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The year ahead in responsible investment

Momentum around responsible investment and sustainable finance hit new highs in 2022, and all indicators suggest that for our own markets of Australia and Aotearoa New Zealand, this focus on embedding sustainability into finance won’t slow in 2023.

 

2023 is shaping up to keep us all busy, as our sector firms up its position within the core financial market settings across the globe. Currently being hardwired into the sector are codes of practice, mandatory disclosure requirements, formal labelling standards, additional scrutiny by regulators, convergence on standard definitions and elevated expectations of investment managers, asset owners and financial advisers.

 

This is all set in a context of tumultuous and uncertain markets. Yet again, despite the turbulence, the overarching hypothesis of responsible investment – that the consideration of a broader array of financial and non-financial risks only strengthens investment outcomes – is, I believe, only being underscored in these times.

 

In this context, three main areas will define our sector in 2023.

 

Policy momentum has become the primary driver of responsible investment.

Whether in New Zealand or Australia, legislation and regulation has stepped up and is requiring a constant focus by investors to stay up to speed. The Australian Treasurer’s sustainable finance commitments announced in December brings Australia closer to the progress already well advanced in New Zealand, and sets in train a huge work program to build in the structures that shift this industry to consider governments central to solving some of our great sustainability challenges.

 

This decisively moves responsible investment from an optional nice-to-have, to a core risk and compliance issue that must be managed. If your organisation is still thinking that responsible investment is an optional area for occasional consideration, you are simply putting yourselves at risk.

 

Our ability to stamp out greenwashing will determine our success as a credible and trusted sector.

With the elevated expectations set out by regulators in New Zealand and Australia in 2022, combatting greenwashing has become a core focus for us at RIAA. This increased focus also moves the RI Certification Program to be an essential verification of alignment to these new expectations.

 

Meaningful progress will be impossible without collaboration.

The breadth of ESG issues our members are managing for and influencing is vast, is fast-moving and requires new models of collaboration and generous sharing of knowledge to bolster capability across our markets. The community of practitioners we get to work with on a daily basis, including within our working groups, provides such a generous community to ensure this sector’s best chance of success. Our annual conferences are essential gatherings focused on this critical element of capability-building for our sector at this time, so don’t miss our Australian conference in May.

 

RIAA starts 2023 in a strong position to influence this critical window of opportunity, with strong regulator relationships and a deep expertise on the policy that is being advocated. We have the world’s most mature labelling system in our RI Certification Program that is aligned to global standards, strong international relationships that help to ensure our markets are tracking in a manner that is globally consistent and locally relevant, and an incredibly skilled and capable team to implement and convene the changes, collaborations, and initiatives needed for these times.

 

It’s going to be an exciting year ahead, and one where RIAA is positioned centrally, as an essential platform for leading this change and keeping our members on top of these rapidly evolving market reforms. We are constantly grateful for your engagement with RIAA, and look forward to working with you on all these issues and more in 2023 at this critical moment in our sector’s advancement.

 

By Simon O’Connor, CEO at RIAA.