Global Sustainable Investment Alliance. Web Conference: Global Trends in Responsible

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1 Global Sustainable Investment Alliance Web Conference: Global Trends in Responsible

2 Global Trends in Responsible Investment Today s Speakers: Lisa Woll, CEO, US SIF: Forum for Sustainable and Responsible Investment Meg Voorhes, Director of Research, US SIF: Forum for Sustainable and Responsible Investment Flavia Micilotta, Executive Director, Eurosif Simon O Connor, CEO, Responsible Investment Association Australasia Moderated by Simon Howard, Chief Executive, Global Sustainable Investment Review 2

3 Global Trends in Responsible Investment Participants can ask questions by typing questions in the question box. Questions can be sent at all times during the presentations and the Q&A. The questions will be collected and answered during the Q&A. Please make clear to whom your question is addressed. 3

4 Introduction to GSIA Simon Howard Chief Executive, UKSIF

5 Introduction to GSIA We are a collaboration of membership-based sustainable investment organizations around the world. 5

6 Introduction to GSIA The GSIA s mission is to deepen and expand the practice of sustainable, responsible and impact investing through intentional international collaboration. Our vision is a world where sustainable investment is integrated into financial systems and the investment chain and where all regions of the world have coverage by vigorous membership based institutions that represent and advance the sustainable investment community. 6

7 Introduction to GSIA The Global Sustainable Investment Review is published every two years. This is the third edition of the report. The full report can be accessed at We are grateful to our sponsor 7

8 Program 1. Report Highlights 2. Regional Highlights United States Canada Europe Australia and New Zealand Asia ex-japan Japan 3. Q&A 8

9 Report Highlights Meg Voorhes Research Director, US SIF

10 Report Highlights The collated the results from regional market studies by the sustainable investment forums and research partners in: Europe United States Canada Australia and New Zealand Asia ex-japan Japan The report also looks at the growth of sustainable and impact investing in Latin America and provides a snapshot of developments in the three major African economies: Kenya, Nigeria and South Africa. 10

11 Sustainable Investment Strategies 1. Negative/exclusionary screening: the exclusion from a fund or portfolio of certain sectors, companies or practices based on specific ESG criteria; 2. Positive/best-in-class screening: investment in sectors, companies or projects selected for positive ESG performance relative to industry peers; 3. Norms-based screening: screening of investments against minimum standards of business practice based on international norms; 4. ESG integration: the systematic and explicit inclusion by investment managers of environmental, social and governance factors into financial analysis; 5. Sustainability themed investing: investment in themes or assets specifically related to sustainability (for example clean energy, green technology or sustainable agriculture); 6. Impact/community investing: targeted investments aimed at solving social or environmental problems, and including community investing (where capital is directed to underserved individuals or communities) and financing businesses with a social or environmental purpose; 7. Corporate engagement and shareholder action: the use of shareholder power to influence corporate behavior, including through direct corporate engagement (i.e., communicating with senior management and/or boards of companies), filing or co-filing shareholder proposals, and proxy voting that is guided by comprehensive ESG guidelines. 11

12 Report Highlights 12

13 Report Highlights 13

14 Report Highlights 14

15 Report Highlights 15

Report Highlights Retail Investors While institutional investors still dominate the SRI market, with pension funds often comprising the largest percentage of institutional SRI assets, interest by

16 Report Highlights Retail Investors While institutional investors still dominate the SRI market, with pension funds often comprising the largest percentage of institutional SRI assets, interest by retail investors is growing. The relative proportion of retail SRI investments in Canada, Europe and the United States increased from 13% in 2014 to 26% at the start of Over a third of SRI assets in the United States were retail. 16

17 Regional Highlights Lisa Woll CEO, US SIF

18 Report Highlights: United States SRI assets rose 33%, from $6.57 trillion in 2014, to $8.72 trillion in $8.10 trillion is held by institutional investors and money managers applying ESG criteria in investment analysis and portfolio selection. $2.56 trillion is held by 176 institutional investors and 49 investment management firms that filed or co-filed resolutions on ESG issues at publicly traded companies. Eliminating double counting for assets involved in both strategies yields net total of $8.72 trillion: nearly 22 percent of professionally managed investment assets in the United States. ESG integration is most widely used strategy, affecting $5.8 trillion of SRI assets. Developments to watch: DOL fiduciary guidance, renewable energy finance 18

