Responsible investment now one third of global capital markets
- Global responsible investment has reached US$35.3 trillion in five major markets, a 15% increase in the past two years (2018-2020)
- Responsible investment assets under management make up a total of 36% of total assets under management
- Responsible investment assets continue to grow in most regions, with Canada experiencing the largest increase in absolute terms over the past two years (48% growth), followed by the United States (42% growth), Japan (38% growth) and Australasia (25% growth)
- The US and Europe continue to represent more than 80% of global responsible investing assets
- Canada is now the market with the highest proportion of responsible investment assets at 62%, followed by Europe (42%), Australasia (38%), the United States (33%) and Japan (24%)
Today the Global Sustainable Investment Alliance (GSIA) released its biennial Global Sustainable Investment Review, revealing an industry that has grown to US$35.3 trillion as it transitions to one more focused on the short- and long- term impacts generated by investors.
In its fifth edition, the biennial Global Sustainable Investment Review 2020 maps the state of responsible investment of the major financial markets globally, combining regional data from the United States, Canada, Japan, Australasia and Europe. Responsible investment refers to the incorporation of environmental, social and governance (ESG) issues into the selection and management of investments.
This year’s report shows the continuing prevalence of responsible investment across the global investment industry, with assets under management reaching US$35.3 trillion, a growth of 15% in two years, and in total equating to 36% of all professionally managed assets across regions covered in this report.
“The Global Sustainable Investment Review 2020 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” said Simon O’Connor, Chair of the GSIA.
“This growth is being fuelled by rising consumer expectations, strong financial performance and the increasing materiality of social and environmental issues – from biodiversity to racial equity to climate change.”
It also reveals an industry that is in transition, with variations in the scale and growth of responsible investment in different regions, and rapid developments that are reshaping responsible investment to increasingly focus on moving the industry towards best standards of practice.
Many regions continue to see strong growth in responsible investment assets under management – with Canada experiencing the largest increase in absolute terms over the past two years (48% growth), followed by the United States (42% growth), and Japan (38% growth).
Other regions are slowing down their rate of growth or have seen a reported reversal – in particular Europe and Australasia. In both cases, this is largely due to changes in how sustainable investment is defined. In the case of the EU, there’s been a decline in absolute terms over this period (-13%), owing to revised definitions of sustainable investment that have become embedded into legislation as part of the European Sustainable Finance Action Plan. Meanwhile in Australasia, growth has been affected by tightening of industry standards.
The most common responsible investment strategy is ESG integration, followed by negative screening, corporate engagement and shareholder action, norms-based screening and sustainability-themed investment.
“Increasingly, there are expectations that sustainable investment is defined not just by the strategies involved, but by the short and long term social and environmental impacts that investors are generating through their sustainable investment approaches,” said O’Connor.
“This research confirms that responsible investment is not a fad or a trend; it’s a global paradigm shift,” said Dustyn Lanz, CEO of the Responsible Investment Association of Canada. “Leading investors are adopting a stewardship mindset, which is a critical starting point for capital to play a meaningful role in the transition to a sustainable economy.” He added, “A large portion of these assets analyze ESG factors from a risk management perspective. Looking ahead at the next phase of market development, I expect we’ll continue to see more investors focusing on sustainable and inclusive outcomes.”
This year’s report includes additional market insights from the United Kingdom, China, Latin America, Africa and other areas of Asia, all showing unique markets for responsible investment.
Download the full report here.
About the Global Sustainable Investment Review
The Global Sustainable Investment Review 2020 is the fifth edition of this biennial report mapping the state of sustainable investment in the major financial markets globally. This edition collates results from the US SIF: The Forum for Sustainable and Responsible Investment (US SIF), Japan Sustainable Investment Forum (JSIF), the Responsible Investment Association Canada (RIA Canada) and the Responsible Investment Association Australasia (RIAA) and in the case of Europe (including UK), from secondary industry data.
All 2020 assets are reported as of 31 December 2019, except for Japan which reports as of 31 March 2020. The report also includes additional market insights from the United Kingdom, China, and across Latin America, Africa and Asia, to form a global picture of the sustainable investment industry
About The Global Sustainable Investment Alliance
The Global Sustainable Investment Alliance (GSIA) is an international collaboration of membership-based sustainable investment organisations around the world. Our mission is to deepen the impact and visibility of sustainable investment organisations at the global level. Our vision is a world where sustainable investment is integrated into financial systems and the investment chain and where all regions of the world have coverage by vigorous membership-based institutions that represent and advance the sustainable investment community. For more information, visit gsi-alliance.org.
About the Responsible Investment Association
The Responsible Investment Association (RIA) is a nonprofit, membership-based organization dedicated to the advancement of responsible investment in Canada. The RIA’s membership is composed of over 400 institutional investors and investment professionals who practice and support responsible investing. To learn more about the RIA, please visit www.riacanada.ca.