US SRI investing assets surge 76%

The US SIF Foun-dation’s latest biennial trends survey titled ‘Report on US Sustainable, Responsible and Impact Investing Trends 2014’, marks the tenth edition of the report first published in 1995 and has revealed that total US-domiciled assets under management using SRI strategies grew $2.83 trillion (trn) - equivalent to 76% - in the two-year period to the start of 2014.

Lisa N. Woll, ceo of US SIF and the US SIF Foundation, reflecting on the rise of impact investing strategies stated: “While the variety of labels - ESG, Ethical, Green, Impact, Mission, Responsible, Socially Responsible, Sustainable and Values - can sometimes be confusing, the core message is clear. A growing number of investors, institutions and financial professionals are deploying and managing capital to build a more sustainable and equitable economy.”
As a result the level of assets identified as following SRI strategies now account for more than one in every six dollars under professional management in the US. Woll added: “Sustainable investment strategies are being applied across asset classes to promote corporate social responsibility, build long-term value for companies and their stakeholders, and foster businesses that will yield community and environmental benefits.”

The report, which was conducted between May and August 2014 and based on a survey of around 1,500 investment management firms and institutional asset owners identified as implementing sustainable investment strategies or believed to be new SRI-investment entrants, asked recipients to detail whether they “considered ESG issues” in their investment analysis and portfolio selection, list the issues considered and provide the value of US-domiciled assets affected as of 31 December 2013.

US SIF’s researchers noted that much of the growth could be explained by “the expansion of the investment funds offered by money managers that incorporate ESG factors into investment decision-making.” The value of assets managed at the start of 2014 by investment firms considering ESG issues grew more than three-fold - up from $1.4trn at the start of 2012 to $4.8trn.

In a similar fashion, the pool of assets to which institutional owners - including public pension funds, foundations and educational endowments - apply ESG criteria has grown to $4.04trn - up 77% since 2012. Over the two-year period to 2014, the number of private equity and other alternative investment funds considering ESG factors grew to 336 with $224 billion (bn) in assets (2012: $132bn/301 funds).

Following the shooting of 26 people on 14 December 2012 at Sandy Hook Elementary School in Newtown, Connecticut, the report noted that policies restricting investments in weapons manufacturers have spread. Here US SIF’s report stated: “Since 2012, consideration of these criteria by money managers has grown nearly four-fold in asset-weighted terms to affect $588bn.” Among institutional asset owners, concerns over weapons now apply to $355bn in assets, equating to a near five-fold increase.

Separately, Sudan remains the “leading social issue” for institutional investors as regards assets affected, with restrictions on investing in companies doing business in this country affecting $2.7trn in assets.

Katherine Garrett-Cox, chief executive of Alliance Trust Investments, a UK fund management firm and member of UK Sustainable Investment & Finance (UK SIF), echoing trends in the US pointed out late this January in a Forum comment in City A.M. that: “Over the past 12 months I believe that there has been a real change in the [investing] mindset, and socially responsible investing (SRI) considerations have truly entered the mainstream investment consciousness.”

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