Most Aussies expect their money to be invested responsibly

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Four in five Aussies expect their money in super, banks and other investments to be invested responsibly, according to the Responsible Investment Association Australasia (RIAA).

RIAA has released From Values to Riches 2022: Charting consumer demand for responsible investing in Australia, which found that 17% of Australians already invest in ethical and responsible products, 72% say they are concerned with greenwashing and 74% are considering moving to another provider if they found out their current fund was investing in companies engaged in activities inconsistent with their values.

"It should be well known to the finance sector that there is a real risk if you're not considering the values of clients in the way you invest their retirement savings," says RIAA CEO Simon O'Connor.

aussies expect their money to be invested ethically riaa sustainability rachel alembakis

"There is a more discerning consumer out there today. One, we're seeing more of them are already investing responsibly and ethically - there's an increase of 28% from 2020 - and two, more are understanding that there are credible claims and less credible claims with super funds and banks, and they are getting smart at running the ruler over those claims."

Independent verification of sustainability claims is becoming key to winning trust. Three-quarters of Australians say they would be more likely to invest in responsible investment products that have been independently certified by a third party.

According to the RIAA Report, three-quarters of Australians say they would be more likely to invest in responsible investment products that have been independently certified or labelled, and 88% of Australians that already invest responsibly or plan to do so in the next 12 months say that independent responsible investment labels would convince them to invest.

Teachers Mutual Bank is certified as a responsible entity by RIAA and has recently become certified as a B Corp, capping what has been more than a decade of work building a reputation as a socially responsible bank, says Corin Millais, head of socially responsible banking at Teachers Mutual Bank Limited.

"It takes a while to build up a credible, authentic platform," Millais says. "That's what RIAA certification and B Corp certification means. The challenge for us now is looking at more consumers joining.

"Our proposition isn't to get green consumers. The challenge is for 100% of our members to be with a socially responsible bank. It's It's built in, not bolt on."

People who invested in responsible investing and ethical products are even more attuned to greenwashing than other investors - four out of five (82%) Australians that are considering investing in responsible investment products in the next 12 months are concerned about greenwashing.

"What this should be telling us is that we should have very credible products in the marketplace and that consumers won't have the wool pulled over their eyes anymore," O'Connor notes.

"We should be expecting that scrutiny is rising in our sector, and investors are looking for credible claims that can be backed up. The days of pure marketing spin without substance are well and truly gone."

Australians support action on climate change - 84% of respondents believe it is important their super fund or bank commits to reducing greenhouse emissions (84%), 83% want targets for emissions reductions and 81% want to see them pledge to achieve net zero by 2050.

Social issues are also rising up the agenda - 74% of Australians say social issues are important when they think about investing their money, up from 64% in 2020.

RIAA also found a mismatch between the social and environmental issues between what consumers are concerned about and what products on offer - 67% of Australians want to avoid animal cruelty, testing, and animal products while only 32% of investment providers offer such products.

Nearly two-thirds of Australians also want to avoid investments that violate human rights, while only 39% of responsible investment providers deliver products that meet this criterion.

This article first appeared on FS Sustainability

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Rachel Alembakis is the Managing Editor of FS Sustainability, a Rainmaker title that examines how investors and companies integrate environmental, social and corporate governance issues into their decision-making processes. She has more than a decade's experience covering investment issues for a range of publications in Australia and overseas.

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