack of independent information available and insufficient time to look at and compare all the options – Our Certification Program is intended to unlock both of those blockages.
Pleasingly, we now have over 80 products certified from 30 different investment organisations, with 20 Certified Financial Advisers, including products and advisers across New Zealand as well as Australia – you can find them all on our Certification website.
We’ve also just awarded the first whole superannuation fund certifications, as a new category of certification that requires over 75% of assets to be under at least two responsible investment strategies (among other criteria). Congratulations to Australian Ethical Super, Christian Super and Local Government Super.
Do have a good look over the new refreshed program and send us your thoughts – we hope you like it and that you’ll be seeing much more of it this year!
Importantly, the Certification program is not financial advice, so we do stress that this information is not provided as a recommendation to invest. For that you’ll need to seek professional financial advice (preferably by one of our Certified Advisers!)