How do responsible and ethical investments perform?
There’s sometimes a misconception that investing responsibly or ethically means accepting a lower financial return. But in many cases, this is simply not true.
In fact, there is a growing body of evidence that shows super funds and investment funds that take an ethical and responsible approach often perform better than their peers.
It pays to invest ethically 2020 analysis by the Responsible Investment Association Australasia (RIAA) shows responsibly invested Australian share funds have produced an average return of 11.3% over 3 years and 9% over 10 years. This compares with returns of 10.3% and 7.8% respectively for the S&P/ASX 300 index.
Responsibly invested International share funds outperformed their mainstream peers over 3, 5 and 10 year timeframes, and like Australian share funds, responsible investment multi-sector growth funds (which invest in a combination of asset classes including shares and property) outperformed across 1, 3, 5 and 10 year time frames. (Importantly, there's been much analysis of financial performance since the onset of the COVID-19 pandemic that reaffirms this trend of outperformance).
Many of these responsible investment products have been certified by RIAA and will be included when you conduct a search on Responsible Returns.
2019 financial performance (1).png 124.46 KB RIAA’s research also shows that Australian super funds that comprehensively engage in responsible investment are, on average, outperforming their peers over 1, 3 and 5-year time frames.
You don’t have to be a finance whizz to see that that ethical and responsible investing can lead to better investment outcomes, as well as benefiting people and the planet. Study after study shows that companies which look after their employees, minimise their impact on the environment, have good governance and protect human rights across supply chains are more likely to deliver superior financial returns to investors.
Sustainability, by its very definition, involves thinking long-term. And if there’s one investment you want to perform well in the long-term, it’s an investment like your super fund or your savings account.
Going mainstream The popularity of ethical and responsible investing is growing in line with the strength of financial returns. By the end of 2019, more than a third of Australia’s investors could demonstrate a leading approach to responsible investment, contributing to real world outcomes. In New Zealand over half of investors (52%) can demonstrate a leading approach to responsible investing.
Interest has spread; methods of gauging the sustainability credentials of a company – such as considering environmental, social and governance factors when making an investment - are now being adopted by mainstream investors as key indicators of risk. It’s just smart investing.
The old myth, of having to trade-off your values or issues you care about for lower returns, can be buried once and for all. More and more people are recognising the benefits of investing in line with their values for better returns today, and a better world tomorrow.
More information about the products featured on this tool
What sets these investment products aside from regular ones on the market is they all have some type of responsible or ethical strategy applied to them.
At a minimum, their issuers explain these strategies in public documents and open their offices and books to third party verifiers who check these strategies are implemented according to what you read about them publicly.
You can also click through to see the underlying managers and / or stock holdings in each certified product as well as access a certified product’s recent performance results.
Stewardship & Impact
In July 2019, we lifted our requirements of certified products which we are phasing in over 18 months.
We now require that issuers have organisation-wide commitments to responsible investing and they exercise their responsibilities as stewards of your money - through engaging with companies to improve sustainability performance and voting on shareholder resolutions where possible. All certified products now need to at least avoid significant harm and their issuers will annually report against any sustainability-based claims made by their products. This uplift in program standards is part of our passion for, and on-going commitment to, responsible and ethical investing.
Even though we're lifting the bar, we know your convictions to doing good with your money may be higher and so we have served up our member's certified products with a large dose of transparency and independent verification, so that you can draw your own conclusions from reliable information and choose investments that best suit your individual needs.
*Information Disclosures
While all reasonable efforts are undertaken to ensure information and links on site are current there may be instances where information and documents are updated during the course certification (eg. PDS, Fact Sheet). Certified product issuers are required to update this information as soon as possible on the Responsible Returns site, but there may be some extenuating circumstances impacting timeframes.
The certification program may also assess information provided for certification based on proposed future changes to a responsible investment process that is in-line with Responsible Investment Association Australasia’s (RIAA) Responsible Investment Certification Program criteria. In such instances, members are similarly required to update this information on Responsible Returns within an agreed future timeframe. Old document versions may be reflected on site until this process is finalised.
I'd like to search for responsible and ethical investing options that match my values and interests
