Investor demand for sustainable, responsible and impact investing has grown by 33% since 2014, according to the Forum for Sustainable and Responsible Investment (US SIF) Foundation’s 2016 report.
The study found that investors now consider environmental, social and governance across $8.7 trillion of assets professionally managed in the U.S., about a fifth of total assets under management tracked by Cerulli Associates.
Lisa Woll, chief executive of US SIF and its foundation, said money managers and institutional investors in 2016 were scrutinizing concerns, such as climate change, weapons production, human rights, and corporate political spending and lobbying, across a broader span of assets than in 2014.
“A diverse group of investors is seeking to achieve positive impacts through such strategies as corporate engagement or investing with an emphasis on community, sustainability or the advancement of women,” Wohl said in the study’s introduction.
The research identified 477 institutional investors, 300 money managers and 1,043 community investment institutions with $8.1 trillion in U.S.-domiciled assets at the beginning of 2016 that apply various ESG criteria in their investment analysis and portfolio selection.
In addition, $2.6 trillion in U.S.-domiciled assets were held by 225 institutional investors or money managers that filed or co-filed shareholder resolutions on ESG issues at publicly traded companies from 2014 through 2016.
The study arrived at the overall $8.7 trillion figure for SRI assets after eliminating double counting for assets involved in both strategies and for assets managed by money managers on behalf of institutional investors.
It said several factors account for growth in ESG assets, including growing market penetration of SRI products, the development of new products that incorporate ESG criteria and the incorporation of ESG criteria by numerous large asset managers across wider portions of their holdings.
In addition, during the past two years, numerous institutional investors and asset managers have disclosed how they are implementing the Principles for Responsible Investment.
From 2014 to 2016, the report said, 176 institutional investors — including public funds, religious investors, labor funds, foundations and endowments — and 49 investment management firms with total assets of $2.6 trillion filed or co-filed resolutions.
The number of institutions and managers actively involved in filing shareholder resolutions has remained relatively stable over the past four years, while the proportion of shareholder proposals on social and environmental issues that receive high levels of support has been rising.
Since 2013, approximately a third of these proposals received support from some 30% of the shares voted. From 2007 through 2009, only 17% of proposals cleared this threshold.
Money managers and institutional investors are pursuing engagement strategies on ESG issues in addition to filing shareholder resolutions at publicly traded companies. Fifty-seven institutional asset owners reported that they engaged in dialogue with companies on ESG issues, as did 61 asset managers.
SRI Drivers and Trends