SRI assets amongst Europe’s rich could top one trillion euros by 2012: Eurosif.

Generation change and greater acceptance of sustainable performance cited as motors for market growth.

Europe’s richest individuals could now be investing about 8% of their total assets, or €540bn ($784bn), in green investment strategies, according to market estimates by the European Social Investment Forum (Eurosif), the lobby group for SRI in Europe. The organisation said it believed the amount of sustainable investments held by high net worth individuals (HNWIs) could break the €1 trillion level by 2012. Eurosif produced the estimate, which represents about a third of the predicted institutional market in SRI in Europe, from a mixture of a new survey of high net worth individuals and wealth managers, as well as market research and previous studies.
In its recent survey, Eurosif sent questionnaires to more than 400 companies in the high net worth sector, both on the supply side amongst wealth managers and on the demand side within family offices that manage high net worth money. The number of respondents was not given. The survey revealed that the sustainable investment strategy most often employed among rich individuals responding was thematic investment, with clean energy and water as their preferred themes. Eurosif said the report highlighted a fast-growing segment where investors are “seeking returns while engaging on sustainability issues.”It said there were three main factors behind the growth. Firstly that high net worth investors have never had more money, with projections that their asset base will expand further. Second, that demand for ‘sustainability criteria’ for HNWIs is growing due to a generational shift in thinking, with younger wealthy individuals more concerned about green issues and aware of the potential for financial out-performance in related companies. Third, the report said wealthy individuals have transitioned from only making philanthropic donations to increasingly integrating sustainability criteria in their actual investments. It said this also reflected a growing consensus that financial returns were consistent with sustainability issues. Eurosif said its survey showed the high net worth market is in an early, fast growth phase with 72% of respondents seeing an increase in HNWI interest for sustainable investment in the last 12 months. In spite of the recent market turmoil, 87% of respondents think the interest for sustainable investments will grow in the next three years. Moreover, 75% of surveyed family offices think that sustainable investment will increase in the generational transfer of their family’s wealth.
One responding wealth manager told Eurosif: “In the long term we are recommending that every one of our clients invests 10% in SRI products. The share

of private clients asking actively for SRI products is small, but when informed about SRI by the bank the response is enormous: thus the development of the SRI market will depend heavily on supply strategies of financial institutions.” Globally the high net worth market was estimated to be worth $40.7 trillion in 2007 and ispredicted to rise to $59.1 trillion by 2012, according to the Capgemini/Merrill Lynch World Wealth Report. The European wealth market was estimated at €6.7 trillion in 2007 to rise to €8.6 trillion, by the same study.
The Eurosif survey was sponsored by Bank Sarasin and KPMG International.
Link to Eurosif survey