Sustainable investments rocket worldwide

Sustainable investment increased by more than a third between 2016 and 2018 to reach $30.7trn (£23.3trn) in the world’s five major markets, new analysis has revealed.

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The findings show a 34% rise in investments that consider environmental, social and governance (ESG) factors, with Japan recording the largest increase of over 300%.

Europe continues to manage the highest proportion of sustainable assets, accounting for almost half, with negative screening the most popular investment strategy.

The Global Sustainable Investment Alliance (GSIA), which carried out the research, said the growth reflects expanding awareness of the business case for sustainable investing.

“Investment related to combating climate change, responding to environmental challenges or implementing the UN Sustainable Development Goals were in evidence throughout the regions,” the GSIA said.

“Sustainable investing is increasingly accessible. Options are available across asset classes and through a broadening array of investment vehicles, including those suitable for retail investors.”

How sustainable investing has changed by region is shown below ($bn):

 

The research shows that Europe was the only region where the proportion of sustainable investment relative to total assets did not increase, although this was partly thanks to changing standards and definitions.

And Europe accounted for 46% of the sustainable assets invested, with the US responsible for 39%, Japan 7%, Canada 6%, and Australia and New Zealand making up the rest.

Negative or exclusionary screening was responsible for $19.8trn in sustainable investments, while ESG integration has grown by 69% over the last two years, accounting for $17.5trn in assets.

Investments by strategy and region are shown below ($bn):

 

“Asset managers reported in regional surveys that major motivations for their use of sustainable investing strategies are the desire to minimize risk and improve financial performance over time,” the GSIA said.

“The quest for positive impact remains an important motivation too. In almost all the markets represented in this report, sustainable investing has grown in both absolute and relative terms in the two years since the beginning of 2016."

 

Image credit: iStock

Graphic credit: GSIA

Author: 

Chris Seekings is a reporter for TRANSFORM

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