Daily Management Review

More Than A Third Of Global Assets Is Comprised Of Sustainable Investments


More Than A Third Of Global Assets Is Comprised Of Sustainable Investments
A report from the Global Sustainable Investment Alliance revealed that the total volume of investments towards sustainable projects was at $35.3 trillion which was more than one third of all assets in five of the biggest markets of the world.
Environmental, social and governance-related (ESG) factors are increasingly impacting investors’ decision on investments and these factors have traditionally not been captured in balance sheets of companies but can have significant impacts on future returns on investments.
About 36 per cent of total assets under management is accounted for by professionally managed assets, said the GSIA, whose member bodies track growth in their region. The calculations were based on a large range of classification of investments as being sustainable.
Wholesale and institutional assets make up most of the GSIA even though some assessments of industry growth focus on retail-focused mutual funds that have a specific sustainability mandate.
Investments that have been made using a process that is able to assess the risk and return impact of issues, such as climate change, even though investment strategies to not have a formal, explicit sustainability focus – known as the 'ESG integration', were also included in the report.
The report considered assets in the United States, Europe, Australasia, Japan and Canada and the work was done using data from end-2019 for all regions except Japan, for which data to the end-March 2020 was used in the biennial industry survey.
The report said that total assets across the markets had risen by 15 per cent since the last report.
"This growth is being fuelled by rising consumer expectations, strong financial performance and the increasing materiality of social and environmental issues - from biodiversity to racial equity to climate change," Simon O’Connor, chair of the GSIA, said.

The report said that the strongest growth over the last two years was seen in Canada and the United States at 48 per cent and 42 per cent respectively.