Stockholm (NordSIP) The Global Sustainable Investment Review 2016, the biennial Global Sustainable Investment Alliance (GSIA) report that compiles results from regional market studies by sustainable investment forums in Europe, the U.S., Canada, Australia, New Zealand, Asia and Japan, showed a continuing global growth of assets in sustainable investment strategies, albeit at a slower pace than previous years. The Bloomberg-sponsored report, which was released Monday, draws on in-depth regional and national reports from GSIA members such as Eurosif, US SIF, Responsible Investment Association Australasia and others.
Global sustainable investment assets reached $22.89 trillion at the start of 2016, a 25% increase from 2014 and accounting for 26% of all professionally managed assets globally, the report showed. By comparison, however, sustainable assets grew 61% globally between 2012 and 2014. Sustainable investing grew in both absolute and relative terms, with Europe accounting for over half of global SRI assets at 53% ($12.4 trillion), the U.S. at 38% ($8.72 trillion), a fast-growing Japan ($474 billion) (Japan provided information for the first time on sustainable investing activities of a number of institutional asset owners), with Australia and New Zealand bring up the rear.
The report suggests that the largest sustainable investment strategy globally is negative/exclusionary screening, at $15.02 trillion worth of assets, followed by ESG integration at $10.37 trillion and corporate engagement/shareholder action at $8.37 trillion. While negative screening is the largest strategy to be employed in Europe, ESG integration leads in the U.S., Canada, Australia, and elsewhere, with corporate engagement and shareholder action being the primary sustainable investment strategy in Japan.
Institutional investors such as pension funds still dominate the SRI market, but interest from retail investors is growing. The relative proportion of retail SRI investments in Europe, the U.S. and Canada increased from 13% in 2014 to 26% at the outset of 2016, with over a third of U.S. SRI assets being in retail. Interest in green finance, including in climate-aligned bonds, has also surged due to concern over climate change, shifting the average SRI asset allocation towards bonds over equities. China has been an important contributor, as it is now the largest issuer of climate-aligned bonds with $220 billion in issuances, according to the Climate Bonds Initiative.
The fastest growing strategy, though also the smallest in absolute dollar terms, was impact/community investing. Several GSIA members reported that the consideration of fiduciary duty and client demand were important drivers for sustainable investing.
Download the report here
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