Responsible Investing

The Investment Store is a strong advocate of Responsible Investing.

Responsible investment is a process that takes into account environmental, social, governance (ESG) and ethical issues into the investment process of research, analysis, selection and monitoring of investments.

Responsible Investing can take a number of forms and approaches; from excluding investments in certain industries and sectors deemed unethical (like tobacco, controversial weapons and gambling) to identifying investments that have positive impacts on the environment and society (e.g. investments in renewal energy).

Several research studies have demonstrated that companies with strong corporate social responsibility policies and practices are sound investments. For example, research by Harvard Business School in 2016 concluded that "portfolios providing material ESG metrics provided superior returns"1.

In New Zealand and indeed around the world, there has been a significant increase in the adoption of responsible investing. In its most recent benchmark report in New Zealand, the Responsible Investment Association of Australasia noted "the vast majority of professionally managed investments are invested as responsible investments, with total assets under management having more than doubled in just 2 years". According to the report, $183.4 billion of funds are responsibly invested, up from $131.3 billion in 2016, and $79 billion in 20152.

In consumer research undertaken by RIAA in 2018, the overwhelming majority of New Zealanders (81%) believe that it is important that their KiwSaver funds consider environmental, social and/or ethical factors along with financial analysis when investing3.

The Investment Store is a member of the Responsible Investment Association of Australasia (the peak industry association championing Responsible Investing in New Zealand and Australia (RIAA)). Matthew Mimms is currently a board member of RIAA.

The Investment Store encourages it's fund manager partners to consider responsible investment issues as part of its investment approach and process. To learn more, please contact us on 0800 331 041 or by e-mail to info@theinvestmentstore.co.nz

 

1Sakis, K., Pinney, C & Serafeim. G. (Harvard Business School) ESG Integration in Investment management: Myths and Realities, Journal of Applied Corporate Finance 29  (no2 Spring 2016); 10 - 16. 2RIAA Responsible Investment Benchmark Report New Zealand 2018. 3RIAA and Mindful Money (2018) Responsible Investment New Zealand Consumer Survey 2018, September.

 
 
 
 

Want to learn more about Responsible Investing?

If you are a financial adviser and would like to learn more about Responsible Investing, RIAA has produced a  Financial Adviser Guide to Responsible Investing. You can access a copy by clicking here.

We have been strong advocates for Responsible Investing for a decade. We believe that Responsible Investing is important because:

  • There is strong evidence to suggest that successfully incorporating ESG factors into the investment process leads to  better risk adjusted returns
  • Taking a more responsible approach to investing better aligns investment portfolios to investor's values
  • Responsible investing helps shift capital away from business activities that have negative outcomes (e.g. tobacco) to areas that have positive outcomes (e.g. clean technologies, renewal energy).

The Investment Store is a member of the Responsible Investment Association of Australasia.

 

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