The rise and rise of responsible investment

“It is clearly not enough for pension funds to just manage money for their members – that’s their job. But as investors we need to think more holistically and to also consider the world into which people retire.”

These are the words of Fiona Reynolds, CEO of Principles of Responsible Investment, who will be joining us in Australia next year for our new conference, TRANSFORM.

Fiona leads the London-based group of 1900-plus members which hold a collective AUD$100 trillion in assets under management. PRI’s members include investment giants BlackRock and Vanguard, Norway’s giant sovereign wealth fund, Wall Street’s Goldman Sachs and Morgan Stanley, as well as more than 130 Australian institutions including GBCA members Lendlease, AMP, Investa, Cbus and Australian Super.

Fiona says there has been a noticeable shift in the “tone from the top” of the investment community. Where once responsible investment sat on the outskirts of Wall Street, today it’s moving to the middle.

Most institutional investors now recognise that environmental, social and governance (ESG) factors drive value – and that financial performance and sustainability aren’t a zero-sum game.

A good indicator of this progress is Larry Fink’s recent comment that responsible investment does not mean sacrificing returns. BlackRock’s CEO said: “We are going to see evidence over the long term that sustainable investing is going to be at least equivalent to core investments. I believe personally it will be higher.”

More than one-quarter of assets under management globally are now invested according to ESG principles, and boardroom discussions increasingly focus on how core business practices can build a better society.

A generational shift is also underway as young investors want to understand how their money is making a difference to the world. A 2017 survey by Morgan Stanley’s Institute for Sustainable Investing, for instance, found that 86 per cent of millennials are looking at investment through an ESG lens.

Technology and big data are also driving shareholder demand for greater transparency. Investors are scrutinising company ratings and digging deeper into performance metrics – which is why topping the GRESB table is such a hotly-contested prize.

Green bonds are also growing rapidly. According to the Climate Bonds Initiatives, the first half of 2018 saw $103 billion in green bonds issued – a four per cent increase on the previous year.

Meanwhile, the UN’s 17 Sustainable Development Goals are encouraging investment that achieves positive returns for shareholders and society. The UN estimates that up to $5 trillion each year between now and 2030 will be required to meet the SDGs – and most of that will need to come from the private sector.

These are just a few of the countless signposts on the road to responsible investment. But as Fiona Reynolds says, “transformation is happening, but not at the pace or scale that is required”.

That’s why we are hosting our conference, TRANFORM, in Sydney from 19-20 March. We are determined to shake up the standard conference format with innovative sessions, multiple streams of content and dynamic speakers with out-of-the-box ideas.

In one panel alone we feature Jon Dee, co-founder of DoSomething and Planet Arc, Nina James from Investa Property Group, Nicole Bradford from Cbus Super as well as PRI’s Fiona Reynolds.

Professor John Thwaites and Sam Mostyn are unpacking how boards can respond to the SDGs and Stockland’s Davina Rooney will examine the long-term impact of the Taskforce on Climate-related Financial Disclosures (TCFD).

The leading thinkers we are bringing together for TRANSFORM have devoted their careers to building better places for people, to tackling our most difficult societal problems, and to making the financial system work in favour of the many not the few.

As Fiona says, responsible investment is the best way to align people, profit and planet. “As we know, one does not need to come at the expense of the other.”

So join us at TRANSFORM. Book before 14 December 2018 to save $400.

The GBCA will be hosting an event to recap the insights gleaned from two recent gatherings in San Francisco: the Global Climate Action Summit and PRI in Person Conference. Join some of the thought leaders who attended these events to gain insights relevant to our industry.