The Global Sustainable Investment Review 2012 is a collaboration of the Global Sustainable Investment Alliance (GSIA), as well as nonmember organizations AfricaSIF.org and SIF Japan and is the first report to collate the results from the market studies of regional sustainable investment forums from Europe, the US, Canada, Asia, Japan, Australia and Africa. Sustainable investment information was not available from the Latin American regions, which do not yet have an organized sustainable investment forum. The report is based on the work of seven sustainable investment forums which, using detailed surveys, localized knowledge, and secondary sources, have evaluated and compared the sustainable investment practices of asset owners, asset managers and individual investors around the world. This report includes all major asset classes, from public equities and fixed income to hedge funds and microfinance. Investment strategies such as positive and negative investment selection, best-in-class screening, ESG integration, and shareowner engagement are examined and broken down across regions.
The report finds that, globally, at least US$ 13.6 trillion worth of professionally managed assets incorporate environmental, social and governance (ESG) concerns into their investment selection and management. This represents 21.8 percent of the total assets managed professionally in the regions covered by the report, conclusively showing that the sustainable investment industry has significant scale in the global arena. This is encouraging in a time when many parts of the financial industry are under pressure to demonstrate value and it suggests that there are high levels of investor interest around the world in financing the businesses, projects and ideas needed to drive sustainable growth.
According to the definition of sustainable investment used throughout this global report, Europe is the largest region with about 65 percent of the known global sustainable investing assets under management. The three biggest regions—Europe, the United States, and Canada—together account for 96 percent of such assets.
Looking beyond the aggregates, the report finds that the most common sustainable investing strategy used globally is negative/exclusionary screening, with US$ 8.3 trillion in assets. This is followed by integration (US$ 6.2 trillion) and corporate engagement/shareholder action (US$ 4.7 trillion). Norms-based screening is also significant at US$ 3.0 trillion, but this approach is currently only found on a large scale in Europe. Positive/best-in-class screening stands at just over US$ 1.0 trillion, while impact investing and sustainability themed investments are comparatively small at US$ 89 billion and US$ 83 billion respectively.
Negative screening is the most consistently applied approach across the markets covered in this study, as it is found in significant scale in all markets except Japan. It is interesting to note the large differences in the popularity of specific strategies employed across regions. For instance, the US market contributes most of the global assets invested in positive screening and impact investing, while most thematic investments originate from Europe and Africa. These regional differences present opportunities for learning and for the exchange of knowledge and practices.
Finally, all the regions expect the proportion of assets managed with reference to ESG considerations to rise, as more and more investors realize the importance of sustainable investment to risk management and long-term performance and as the salience of ESG issues grow.