Responsible and Sustainable Investing

THE PATH TO 2030

As you may know, The Investment Store has been a keen supporter of responsible and sustainable investing for many years. The recent report from the IPCC highlights the stark nature of the situation we face. As UN Secretary General stated, “The alarm bells are deafening, and the evidence is irrefutable”. The report states, the world is already 1.09 degrees warmer than pre-industrial levels. Human activity is (unequivocally) causing this warming.

Whilst the report indicates that the effects of climate change are real and happening now, it also provides a glimmer of hope, in particular that the worst effects can be avoided if action is taken now. But the window of opportunity is narrow, and action taken in the next decade is crucially important.

As ever, money is critical in driving change and in many countries around the world, we are seeing finance and investment beginning to play a crucial role in the shift to a more sustainable economy.

Over the coming months, we will be publishing articles, highlighting topical news and developments and running a number of (virtual) events that not only highlight the sustainability challenges, but also discuss possible solutions, particularly from an investment standpoint.

In this edition, we discuss recent trends and growth in the responsible investment sector as highlighted in RIAA's recent NZ Benchmark report; and include a short article on the sustainability challenge.

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Responsible investment growth outpaces wider NZ market

In its recent published Responsible Investment Benchmark Report Aotearoa New Zealand 2021, the Responsible Investment Association of Australasia (RIAA) presented trends and growth in responsible investing in NZ. Highlights included:

The market for responsible investments in Aotearoa New Zealand has continued to soar in popularity, increasing 28% to $142 billion in 2020, with responsible investment assets growing at more than twice the rate of overall professionally managed investments.
The proportion of professionally managed funds now managed with leading practice responsible investment has grown from 38% in 2019 to 43% in 2020.
The proportion of New Zealand’s investment managers practising a leading approach to responsible investment nearly doubled in 2020, to comprise nearly half of investment managers purporting to engage in responsible investing.
The growth in responsible investment domestically reflects offshore trends, with global responsible investment assets reaching $US35.3 trillion at the start of 2020 (a 15% increase from 2018), according to data from the Global Sustainable Investment Alliance.

As RIAA states, "this is an industry in transition. There are rapid developments taking place across countries, regions and markets that are resetting expectations of both companies and investment managers. New standards and regulations are moving the industry towards leading standards of practice that contribute measurably to a more sustainable world. New Zealand is emerging as a leader in this regard".

You can access a copy of the full report HERE, and an executive summary HERE.

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29th July 2021

This year, Earth Overshoot Day falls on 29th July. This marks the day when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year. From now til the end of the year, we will in effect be depleting the earth’s natural resources over and above its ability to regenerate (and accumulate waste over, in particular greenhouse gases over and above the earth’s ability to absorb it). This is according to The Global Footprint Network, an award-winning international research organization which is focused and developing tools for advancing sustainability. To read more, please click HERE.

I trust that this is of interest and feel free to touch base if you have any immediate questions.

Kind regards,

Matthew Mimms, The Investment Store Limited

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