Sustainable Investing = 30% of Global Managed Assets
By James Griffitts, Contributor
A study conducted by the Global Sustainable Investment Alliance (GISA) has found that sustainable investing now accounts for 30% of professionally managed assets globally. Sustainable investing, which factors environmental and social criteria into portfolio selection, has grown by 61% globally over two years, reaching $21 trillion at the beginning of 2014.
GISA defined sustainable investing to include several methods for investing. The most widely practiced strategy globally was negative screening, meaning the exclusion of investments found to be unsustainable. Negative screening is used most commonly in Europe and accounts for $14 trillion of the global total.
The most frequently used method for sustainable investment in the U.S. is called ESG integration. It’s an analysis process that integrates environmental, social, and corporate governance factors (traditionally considered to be “non-financial” factors) into investment decision-making. ESG factors are key performance indicators used to judge a company’s environmental and social impact and transparency. This method is popular in Asia and the Pacific as well as the U.S. and accounts for almost $7 trillion in assets.
According to GISA, sustainable investing is most widely conducted in the U.S., Canada, and Europe, which account for 99% of sustainable investing assets. Despite a growing sustainable market in Asia, it is not yet a widespread practice in the region. The GISA study noted, however, that in Asia there has been a rise in investor interest in products which address resource efficiency and climate change.
GISA found that sustainable investing is growing globally. In the U.S., sustainable investing grew by 76% between 2012 and 2014. Over the same two year period, Canada witnessed 60% growth, nearing $1 trillion in sustainable assets. Europe continues to lead the way in impact investing with astounding 146% growth between 2012 and 2014 and accounts for 64% of global sustainable assets.
Sustainable investing is also gaining popularity in Australia and New Zealand, now topping $180 billion. Interest is also rising across Asia. In Japan, green real estate and impact investing bonds are growing in popularity. The International Finance Corporation, part of the World Bank Group, predicts growth in sustainable asset investment in Africa over the next five years, and sustainable investing is also growing in Latin America.
GISA’s report highlighted the increasing global push for better environmental and social practices by investors. Sustainable investing continues to show impressive growth numbers worldwide and is poised to expand beyond the developed world and push companies and governments towards sustainable socially responsible practices.
At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?
Posted: April 1, 2015