New Zealand's responsible investment market has been compared to other regions. Photo: 123RF
The level of responsible or ethical investment in New Zealand has surpassed so-called laggard funds for the first time, despite ongoing concerns about greenwashing.
The Responsible Investment Benchmark Report by the Responsible Investment Association Australasia (RIAA) compares New Zealand's responsible investment market to other regions, based on guidelines set by the Global Sustainable Investment Alliance.
It found investment reached $183 billion in 2022, accounting for 52 percent of the total managed funds market, at the expense of funds which included a mix of assets considered to be unethical, unsustainable or undesirable.
Investment into climate change-related themes, such as renewable energy and energy efficiency had almost doubled since 2021, reaching $16b.
The report said the 2.5 percent growth in responsible managed assets was particularly impressive considering the overall managed funds market value fell by 3.4 percent.
"What we have seen though is that as more and more funds are being managed by a higher quality level of responsible investment process, we've actually seen that pool of assets grow, whereas the wider market in 2022 actually shrunk," RIAA executive manager Dean Hegarty said, adding that demand for responsible investment funds would continue to grow.
"It's only a few years since responsible investment was seen as a niche market. But the landscape has now turned on its head - today, funds not actively engaged in responsible investment are not just lagging - they're stranded at the starting line of a race that's already in full swing."
However, would-be investors had ongoing concerns about greenwashing, rather than concerns about a lack of investment choices.
"This year, we set a higher bar for investment managers chasing Responsible Investment Leader status," Hegarty said, adding that more fund managers were seeking the independent certification offered by RIAA.
"What was once considered leading practice in responsible investment is now becoming the baseline."