Sustainable investing, which considers environmental, social and governance factors in portfolio selection and management, now accounts for 30% of professionally managed assets across the globe, according to a recent study by the Global Sustainable Investment Alliance, a multinational membership organization.
GSIA reported that global sustainable investing assets had grown to $21 trillion at the beginning of 2014, a 61% increase over two years.
The U.S., Canada and Europe account for 99% of global sustainable investing assets, with 64% of the total in Europe.
Sustainable investing is not widely practiced in Asia, the study found, but noted growth of interest in investment products that address climate change and resource efficiency.
For purposes of its report, GSIA used an inclusive definition of sustainable investing.
It found that the largest sustainable investment strategy globally was negative screening or exclusion of unsustainable investments, representing more than $14 trillion. Negative screening is the most-deployed strategy in Europe.
ESG integration, the systematic and explicit inclusion of ESG factors into traditional financial analysis, accounting for $7 trillion, is the next most used strategy in the world, and now dominates in the U.S., as well as Australia/New Zealand and Asia, in asset-weighted terms.
Corporate engagement and shareholder action are Canada’s main strategy.
The study found that impact investing — targeted investments, typically in private markets, aimed at solving social or environmental problems — is a small but vibrant segment of the broader sustainable investing universe in all the markets studied.