Responsible investing has been on the rise in Australia for some time now. It reflects a growing realisation that the investment industry can play an important part in helping the sustainability of the economy.
As consumer demand grows, more banks, asset management companies, superannuation funds and financial advisory services continue to adopt a responsible investing approach. A recent report from the Responsible Investment Association Australasia identified that responsible investments now make up $622 billion in 2016, an increase of 9% on the previous year1.
Up and up
With around 44% of all professionally managed assets now a part of the responsible investment movement2, there’s plenty of choice for investors. And those sustainability-focussed funds, which have a specific focus on environmental, social and governance issues, can also offer returns for their investors. The report showed that performance in Australian share funds over a 5-year period in the mainstream S&P/ASX300 accumulation index had an 11.6% return compared to the average responsible investment fund of 13%3 – a return which could make a difference to employees’ retirement savings.
When choosing to invest in a sustainability-focussed investment fund, employees should remember to check that the principles behind the fund are in line with their views. And as always when choosing an investment option, it's important to weigh up whether the risk, returns and fees are suited to your needs.
How we’re changing
AMP Capital has been investing in environmental, social and corporate governance (ESG) issues since 2001, and we signed up to the United Nations backed Principles for Responsible investment (PRI)4 in 2007.
We recently introduced a new ethical framework, which recognises and determines degrees of ‘harm’ or ‘denial of humanity’ against another person as a factor in why we should or shouldn’t invest in a company across all the funds we manage.
After looking at these factors, AMP Capital decided that manufacturers of tobacco, cluster munitions, landmines, biological and chemical weapons will be excluded from our portfolios. This means divesting approx. A$580million worth of funds in our portfolios that are directly or indirectly invested in tobacco-related products and the manufacturing of cluster munitions and landmines.
Find out more
You can find out more about AMP Capital’s commitment to responsible investing at ampcapital.com.au or by talking to your financial adviser or business development manager. Choosing the right investment today could shape the future of tomorrow.