Tracking Australia’s Sustainable Investment Market

Australia and New Zealand’s sustainable investment market is worth US$178 billion (1.3%), behind Europe at US$8758 and the United States at US$3740, according to the ‘2012 Global Sustainable Investment Review’.

The report found that Impact Investing and sustainability themed investments are comparatively small at US$ 89 billion and US$ 83 billion respectively.

Pablo Berrutti, Chair of Responsible Investment Association of Australasia (RIAA)’s Board of Directors said that the release of the first Global Sustainable Investment Review and the launch of the Global Sustainable Investment Alliance mark an important milestone for responsible investors globally.

"From an Australian perspective we are watching with interest the impact investment approach as it continues to grow from a very low base. Unlike some other approaches impact investing has appeal to both retail and institutional investors and so it has the potential to grow very rapidly in the coming years,” Berrutti said.

"The report shows that there are a number of approaches to responsible investment which satisfy different people’s needs, with some being more popular in some countries than others."

Sustainable investment in Australia amounted to US$ 178.5 billion, representing approximately 18 per cent of total assets under management, a figure similar to the Canadian sustainable investing industry.

Australia is one of only two regions in the report, the other being Africa, where ‘integration’ is the largest strategy used by sustainable investors. Integration is used on behalf of US$ 127 billion in assets, or 71 percent of all sustainable investing assets in Australia.

“The report clearly shows that while retail investors have had the ability to make sustainable or ethical product choices for many years, only now are we seeing a significant number of mainstream investors differentiating themselves on their approach to managing environmental, social and corporate governance issues across their entire businesses,” Berrutti said.

“Encouragingly all areas of responsible investment are growing which in turn gives everyone from retail investors to sovereign wealth funds an opportunity to allocate money to responsible investment managers regardless of the approach."

The report is the first to collate the results from the market studies by regional sustainable investment forums from Australia, Europe, the United States, Canada,Asia, Japan, and Africa. It measures sustainable investments in all asset classes, from public equities and fixed income to hedge funds and microfinance.