Simon O’Connor

Nine in ten Australians expect their assets to be invested responsibly,1 creating an opportunity for financial advisers to implement responsible investment (RI) strategies on behalf of their clients, according to AXA Investment Managers (AXA IM) and the Responsible Investment Association Australasia (RIAA).

To assist advisers in deepening their understanding of RI, RIAA and AXA IM have launched the free Financial Adviser Guide to Responsible Investment.

Simon O’Connor, Chief Executive Officer of RIAA, said the Guide provides advisers with practical ways to incorporate responsible and ethical investment practices into their businesses to better meet client requests.

“The Guide sets out to demystify RI, unscrambling all the jargon, to help advisers move up the learning curve fast so that they can have meaningful conversations with clients on the topic.

“Evidence continues to mount that responsible investments have the potential to deliver stronger risk-adjusted returns for investors. Advisers can no longer afford not to be informed. The good news is that by accessing the Guide – and educational resources from firms like AXA IM – advisers can strengthen their knowledge in this area, to deliver the best advice to clients,” Mr O’Connor said.

The spectrum of responsible investment

The RI universe is vast and covers a range of different investment approaches that all consider more than traditional financial information.

“The challenge for financial advisers is determining what approach aligns best to a client’s individual circumstances and values,” said Michelle Lacey, Head of Wholesale at AXA Investment Managers.

“While more and more people are asking their financial adviser about RI, there’s a degree of mystery surrounding it. RI covers a wide range of approaches, and it’s essential advisers have access to enough information to make informed decisions on responsible investments based on the needs of clients,” Ms Lacey said.

RI can be categorised into a range of strategies, including environmental, social and governance (ESG) integration, negative screening, positive or best-in-class screening, sustainability-themed investing and impact investing. There is no one best approach, and advisers need to select an approach that best matches the client’s needs. For some, this may require ESG integration – which refers to the consideration and analysis of ESG factors as part of the investment decision making process. For others, impact investing strategies may be best suited.

RI now constitutes the majority of the overall investment market in Australia, comprising $866 billion of assets, or around 55.5% of all assets professionally managed in 2017, according to research from RIAA. 2

The Guide will be presented to advisers by representatives from RIAA and AXA IM at a series of seminars in four cities across Australia this week.

Advisers wishing to attend a seminar and obtain a copy of the Guide should contact Michelle Lacey at michelle.lacey@axa-im.com.

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[1] Lonergan Research (prepared for the Responsible Investment Association of Australasia), Responsible Investment, October 2017.
[2] Responsible Investment Association Australasia, Responsible Investment Benchmark Report, 2018 Australia.

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