Sustainable investment has surged worldwide by more than a third since 2016, reaching assets of more than $30 trillion at the start of last year, new global financial analysis released last week has found.
Sustainable investment assets — which includes environmental, social and governance (ESG) and impact investing — have grown 34 percent worldwide since 2016, according to the Global Sustainable Investment Alliance (GSIA).
The fourth edition of GSIA’s biennial global sustainable investment review brings together results from regional market studies by the sustainable investment forums of Europe, the United States, Japan, Canada, Australia and New Zealand.
It also includes data on the African sustainable investing market in cooperation with the African Investing for Impact Barometer, alongside several countries in North, Central and South America using data provided by the Principles for Responsible Investment (PRI).
Europe accounts for the largest concentration of sustainable investment assets globally, totaling $14.1 trillion, despite its overall global share falling from 53 percent to 49 percent of the total between 2016 and 2018. This “may be due to a move to stricter standards and definitions of sustainable investing” in Europe, according to GSIA.
The second-largest region based on value was the United States, which saw its sustainable assets under management (AUM) grow from $8.7 trillion at the start of 2016 to $12 trillion two years later, marking a rise of 38 percent.
Japan-domiciled sustainable investments quadrupled over the period, rising from just 3 percent of total professionally managed assets in the country to 18 percent to become the largest center for sustainable investing after Europe and the United States.
ustainable investing assets also grew by 42 percent over the two-year period in Canada, where such assets make up half of the country’s overall AUM.
Australia and New Zealand together represent the region with the greatest proportion of sustainable assets relative to total AUM, at 63 percent.
The largest sustainable investment strategy globally at the start of 2018 was negative/exclusionary screening at $19.8 trillion, followed by ESG integration ($17.5 trillion) and corporate engagement/shareholder action ($9.8 trillion), the analysis found.
“Negative screening remains the largest strategy in Europe, while ESG integration continues to dominate in the United States, Canada and Australia/New Zealand in asset-weighted terms,” the report states. “Corporate engagement and shareholder action is the dominant strategy in Japan.”
Impact investing, which targets investments aimed at solving social or environmental problems, is a “small but vibrant segment of the broader sustainable and responsible investing universe” in all of the market studied, added GSIA.
A separate report also released last week by the Global Impact Investing Network (GIIN) estimates the current size of the global impact investing market at $502 billion.
Based on collation of AUM data on more than 1,300 impact investors around the world, GIIN claims the market report is the most comprehensive to date, although it concedes that calculating a clear estimate of impact investing’s market size still remains “difficult” due to the “lack of available data and the fast-evolving nature of the industry.”
“The results of this study underscore the momentum of impact investing, but also the need for continued growth across the responsible investing landscape if we are to address global challenges like those outlined in the Sustainable Development Goals,” said GIIN CEO and co-founder Amit Bouri. “As the industry grows, we need to be sure it scales with integrity — ensuring good intentions translate into real impact results.”