The responsible investment market in New Zealand hit a record $179 billion in 2021, a 26 percent jump compared to 2020 according to the Responsible Investment Association Australasia (RIAA), as more investors seek assets that have a positive impact and attractive returns.
Assets invested in this strategy accounted for almost half of the total market, with 19 investment managers and asset owners out of the 52 assessed demonstrating leading responsible investment practice, according to RIAA’s Responsible Investment Benchmark Report Aotearoa New Zealand 2022.
Negative screening remained the preferred approach to responsible investing among fund managers in New Zealand, increasing by 22 per cent compared to 2020 to reach $197 billion. Top issues were tobacco, controversial weapons or all weapons, gambling and adult entertainment.
ESG was the second most common investment strategy, rising 24 per cent to reach $177 billion. Four out of five portfolio managers or asset owners applied ESG integration to at least 80 per cent of assets under management (AUM).
Corporate stewardship comprising engagement and shareholder action was the third most widely applied responsible investment approach, increasing by nine per cent to $167 billion.
Sustainability-themed investments reached a new record of $40 billion, up $18 billion in 2021 alone, which included sustainability-linked loans. Almost half of all sustainability-themed investment assets under manager targeted climate change-related themes.
Other investment themes included green property (12 per cent of AUM), waste management and circular economy (10 per cent), sustainable transport (10 per cent) and healthcare and medical products (9 per cent). Impact investment grew by $5 billion to reach $8 billion primarily comprised of green, climate, social and impact bonds.