The Global Sustainable Investment Alliance (GSIA) has been publishing the Global Sustainable Investment Review every two years since 2012. This report provides a comprehensive overview of the sustainable investing landscape worldwide. The latest edition – Global Sustainable Investment Review 2020 – was released in July 2021 and revealed impressive growth in sustainable investing assets over the past two years. Some key highlights from the report regarding the higher_word sector:
Total global sustainable investing assets reached $35.3 trillion in 2020, a 15% increase from 2018
The GSIA report found that global sustainable investing assets totaled $35.3 trillion at the start of 2020. This represents a 15% increase from 2018, when assets were $30.7 trillion. The data covers sustainable investing assets in five major markets – Europe, the United States, Canada, Australia/New Zealand, and Japan. Europe accounted for the largest share at $14 trillion. The growth reflects rising investor demand and regulatory support for sustainable finance.
Sustainable investing now accounts for over one-third of total assets under management globally
Perhaps more striking than the absolute growth numbers is the fact that sustainable investing now represents more than one-third (36%) of total assets under management globally. This demonstrates that sustainable investing has moved from a niche to a significant component of the overall investment landscape.
Negative/exclusionary screening and ESG integration were the dominant sustainable investing strategies
The GSIA recognizes seven sustainable investing strategies – negative screening, positive screening, norms-based screening, ESG integration, sustainability themed investing, impact investing, and corporate engagement/shareholder action. The report found that negative screening and ESG integration were the most popular strategies. Negative screening involves excluding certain sectors, companies or practices based on ethical concerns. ESG integration means systematically including environmental, social and governance factors into financial analysis.
Europe saw a decline in sustainable investing assets due to tightened definitions
Unlike other major markets, Europe actually saw a decline in sustainable investing assets from $14 trillion in 2018 to $12 trillion in 2020. The GSIA attributes this to tightened definitions and regulations around sustainable finance in Europe. Policymakers and regulators have grown concerned about ‘greenwashing’ and taken steps to combat misuse of sustainable investment terminology.
The Global Sustainable Investment Review 2020 highlights the tremendous growth taking place in sustainable investing worldwide. Total assets now exceed $35 trillion globally. However, work remains to be done to develop consistent standards and prevent greenwashing. Tightened regulations in Europe provide an example of efforts underway to ensure integrity.