Global sustainable investing assets balloon 61% to reach $21.4trn

The global sustainable investment market grew substantially over a two-year period between 2012 and 2014 in both absolute and relative terms according to ‘The Global Sustainable Investment Review 2014’ from the Global Sustainable Investment Alliance (GSIA), an international collaboration of membership based sustainable investment organisations including Euro SIF, the European Sustainable Investment Forum, and others in Australasia, Canada, the United States as well as the Japan Social Investment Forum.

The 36-page review, which follows an inaugural study from 2012, revealed that global sustainable investing assets have since risen by 61% to US$21.4 trillion (trn) - up from US$13.3trn in 2012. Over the course of this period the fastest growing region has been the US (+76% to US$6.57trn from US$3.74trn), followed by Canada and Europe.

Together these three regions are also the largest regions in terms of assets, accounting for 99% global sustainable investing assets, the review noted. That said, the majority of the identified global sustainable investments discussed in the Review - 65% - are in Europe.

In total the assets employing sustainable investing strategies have risen to 30.2% (2012: 21.5%) of the professionally management assets across the regions covered - Europe, US, Canada, Australia and New Zealand and Asia.

Simon Howard, chief executive of the UK Sustainable Investment and Finance Association (UKSIF), commenting said: “The Review shows that sustainable investing is growing rapidly around the world.” He added: “In the UK the market has been growing at 32% a year with ESG integration and engagement and voting being the leading styles. The market continues to expand in all segments with UKSIF members reporting increasing interest particularly from pension fund trustees.”

A foreword to the Review signed by parties including Francois Passant, Executive Director of Eurosif, Lisa Woll, ceo of US SIF, and Deb Abbey, ceo of Canada’s Responsible Investment Association, stated: “We are heartened by regulatory and other developments that promise to increase investors’ access to corporate environmental, social and governance data and to further drive growth in sustainable investing products.”

Of other key highlights, the most common sustainable investing strategy used globally is negative/exclusionary screening, which was found to be affecting US$14.4trn in assets. And, ESG integration, the systematic and explicit inclusion by investment managers of ESG factors into traditional financial analysis, is the “second most prominent strategy” in asset terms and affecting US$12.9trn.

In terms of corporate engagement and shareholder actions, the use of shareholder power to influence corporate behaviour, including through communicating with senior management and filing shareholder proposals - is the third most prominent strategy - affecting US$7.0trn.

The Review also noted that: “Negative screening is the largest strategy in Europe, while ESG integration now dominates in the US, Australia/New Zealand and Asia in asset-weighted terms.” Corporate engagement and shareholder action was found to be the dominant strategy in Canada.

These findings also show too that sustainable investing represents a significant share of the market not only in Europe, where more than half of professionally managed assets practice an ESG strategy, but also in Australia, the US and Canada, where its share of the market ranges from 17% to 31%.

Each region covered in the Review used a slightly different methodology to collect data for their respective regional reports and all assets reported were as of 31 December 2013, except Japan which reported as of 30 September 2014.
Further information: www.gsi-alliance.org