Japan surge drives 25% rise in global responsible investment assets – SIFs

Global Sustainable Investment Alliance’s latest Global Sustainable Investment Review

Assets managed under responsible investment strategies globally have grown by 25% over the past two years to $22.9trn – helped by a surge in Japan – according to a new review from the Global Sustainable Investment Alliance (GSIA), the global representative body of the social investment forums (SIFs).

Japan has grown from $7bn to $473.6bn since 2014 spurred by not only better reporting on the sustainable investing strategies of large Japanese institutional asset owners but developments like the country’s Stewardship Code and a new Corporate Governance Code.

Crucially, the report notes, the world’s largest pension fund, the Government Pension Investment Fund (GPIF), became a signatory to the Principles for Responsible Investment.

The Global Sustainable Investment Review comes out every two years and draws on regional and national reports from GSIA members—Eurosif, Responsible Investment Association Australasia, RIA Canada and US SIF—as well as data and insights from the PRI, JSIF (Japan), LatinSIF and the African Investing for Impact Barometer.

Overall the most common sustainable investing strategy used globally is negative/exclusionary screening, affecting $15trn of assets, followed by ESG integration ($10.4trn), and corporate engagement/shareholder action ($8.4trn).There are regional variations: engagement and shareholder action is the dominant strategy in Japan ($289.6bn), while ESG integration now dominates in the United States, Canada, Australia/New Zealand, and Asia excluding Japan.

In Europe, total assets committed to sustainable and responsible investment strategies grew by 12% ($12trn) from 2014 to 2016 – with 53% of managed assets in Europe now using responsible investment strategies.

SRI assets in the US have grown by 33% since 2014 to $8.7trn from $6.7trn. With $8.1trn of the assets being held by institutional investors, money managers and community investment institutions applying ESG criteria.

Asia has seen a 50% reduction in growth of its sustainable investment market down to 16% for the period 2014-2016 from 32% in the period from 2012-2014. As of 2016, $52.1bn in assets in the region were managed using one or more sustainable investment strategies. The fastest growing ESG strategies in the region are sustainability themed investments which have grown by 198%.

Survey data from the Responsible Investment Association of Canada reported a 49% increase responsibly managed assets, up from $729bn to $1.09tn.

And, in Australia and New Zealand (combined) responsible investment assets have grown from 2014 to 2016 to reach $515.7bn – sustainable investments now account for 50% of all professionally managed assets.