Global sustainable investment reaches $21.4tn

Between 2013 and 2014 the global sustainable investment market grew by 61%, according to a new report. Last year the market saw $21.4 trillion (£13.8tn) in assets invested sustainably, compared to $13.3 trillion (£8.5tn) in 2012.

The report, from the Global Sustainable Investment Alliance, collates the results from the markets studies by regional sustainable investment forums from Europe, the US, Canada, Australia and Asia.

The review measures the sustainable investments, defined as an investment approach the considers environmental, social and governance (ESG) factors in portfolio selection and management, in all asset classes, from public equities and fixed income to hedge funds, microfinance and impact investments.

Over the last two years, professionally managed assets in the regions assessed employing sustainable investment strategies have increased from 21.5% to 30.2%. The figures highlight the growing trend in taking non-financial information into account when making investment decisions.

Europe continues to lead the way when it comes to sustainable investment, with almost two thirds of the identified investment assets discussed in the review coming from the continent. Together, Europe, the US and Canada account for 99% of the assets in the review.

Jessica Robinson, CEO of the Asia forum, which excludes Japan, said the figures highlight the “massive potential” for Asia in terms of building out sustainable investment as a mainstream strategy, as has been experience elsewhere.

Despite the growth in the market, sustainable investment still accounts for a relatively small portion of all investments. However, the report notes, “In many of these markets, public policy and regulatory changes are underway that could increase the level of corporate disclosure on various environmental, social and governance factors and support shareholder engagement.”

Across the world, the largest sustainable investment strategy is negative screening, where companies are excluded based on a set or criteria, accounting for $14.4 (£9.2tn) trillion of the assets. This is followed by corporate engagement and shareholder action, making up $7 trillion (£4.5tn) of the investments, this strategy is dominant in Canada.

Photo: 401(K) 2012 via Flickr

Further reading:

ShareAction calls for laws to encourage sustainable investment

63% of UK investors want to be offered sustainable investment options

Private equity industry adds weight behind responsible investment

Responsible investment still being viewed as detrimental to returns

The Guide to Sustainable Investment 2014