The recognition we receive through our various designations and ratings from independent third parties and researchers are an outcome of the commitment we have to managing portfolios in a particular way.

We made ethics the starting point for all our investments a long time ago, as one of the original ethical investors for Australians since 1986.

But there­ are a few reasons why we believe awards and ratings from industry researchers are important. Not just for our customers and investors, but for our own continuous improvement and the improvement of other professional investment managers around us.

The objective measurement that sits behind many of these accolades can help individuals and financial advisers judge whether investment firms are living up to their responsible investing promises.

Measurement and public recognition also pushes us to continually refine what we do so we can stay ahead of local and global best practice standards.

At a time when there are more investment managers making public commitments to responsible investing² than ever before, judging authenticity and continually raising the bar on best practice standards have never been as important.

The objective measurement that sits behind many of these accolades can help individuals and financial advisers judge whether investment firms are living up to their responsible investing promises.

Recent accolades

Australian Ethical’s standing as one of the country’s leaders in sustainable and responsible investing has once again been publicly recognised in 2023 by researchers and raters, including Morningstar, the Responsible Investment Association Australasia and Rainmaker, adding to the accolades we have been awarded over the years.

2023 Morningstar ESG Commitment Leader

• 1 of only 8 asset managers globally and the only Australian Leader
• Evaluated on three key pillars: Philosophy & process, Resources, Active Ownership

RIAA Responsible Investment Leader 2023¹

• Investment managers in the top 20% of scores on RIAA’s Responsible Investment Scorecard, which assess four key factors: commitment to responsible investing, systematic process to managed ESG risk, being stewards for stronger and more resilient markets, and allocating capital to target sustainability outcomes.
• Demonstrates an exceptional ability to deliver on its responsible investment promises

Rainmaker ESG Leader Rating 2023

• Earned by Australia’s best super funds that perform ESG principles to a high level, while having a track-record of strong investment performance.

Our standing as one of the country’s leaders in sustainable and responsible investing has once again been publicly recognised in 2023 by researchers and raters, including Morningstar, the Responsible Investment Association Australasia and Rainmaker.

These recent ratings are far from an end point, they’re part of our ongoing commitment to harnessing the power of money to help create real change for people, planet and animals while growing portfolios.

It’s worth reading the analysis of these reports, we believe they provide relevant insights into who we are and why we do what we do.

Highlights

Following are some highlights from analysis and observations these awards are based on.

Philosophy and process

Having a systematic process that embeds ESG considerations and sustainable investing into everything an investment firm does is now a starting point for firms holding themselves out as having a commitment to responsible investing.

“A firm’s investment philosophy underpins every facet of the organisation,” Morningstar highlights.

“However, it takes time to develop a deeply rooted culture of sustainable investing,” Morningstar states.

“For this reason, firms with a long history of sustainable-investing practices, together with a well-integrated central philosophy of sustainability, have an edge in developing innovative sustainable-investing solutions, compared with peers that are newer to the space,” the researcher states.

It’s more difficult for established investment firms to genuinely embed a responsible investing framework into an existing philosophy and process, meaning the newcomers to ethical investing are at a disadvantage, the researcher observations suggest.

While there is a growing number of managers saying they have a commitment to responsible investing, the researchers acknowledge it takes time for investment firms to live and breathe this commitment.

Strong stewards

More and more, investors and fund researchers want to see evidence of active ownership which includes examples of corporate engagement.

They want to see investors hold companies and their leadership teams to account, something that can requires a big commitment from an investment firm’s resources.

Whether it’s behind closed doors in the boardroom, or publicly calling out companies where negotiations through traditional shareholder avenues might have stalled, the expectation for investment firms to be active continues to rise.

“Committing to responsible investment without implementing strong stewardship practices does not lead to a comprehensive and effective responsible investment strategy overall,” RIAA states. Commitment to resourcing active stewardship is what sets Responsible Investment Leaders apart from non-leaders in RIAA’s latest report.

In November 2022, we called on the NSW Government and Lendlease to be transparent about the width of the koala corridors. Our engagement with Lendlease had since stalled, and in March 2023, we divested from the company.

Standards rising

The increasing number of investment firms making a commitment to responsible investing is set against the backdrop of increasing regulatory scrutiny and awareness among consumers of greenwashing. This makes measurement and independent oversight of funds’ approaches even more important in our view.

“Evolving standards and increased regulatory scrutiny has led to tightening definitions and lifting expectations for responsible investment organisations,” RIAA states.

Australian investment managers have been quick to respond to the rising expectations on responsible investment managers globally but will need to continue to hone their ESG skills and adapt to an evolving landscape, RIAA highlights.