INVESTING/PORTFOLIO STRATEGIES

Sustainable investing strategy AUM soars 61% in 2 years — report

Assets under management incorporating sustainability investment strategies reached $21.1 trillion globally as of the beginning of 2014, up 61% from the onset of 2012, said the “Global Sustainable Investment Review,” released Tuesday by the Global Sustainable Investment Alliance.

As a result of the growth, assets that use a sustainability approach accounted for 30.2% of all assets under management across the regions covered by the review, up from 21.5%.

Institutional assets managed for pension funds and other asset owners accounted for 86.9% of the sustainable assets, down from 89.3% in 2012, the report said.

The report measures use of sustainable investment factors — defined as incorporating environmental, social and governance risks in the investment process — in portfolio management in all asset classes, including public equities, fixed income and hedge funds in the U.S., Canada, Europe, Asia, Australia and New Zealand.

Of the regions, Europe accounts for $13.6 trillion of sustainable AUM, up 55% from 2012. It is followed by the U.S. with $6.5 trillion, up 76% from 2012.

The most common sustainable investing strategies are negative/exclusionary screening with $14.4 trillion in assets, up 73.8% from 2012; ESG integration into traditional financial analysis, $12.9 trillion, up 116%; and corporate engagement and shareholder actions, $7 trillion, up 53.4%.

The alliance is made up of US SIF Forum for Sustainable and Responsible Investment; Responsible Investment Association of Canada; European Sustainable Investment Forum; U.K. Sustainable Investment and Finance Association; Vereniging van Beleggers voor Duurzame Ontwikkeling of the Netherlands; Association for Sustainable & Responsible Investment in Asia; and Responsible Investment Association Australasia.

The NZ$27.78 billion (US$20.7 billion) Auckland-based New Zealand Superannuation Fund, TIAA-CREF and BlackRock (BLK) are among the 28 institutions contributing financial support for the research for the report.