European RI market doubles to €5 trillion in 2 years, despite crisis: Eurosif survey

Total assets covered by some form of RI strategy jumps from €2.7 trillion at the end of 2007.

The size of the European sustainable and responsible investment market has almost doubled in the last two years, despite the financial crisis, according to the latest survey of the market by the European Sustainable Investment Forum (Eurosif). Its 2010 European SRI study – the benchmark survey of institutional investors on the topic – estimates that total SRI assets shot up to €5 trillion as of December 31, 2009, a significant jump from €2.7 trillion on December 31, 2007 – a growth of 87%, or a compound annual growth rate of 37%.
The survey results were unveiled at the ESG Europe 2010 conference on October 13 in Amsterdam, organized by in partnership with the Dutch Ministry of Economic Affairs, the Norwegian Embassy in The Hague, CSR Netherlands, and in association with Eurosif.
The forum said the growth had occurred in both the ‘core’ and ‘broad’ SRI segments that it measures. Eurosif’s core SRI category, which consists of investor assets using norms and values-based exclusions and different types of positive screening (best in class, thematic funds) is now estimated at €1.2 trillion in assets covered.
Its broad SRI market category, which includes corporate exclusions and engagements alongside ESG integration approaches, is estimated to have hit €3.8 trillion of assets covered. For core SRI strategies, Eurosif said Italy, France and the Netherlands had shown the fastestgrowth, while the biggest markets were the UK, France and the Netherlands.
It said France had experienced the biggest growth in broad SRI assets with a compound annual growth rate of 407% and over €1.8 trillion reported as ESG integrated assets, overtaking the UK market in size. The survey said the share of retail investors invested in SRI funds was also on the rise, notably in Austria, Belgium, France and Germany. However, institutional investors still represent the lion’s share of SRI assets (66%). Most respondents said they believed institutional investors would continue to drive the growth in the SRI market in the next three years.
Bonds are now also the favoured asset class of SRI investors at 53% of assets, while equities have dropped to 33%. Microfinance is starting to interest investors and Eurosif said it expected alternative asset classes to rise in the future. Survey respondents said they expected the top four drivers for SRI demand in the next four years to be 1. Demand from institutional investors. 2. International initiatives such as the UNPRI. 3. External pressure from NGOs, media and unions. 4. Demand from retail investors. Many respondents also said the financial crisis had made them more aware of the need to integrate ESG risks into their investment decisions. The Eurosif study was extended this year to cover 19 markets, including for the first time Poland, Greece, Cyprus, Estonia, Latvia and Lithuania.