WASHINGTON—Sustainable, responsible and impact investing (SRI) assets have expanded 76 percent in two years: from $3.74 trillion at the start of 2012 to $6.57 trillion at the start of 2014, according to the US SIF Foundation’s latest biennial survey, the Report on US Sustainable, Responsible and Impact Investing Trends 2014.
As a result, assets managed with SRI strategies now account for more than one out of every six dollars under professional management in the United States.
“The findings released today clearly demonstrate that investment decisions using sustainable, responsible and impact investing strategies are on the rise,” said Lisa Woll, CEO of US SIF and the US SIF Foundation. “Sustainable investment strategies are being applied across asset classes to promote corporate social responsibility, build long-term value for companies and their stakeholders, and foster businesses that will yield community and environmental benefits.”
- The US SIF Foundation conducted research from May through August 2014 and documented:
- $6.20 trillion in US-domiciled assets as of January 1, 2014, held by 480 institutional investors, 308 money managers and 880 community investment institutions that apply various environmental, social and governance (ESG) criteria in their investment analysis and portfolio selection, and
- $1.72 trillion in US-domiciled assets at the start of 2014 held by 202 institutional investors or money managers that filed shareholder resolutions on ESG issues from 2012 through 2014.
- After eliminating double-counting for assets involved in both strategies, the overall total of SRI assets was $6.57 trillion.
Much of the growth is explained by the expansion of the investment funds offered by money managers that incorporate ESG factors into investment decision-making. The assets managed at the start of 2014 by investment firms considering ESG issues grew more than three-fold—from $1.4 trillion at the start of 2012 to $4.8 trillion.
Similarly, the pool of assets to which institutional owners—including public pension funds, foundations, educational endowments and religious institutions—apply ESG criteria has grown to $4.04 trillion, up 77 percent since the start of 2012.
A subset of 119 money managers responded to a question on why they offer ESG products. The top factor—cited by 80 percent in this group—is client demand, but more than 70 percent of the subset also said they considered ESG factors in order to fulfill their (or their clients’) mission, to improve returns and to manage risk.
From 2012 to 2014, the number of private equity and other alternative investment funds considering ESG factors grew from 301 with $132 billion in assets, to 336 with $224 billion in assets.
Following the December 2012 elementary school shooting in Newtown, Connecticut, policies restricting investments in weapons manufacturers have spread. Since 2012, consideration of these criteria by money managers has grown nearly four-fold in asset-weighted terms to affect $588 billion. Among institutional asset owners, concerns over weapons now apply to $355 billion in assets, a nearly five-fold increase.
Sudan remains the leading social issue for institutional investors in terms of the assets affected, with restrictions on investing in companies doing business there affecting $2.7 trillion in assets.
For both money managers and institutional investors, climate change remains the most significant environmental factor in terms of assets, affecting $276 billion and $552 billion, respectively. Fossil fuel divestment policies, tracked for the first time in 2014, now affect tens of billions of dollars in assets.
Moreover, shareholders concerned about climate risk filed 72 resolutions on the subject in 2014, more than double the number in 2012, and negotiated a number of commitments from the target companies to disclose and reduce their greenhouse gas emissions.
Investors have given strong support to a petition urging the US Securities and Exchange Commission (SEC) to require companies to disclose their political spending. The SEC has received more than 1 million comments on the proposal—a record in SEC rulemaking history.
About the Survey
The US SIF Foundation, with research support from Croatan Institute, sent a confidential, personalized survey link to approximately 1,500 investment management firms and institutional asset owners identified in previous surveys as implementing sustainable investment strategies or believed to be new entrants to SRI investment. Survey recipients were asked to detail whether they considered ESG issues in investment analysis and portfolio selection, to list the issues considered and to report the value of the US-domiciled assets affected as of December 31, 2013. They were also asked to report their total US-domiciled assets as of year-end 2013 and whether they filed shareholder resolutions or engaged in other shareholder engagement activities. The research team also collected additional data from public and third-party sources.
US SIF: The Forum for Sustainable and Responsible Investment is the US membership association for professionals, firms, institutions and organizations engaged in sustainable, responsible and impact investing. US SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, community investing institutions, non-profit associations, and pension funds, foundations and other asset owners.
The Report on US Sustainable, Responsible and Impact Investing Trends 2014 is a publication of the US SIF Foundation, a 501c3 organization that undertakes educational, research and programmatic activities to advance the mission of US SIF.