November 24, 2012
US SIF Publishes Biennial Sustainable Investment Trends Report
by Robert Kropp
The 2012 Trends Report notes a total of $3.74 trillion in assets allocated to sustainable
investment, a 22% increase over a two-year period.
The recently published 2012
Report on Sustainable and Responsible Investing Trends in the US from US SIF: The Forum for Sustainable and Responsible Investment indicates
that assets allocated to sustainable investment strategies continue to rise, as they have
throughout the past decade. By the end of 2011, $3.74 trillion were invested by means of such
strategies as incorporation of environmental, social, and corporate governance (ESG) criteria and
The total represents a 22% increase
over sustainable investment at year end 2009, which stood at $3.07 trillion. By the end of 2011,
443 institutional investors, 272 money managers and 1,043 community investment institutions with
assets in excess of $3.3 trillion were incorporating ESG criteria, and an additional 200
institutional investors or money managers, with assets of $1.54 trillion, had filed or co-filed
shareowner resolutions on ESG issues.
Modern sustainable investment traces its history
back to the campaign to end apartheid in South Africa, and social issues relating to investment in
Sudan remain a central concern for sustainable investors. More than $1.63 trillion in institutional
assets are invested according to policies relating to Sudan. While negative screening continues to
be the predominant ESG incorporation strategy, "a larger number of money managers also disclosed
incorporating ESG issues in $812 billion in assets using positive or inclusionary strategies or ESG
integration," the report found.
The rise of positive screening is an important development
in the evolution of sustainable investment. Noting that the 2010 Trends Report found that 90% of
sustainable assets were devoted to some form of negative screening, Cary Krosinsky of Trucost wrote in his foreword to Evolutions in Sustainable
Investment: Strategies, Funds and Thought Leadership, "Take a purely values-based approach, and
you risk missing the very same practical opportunities in eco-efficiency and innovation, where the
sustainability we require will come from."
In other words, as Mindy Lubber, president of
Ceres, stated earlier this year,
"Sustainability has yet to gain traction at anywhere near the scale and speed required given the
global threats we face." And despite the increase in assets allocated to sustainable investment
strategies, less than one percent of allocations by pension funds is devoted to such projects as
sustainable energy sources and clean technology. According to some estimates, as much as 85% of
funding for the transition to a low-carbon and climate resilient global economy will have to come
from private investment.
Another important development is the dramatic increase in the
number of investment funds incorporating ESG criteria in their investment strategies. The report
found that 720 such funds, with $1.01 trillion in assets under management, now do so, a 78%
increase over the assets tracked in 2010.
Also, community investment through such
institutions as community development financial institutions (CDFIs) experienced a 47% increase in
assets over 2010, and now stands at $61.4 billion. The impact of CDFIs and other community
institutions is magnified by their ability to leverage their assets with public dollars.
"We are buoyed by the many advances our field has made, and by the continued growth in assets
that aim to integrate financial returns with environmental, social and governance impacts," US SIF
CEO Lisa Woll wrote in her foreword to the report. "And yet, it is clear we have much more to do in
order to further advance the scale of sustainable and responsible investment and to effectively
grapple with other challenges to building a robust, equitable and sustainable economy."
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