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ESG

Global sustainable assets hit $30.7 trillion in 2018 – report

Global sustainable investment assets reached $30.7 trillion at the start of 2018, with noticeable growth in Canada, the U.S. and Japan, according to the Global Sustainable Investment Review 2018 released Monday by the Global Sustainable Investment Alliance.

The biennial report, which collates regional market studies of sustainable investment forums in Europe, the United States, Japan, Canada, Australia and New Zealand, found overall global growth of 34% from January 2016 to January 2018.

Europe still accounts for the largest share of global sustainable investment assets at $14.1 trillion, but the amount under professional management declined to 49% from 53%. Meg Voorhes, research director at alliance member US SIF foundation, said on a press briefing call that the decline is most likely a result of stricter standards and definitions of ESG integration in Europe.

The second largest region by assets remains the U.S., where U.S.-domiciled assets under management using sustainable strategies grew 38% to $12 trillion as of January 2018, from $8.7 trillion two years earlier.

Japan saw the largest growth spurt in sustainable investing assets, reaching 18% in 2018 up from 3% two years earlier. That makes Japan the third-largest center for sustainable investing, with $2.2 trillion.

In Canada, sustainable investing assets grew by 42% over the two-year period to $1.7 trillion, and now account for more than 50% of professionally managed assets there. "This is really a historical moment in our history," Dustyn Lanz, CEO of alliance member Responsible Investment Association, Canada, said on the call. He noted that a report due in May from Canada's Expert Panel on Sustainable Finance will reinforce that Canada has reached "a tipping point."

Australia and New Zealand, with $734 billion, represent the greatest proportion of sustainable investment assets relative to total assets under management, 63%.

For sustainable investment strategies worldwide, the largest one is negative or exclusionary screening, at $19.8 trillion of the $30.7 trillion, followed by ESG integration at $17.5 trillion, and corporate engagement or shareholder action at $9.8 trillion. The report also found that strategies vary by country, with negative screening the largest strategy in Europe, ESG integration dominating in the U.S. Canada, Australia and New Zealand, and corporate engagement and shareholder action the dominant strategy in Japan.

The report also found that retail investors accounted for 25% of global shares of sustainable investing assets, up from 11% in 2016, as more products and platforms become available.