The amount of assets in US alternative investment funds incorporating environmental, social and governance (ESG) criteria has surged by 15.9% to $80.9bn, according to research released by the US Forum for Sustainable and Responsible Investment (US SIF).
It said 375 funds now incorporate ESG factors – up from 2010, when 346 funds managed a combined $69.8bn.
The report – Sustainability Trends in Alternative Investments in the US – was prepared for the US SIF Foundation by the Center for Social Philanthropy at the Tellus Institute, under lead author Joshua Humphreys.
Although most of the fund managers surveyed consider several ESG criteria simultaneously, environmental factors predominate.
‘Alternative’ is defined as private equity/venture capital, real estate and hedge funds.
“Alternative investments in sustainable and responsible investing are attracting a wide range of investors,” said US SIF CEO Lisa Woll. They included high-net-worth families and individual ‘angel’ investors, mission-driven institutions “and some of the largest and most prominent pension funds and private equity firms”.The market growth was supported by an “ecosystem” of investor networks and other organizations.
“Within this growing investment field, now sized at more than $3 trillion in the United States alone, alternative investments are attracting unprecedented attention across asset classes, geographies and ESG themes,” said Humphreys.
Key findings of the report:
- Private Equity/Venture Capital: led the field of ESG alternative investment vehicles numerically with 233 distinct funds in 2011, or 62% of total funds tracked.
- Real Estate Investment Funds: managed 54% of total assets tracked in 2011, with a combined $44.3bn in 95 distinct funds.
- Hedge Funds: 47 hedge funds identified with $2.6bn AUM, representing just 3.2% of total assets tracked.