Sustainable investment has surged worldwide by more than a third since 2016, reaching assets of more than US$30 trillion at the start of 2018. The recently released biennial Global Sustainable Investment Review 2018, also showed the Australasian region leading globally in the uptake of responsible investment with 63% of total assets under management in Australia and New Zealand using a responsible investment approach.
In its fourth edition, the biennial Global Sustainable Investment Review produced by The Global Sustainable Investment Alliance, brings together the results from regional market studies by the responsible investment forums of Europe, the US, Japan, Canada, Australia &New Zealand. It also includes data on the African responsible investing market and highlights from several countries in North, Central and South America.
“It is pleasing to see the continuing growth of responsible investment, both in our region and globally” said Simon O’Connor, CEO of the Responsible Investment Association Australasia. “The investment community is fast realising the correlation between consideration of environmental, social and governance factors, and positive portfolio performance. At the same time, consumers are increasingly demanding investment products that align with their values.“
In Australia responsible investment assets under management reached $866billion at the end of 2017 (RIAA’s 2018 Responsible Investment Benchmark Report) and in New Zealand hit new heights with NZ$183.4 billion managed as responsible investments at the end of 2017 and broad responsible investing approaches accounting for 53 percent of responsible investing assets in New Zealand (RIAA’s 2018 Responsible Investment Benchmark Report). Updated figures for each market will be released in July 2019.
The Review shows Europe has the largest amount of assets that are responsibly invested, with the US the second largest region, growing from US$8.7 trillion in 2016 to US$12.0 trillion at the start of 2018, an increase of 38%. In Japan, sustainable investing assets quadrupled from 2016 to 2018, growing from just 3% of total professionally managed assets in the country to 18%. This growth has made Japan the third largest centre for responsible investing after Europe and the US.
The largest responsible investment strategy globally is negative/exclusionary screening (US$19.8 trillion), followed by ESG integration (US$17.5 trillion) and corporate engagement/shareholder action ($9.8 trillion). Negative screening remains the largest strategy in Europe, while ESG integration continues to dominate in the US, Canada and Australia and New Zealand in asset-weighted terms. Corporate engagement/shareholder action is the dominant strategy in Japan.
Money managers around the globe said clients were increasingly asking for sustainable strategies and that climate change became a leading issue for investors this year. Retail investors bought up more ethical funds, according to the report, and now account for about 25 percent of assets, up from 20 percent in 2016.
The report concludes that sustainable investing is “increasingly accessible,” with sustainable investing options available through a broadening array of investment vehicles and across asset classes.