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Jul 20, 2021

Sustainable investments hit 35.9 percent of all assets, notes research

Global Sustainable Investment Alliance releases annual report

Sustainable investments have grown to represent more than a third of all assets globally, according to research from the Global Sustainable Investment Alliance (GSIA).

Drawing on data from the US, Canada, Japan, Australasia and Europe, the GSIA says sustainable investments accounted for 35.9 percent of total assets under management at the start of 2020, compared with 33.4 percent in 2018.

In terms of value, sustainable investments at the beginning of 2020 stood at $35.3 tn, a rise of 15 percent over the previous two years, says the organization.

‘The report again demonstrates that sustainable investment is a major force shaping global capital markets and, in turn, is influencing companies and others seeking to raise capital in those global markets,’ write the authors.

In recent years, investors have intensified their focus on ESG issues, driven by the demands of clients, regulators and NGOs. Sustainable investment funds have also performed strongly, helping to draw in more assets.

GSIA says it uses an ‘inclusive definition of sustainable investing’ for the report, covering strategies such as ESG integration, norms-based screening, best-in-class screening and impact investing.

The data is mainly collected from studies by GSIA’s member organizations. These include the Responsible Investment Association (Canada), the Forum for Sustainable & Responsible Investment (US) and the Japan Sustainable Investment Forum.

The research, now in its fifth year, finds that Canada has witnessed the strongest growth in sustainable investments. Between 2018 and 2020, the proportion of sustainable investments versus all assets grew from 50.6 percent to 61.8 percent.

Europe, by contrast, saw its proportion of sustainable investments fall from 48.8 percent in 2018 to 41.6 percent in 2020, according to the report.

‘In Europe, this was driven in large part by a strong legislative push that now explicitly sets out sustainability standards for sustainable finance products,’ write the authors, who caution against making year-on-year comparisons in regions where sustainability definitions have significantly changed.