Responsible investing selects investments by more than financial criteria. How seriously a company takes its environmental, social and governance responsibilities is also considered. There’s a belief that a company’s strategies on these issues can make a difference in how much it thrives. A strategic approach in areas like climate change, water use, employee wellbeing and community impact can affect long term success.
Companies are usually excluded if they are involved in tobacco, or weapons production, manufacturing, distribution or supply.
Socially responsible investing goes one step further and usually excludes socially controversial sectors or industries such as alcohol, gambling, tobacco, weapons and fossil fuels.
There is a full spectrum of responsible investment approaches. Some focus on avoiding harm, while others look for companies that actively contribute to positive solutions.
A recent report from the Responsible Investment Association Australasia (RIAA) says screened responsible investment funds increased in 2016 from $1.3 billion to $42.7 billion. That accounts for 61 per cent of New Zealand’s total assets under management.
Other key trends included:
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