19 Regional Hihlights Canada Report Highlights: Canada Assets managed using one or more responsible investment strategies increased from $729.0 billion to $1.09 trillion in two years, a 49 percent increase. The dominant sustainable investing strategy in 2016 was ESG integration ($1.05 trillion), followed by corporate engagement and shareholder action ($862.1 billion). The top three engagement issues were: executive compensation, greenhouse gas emissions and supply chain management. Impact investing continues to be a small but important category of SRI: Canadian impact investment assets now stand at $6.7 billion, growing 123 percent since Developments to watch: new reporting requirements under Ontario s Pension Benefits Act; other provinces may adopt similar provisions 19

20 Regional Highlights Flavia Micilotta Executive Director, Eurosif + 32 (0)

21 Report Highlights: Europe Total assets committed to SRI grew 12 percent between 2014 and 2016, from $10.7 trillion to $12.0 trillion. Exclusionary screens remain the top strategy at $11.06 trillion, up 48% from Norms-based screening is the second biggest strategy: $5.55 trillion, up 40% from Engagement and voting is third, with $4.65 trillion in assets and 30% growth. Although the assets remain small at $107.2 billion, impact investing appears to be the most dynamic approach for investors in Europe. Developments to watch: Increasing acceptance that reviewing ESG factors is part of fiduciary duty; High-Level Expert Group on Sustainable Finance 21

22 The largest European markets are France - 3.1trn Germany - 1.8trn UK - 1.6trn Country Austria Belgium Denmark Finland France Germany Italy Netherlands Poland Spain Sweden Switzerland UK Biggest style (excluding exclusions) Best-in-class ESG Integration Norms-based screening Norms-based screening Norms-based screening Engagement and voting Norms-based screening Norms-based screening Sustainability themed Norms-based screening Engagement and voting ESG Integration Engagement and voting 22

23 Regional Highlights Simon O Connor CEO, Responsible Investment Association Australasia simonoc@responsibleinvestment.org

24 Report Highlights: Australia & New Zealand Responsible investment assets managed by asset managers, super funds, banks and advisors in Australia and New Zealand grew substantially, both at retail levels and institutional levels, across all responsible investment strategies. In both countries combined, sustainable investment assets have grown 248 % since 2014 to reach $515.7 billion. Australia s core responsible investment funds (incorporating screening, sustainability themed investing or impact/community investing) outperformed across most fund categories and time horizons. Developments to watch: Recently revised guidelines of the Australian stock exchange require listed companies to report on material exposure to sustainability risk; New Zealand s exchange may adopt similar policy. 24

25 Report Highlights: Asia ex-japan Sustainable investment assets grew 16% from 2014 to 2016, to reach $52.1 billion. Excluding Sharia-compliant funds, total sustainable investment assets total $34.2 billion. The most common strategies are ESG integration, representing $24.5 billion of assets, and negative/exclusionary screening, with $18.8 billion in assets. The fastest growing strategies are sustainability themed investments (up 198%), and negative/exclusionary screening (up 14%). Developments to watch: China s growing interest in green finance and its policy commitments to curtail carbon emissions. 25

26 Report Highlights: Japan Sustainable investment assets grew from $7.0 billion in 2014 to $473.6 billion in 2016, with corporate engagement as top strategy, involving $289.6 billion in assets. Factors behind this dramatic growth: Until recently, JSIF s reporting was limited to publicly available data on SRI investment trusts and social impact bonds. However, in 2015, JSIF undertook a survey for the first time of institutional asset owners. Policies and codes that promote sustainable investing: 2/2014: Stewardship Code encourages institutional investors to participate in constructive engagement with portfolio companies. 6/2015: Corporate Governance Code sets rules on whistle-blowing, disclosure and stakeholders rights. Developments to watch: the world s largest pension fund, the Japanese Government Pension Investment Fund, has become a PRI signatory. 26

27 Questions? Questions Participants can ask questions by typing in their questions in the question box. 27

28 Global Trends in Responsible Investment Thank you! Please send any questions to: Ellie Stewart at GSIA website: 28

Asset and Wealth Management Research Digest

Asset and Wealth Management Research Digest PwC AWM Asia Pacific Market Research Centre October 2018 Responsible Investing in Asia-Pacific Globally, there has been an increased on responsible investing