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RIAA’s annual Responsible Investment Benchmark Report New Zealand details the size, growth, depth and performance of the New Zealand responsible investment market over 12 months to 31 December 2019 and compares these results with the broader New Zealand financial market.

To do this, RIAA reviewed the practices of 58 investment managers known to be applying responsible investment to some or all of their investment practices. These managers control approximately $278.9 billion in assets under management (AUM), which is 94% of the total professionally managed AUM (TAUM). Twenty-two of those responses were assessed directly via survey, and supplementary desktop analysis was undertaken for the remaining 36 investment managers.

For a second year, RIAA canvassed asset owners including pension funds to the extent that they directly manage investments, acknowledging the growing trend for pension funds to bring investment management in-house.

Key findings:

  1. The responsible investment market in New Zealand was worth $153.5 billion in 2019. 
  2. Many investors now claim to be responsible, and one quarter can demonstrate leading practice.
  3. For the first time, ESG integration (48%) replaces negative screening (10%) as the responsible investment approach that most influences the final construction of responsible investor portfolios.
  4. 71% of investment managers in the Responsible Investment Research Universe have a responsible investment policy and 60% make them publicly available.
  5. 62% of investment managers in the Responsible Investment Research Universe have at least one asset class (or 50% AUM) covered by an explicit and systematic approach to ESG integration, while 48% have more than three asset classes (or 85% of their AUM) covered.
  6. Investment managers in the Responsible Investment Research Universe are starting to demonstrate greater transparency through their stewardship activities.
  7. The issues most frequently screened are weapons and tobacco with both themes screened to some extent by 100% of survey respondents who use negative screening.
  8. Exclusionary screening for fossil fuel exploration, mining, extraction and production has increased significantly in popularity since 2018.
  9. Exclusionary screening of fossil fuels is beginning to catch up to consumer interest.
  10. For those investment managers using a sustainability-themed approach, social impact is the most popular theme, followed by climate change and energy efficiency.
  11. Impact investing AUM has grown over 13 times from $358 million in 2018 to $4.74 billion in 2019 for assets managed by financial intuitions included in the Responsible Investment Research Universe.
  12. The three most cited drivers for growth in responsible investment funds managed by survey respondents are alignment of investments with mission or values (44%);
  13. For the first time, financial performance data for New Zealand's responsible investment funds have been reported. Even though it draws from a low sample size, it can be seen that responsible investment multi-sector growth funds outperformed mainstream indices over some time horizons.
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