Mainstreaming SRI Survey Results

The Institute for Sustainable Futures (ISF) is launching the results of its 2005 Survey "Mainstreaming Socially Responsible Investment (SRI): A role for Government?" .

The survey collected opinions across the business spectrum including SRI practitioners, institutional investors, related stakeholders, and interested government departments.

These results provide a critical understanding of the instruments that key industry members believe are most likely to encourage the widespread uptake of SRI.

Perception of SRI drivers

87% of respondents believe the Australian economy’s performance is positively driving SRI uptake, while 73% believe the limit of investment options in Australia is negatively affecting SRI uptake.

Current initiatives contributing to SRI uptake
When asked to rank eight identified initiatives regarding their potential to promote SRI uptake, Super Choice was ranked in the top three by 55% (ranked first by 33%), mainstream international research about SRI was ranked in the top three by 55% of the respondents, and the Ethical Investment Association’s, SRI Symbol ranked in the top three by 50% of respondents

Support for potential policy initiatives
Respondents were given 20 policy options that have been implemented internationally to help mainstream SRI. They were asked to select and rank five of these options that they would support in Australia. The five policy options that attracted the highest degree of industry support were, in order of popularity:

• A requirement of the initial profiling process, that financial planners ask potential customers if they are interested in investing in SRI (giving the recommendation in the current ASIC guidelines some ’teeth’).

• Mandatory sustainability reporting for ASX200 (as has been the case in France since 2001).

• Applying SRI to the Australian Government Future Fund as an illustration of Government leading by example (as is the case with an equivalent fund in Europe)

• A requirement that all superannuation funds offer an SRI option (as is currently being explored in the UK).

• Providing Capital Gains Tax relief on SRI investments

A challenge for sustainability reporting
50% of respondents indicated that the greatest barrier to sustainability reporting for businesses was a lack of identifiable benefits for outlay.

Further Investigation
The survey indicates an opportunity for further investigation into the feasibility and implementation of those policy options supported by stakeholders, including:

• Guidelines regarding information in the financial adviser-investor relationship to ensure that investors have the information necessary to make the best decisions for their needs;

• Government opportunities to lead by example through options such as SRI investment of the Future Fund;

• Options for expanding SRI in super funds by providing an SRI option or defaulting to an SRI investment fund; and

• The benefits to business from sustainability reporting to highlight the value of this process.

The value of such an investigation was recently recognised by the UK Department for Environment Food and Rural Affairs which is currently exploring a range of policy options to support SRI.

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