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Global Sustainable Investment Assets Grew by a Third in 2 Years: Report

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Global sustainable investment assets grew by 34% between the beginning of 2016 and the start of 2018 to $30.7 trillion, according to a biennial report released Monday by the Global Sustainable Investment Alliance.

Sustainable investment commanded a sizable share of professionally managed assets in each region in the study, ranging from 18% in Japan to 63% in Australia and New Zealand.

According to the report, Europe accounted for the largest concentration of sustainable investment assets globally, $14.1 trillion. However, Europe’s share of sustainable investing assets in the region’s overall assets under professional management fell from 53% to 49%, possibly because of a move to stricter standards and definitions of sustainable investing.

The U.S. was the second largest region based on its value of sustainable investing assets, which grew from $8.7 trillion in January 2016 to $12 trillion in January 2018, an increase of 38%. Assets managed under sustainable strategies made up more than a quarter of total professionally managed assets.

Japan’s sustainable investing assets quadrupled during that period to $2.2 trillion, growing from just 3% of total professionally managed assets to 18%.

In Canada, sustainable investing assets grew by 42% over the two-year period to $1.7 trillion, accounting for more than half of professionally managed assets in the country.

Australia and New Zealand, with total 2018 assets of $734 billion, had the greatest proportion of sustainable investment assets relative to total assets under management: 63%.

The GSIA included these activities and strategies under the sustainable investment umbrella:

  • Negative/exclusionary screening
  • Positive/best-in-class screening
  • Norms-based screening
  • Environmental-social-governance integration
  • Sustainability themed investing
  • Impact/community investing
  • Corporate engagement and shareholder action

At $19.8 trillion, negative/exclusionary screening was the largest sustainable investment strategy, followed by ESG integration at $17.5 trillion and corporate engagement/shareholder action at $9.8 trillion.

Negative screening remained the largest strategy in Europe, while ESG integration continues to dominate in the U.S., Canada and Australia/New Zealand in asset-weighted terms. Corporate engagement and shareholder action was the dominant strategy in Japan.

Norms-based screening has lost ground in Europe, with substantially fewer assets managed under this strategy in 2018 than in 2016. Despite modest growth in assets managed under norms-based screening in Canada and more rapid growth in Japan, the global total of these assets fell by 24% during the two-year period to $4.7 trillion.

Impact investing is a small but vibrant segment of the broader sustainable and responsible investing universe in all the markets studied. In the report, GSIA defined impact investing as targeted investments aimed at solving social or environmental problems.

Community investing, whereby capital is specifically directed to traditionally underserved individuals or communities, is included in this category, as is finance that is provided to businesses with an explicit social or environmental purpose.

The report said institutional investors held 80% of sustainable investment assets in 2016 and retail investors 20%. Two years later, the retail portion had grown to 25%.


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