Monday 26 July 2021

Sustainable investments make up a third of all global assets

Global sustainable investment reached $35.3 trillion (£25.6tn) across five major markets at the start of 2020 – more than a third of all assets under management.

That is according to the latest report by the Global Sustainable Investment Alliance (GSIA), which stated the figure was a 15% increase in sustainable assets under management from 2018.

Canada experienced the largest growth in sustainable investment across the two years, with a 48% increase, which was followed by the US (42%) and Japan (34%).

Europe witnessed a 13% decline, however the GSIA noted this was due to a change in how sustainable investment is defined in European Union legislation and through the European Sustainable Finance Action Plan.

Sustainable assets under management account for 62% of Canada's overall investment portfolio, with 42% for Europe and 33% for the US.

The report reveals ‘ESG Integration’ to be one of the most common investment strategies, which involves an assessment of risk and return based on issues such as climate change.

The report stated: “This year’s report highlights an industry that is in transition, with rapid developments across regions that are resetting expectations of sustainable investment, with an emphasis on moving the industry towards best standards of practice.

“This is playing out in various ways in different markets, including tightening regulatory frameworks and industry standards and consumer expectations rising. For example, the European Union Sustainable Finance Action Plan has set new definitions for sustainable and responsible investment embedded in legislation.

“This has reshaped the way sustainable investment is defined in Europe, which is reflected in the report by a new source of data that starts to align with these new definitions.”