Socially Responsible Investment: A Review of Recent Developments in Australia

Abstract

Growing awareness about sustainability among consumers and investors is rapidly changing the investment management practices in Australia. Until 2000, the size of fund under management in socially responsible investment (SRI) portfolios was less than $1 billion which by the end of 2012 totaled as $152 billion. About 80% of the top fund managers by now has been the signatories of the UNPRI bringing responsible investment issues to the mainstream. The growth of sustainable and responsible investment has been driven by both public and private sector. ASX has revised the corporate governance code 7.4 (March 2014) to assure that listed companies provide due attention to environmental, social and governance (ESG) issues. Private investors (retail and institutional) are also diverting more funds to sustainability focused portfolios. The combined public and private initiatives have been quickly unfolding a new reality for the fund industry. However, there are significant differences in terms of approaches to sustainable investments It is often difficult to compare among different segments of responsible investment market as well their impacts on environment and society. This paper analyse the key trends in responsible investments in Australia and critically evaluate the challenges and opportunities ahead.