Socially responsible investing (SRI) means integrating non-financial factors – such as ethical, social or environmental concerns – into the investment process with the aim of earning both a financial return and a moral ‘return’.  Such investments increasingly play a role in Australian and New Zealand portfolios, with one in every two dollars under professional management subject to a responsibility investment strategy.  A clear majority (70%) of Australia’s largest superannuation funds have made some form of public commitment to responsible investing and about half have in place dedicated SRI options.

SRI growth

Growth in the broader SRI market in Australia and New Zealand is accelerating, growing 247% from 2014 to 2016 to reach $516 billion.  This growth is part of a global trend that increasingly sees investors direct funds towards environmental and social mandates and is buoyed by the weight of our growing superannuation pool which is set to reach $9.5 trillion by 2035.   This will bring many opportunities to connect borrowers and investors across the spectrum and will give NAB and its customers the opportunity to create societal and financial value at the same time.

SRI not a detriment to financial returns

We’re pleased to share a report on SRI  produced by NAB’s long term research partner, the Australian Centre for Financial Studies.   The report seeks to explain the seven categories of SRI strategies and undertakes an extensive review of global performance data overall which concludes that SRI does not come at a detriment to financial returns.  Indeed, the incorporation of Environmental, Social and Governance (ESG) factors into the investment process might result in an outperformance effect.

NAB has played a lead role creating SRI options in the Australian debt market including the issuance of Australia’s first green bond and Australia’s first gender bond.  Consistent with findings of the report, these bonds achieved equivalent pricing to non-SRI NAB bonds of the same maturity.

NAB created these types of products to create demand in the SRI ecosystem so that we can continue to create financial products that address social and environmental issues and meet growing investor demand at the same time.

Download the report to find out more:

A review of socially responsible investing in Australia (PDF  582KB)