Global Sustainable Investment Report



Global Sustainable Investment Trends Report 2012 PROJECT

#GTR2012



The Global Sustainable Investment Alliance (GSIA) is a strategic collaboration of sustainable investment forums around the world with the mission to deepen the impact and visibility of sustainable investment organizations at the global level. The Global Sustainable Investment Trends Report 2012 represents the first time that there has been an estimate of the size and scale of the sustainable investment industry worldwide.

The following SIFs are members of GSIA:

  • US SIF: The Forum for Sustainable and Responsible Investment 
  • Eurosif, the European Sustainable Investment Forum
  • ASrIA, the Association for Sustainable & Responsible Investment in Asia
  • RIAA, the Responsible Investment Association Australasia
  • SIO, the Canadian Social Investment Organization
  • UKSIF, the UK Sustainable Investment and Finance Association
  • VBDO, the Dutch Vereniging van Beleggers voor Duurzame Ontwikkeling
  • *AfricaSIF.org, the Africa Sustainable Investment Forum, has observer status.




TEAM

All the individuals and organisations that took the time to respond to the regional surveys.

Europe

  • Anders Nordheim, Eurosif
United States
  • Meg Voorhes, US SIF Foundation and US SIF
Canada
  • Ian Bragg, Social Investment Organization
  • Daria T. Smeh, LoyalTeam Inc.,
Australia
  • Responsible Investment Association Australasia
Asia including Japan:
  • David Doré, ASrIA
  • Erik Floyd, ASrIA
  • Mariko Kawaguchi, SIF Japan
Africa
  • Deon Smith, Asmaa El Bacha Blanc, Pamela Leste De Perindorge, Keith Comline, Adekanmi Lawson, Ian Meaker, Suchit Saraf, and Graham Sinclair.



MEDIA

http://www.socialfunds.com/news/article.cgi?sfArticleId=3491



METHODOLOGY


Major Definition
We will use Sustainable Investment as the term for the harmonized report and define it thus: "An approach to investment where environmental, social and governance factors, in combination with financial considerations, guide the selection and management of investments".

Classifications
1.    Screening
a.    norms-based
b.    negative/exclusionary
c.    positive/best-in-class
2.    Integration
3.    Sustainability themed investing (e.g. climate change, water, and renewably energy funds)
4.    Impact Investing
5.    Corporate Engagement and Shareholder Action

Definitions:


Screening

  • Norms-based Screening - Screening of investments based on compliance with international norms and standards such as the Global Compact. May include exclusions of investments that are not in compliance with norms or standards or over and underweighting
  • Negative/Exclusionary Screening - Exclusion of investments or classes of investment based on pre-determined ESG criteria. This can involve the simple screening of shares in companies that are involved in controversial activities like the manufacturing of weapons or tobacco, the screening out of entire sectors, or screening out poor performing companies from an investable universe.
  • Best-in-Class/Positive Screening – Strategy that seeks out leading companies, based on ESG criteria, within a defined universe.

Integration
Integration is the explicit consideration of environmental, social and governance factors in the investment decision-making process. Integration must be demonstrated to be guided by a transparent and systematic process.

Sustainability Themed Investment
Investment funds that address specific sustainability issues such as climate change, food, water, renewable energy/clean technology, agriculture, etc.

Impact Investing
Impact investments are direct investments made in companies and organizations with the intention to generate social and environmental impact alongside a financial return . Examples of impact investing include community investing, where capital is specifically directed to traditionally underserved communities or individuals, or financing that is provided to businesses with a social or environmental purpose or enterprising (i.e. revenue-generating) non-profits.

Corporate Engagement and Shareholder Action
This strategy employs shareholder power to influence corporate behaviour through direct corporate engagement, filing or co-filing shareholder proposals, and proxy voting. Proxy voting must be supported by a policy and engagement activities that are guided by a transparent and systematic approach to issues encompassing environmental, social and governance objectives.


What Gets Counted
•    While we will separate out ESG-branded products in the final report and present a discussion on retail-level ESG, we will not use motivation of institutional investors (whether values-based or value-based) to count or not count assets.
•    PRI signatories will be looked at to cross-reference our data or to identify organizations that need to be surveyed. We will not wholesale include these assets.


Double Counting

Each SIF will continue to use their own methods to reduce the possibility of double-counting assets at the owner and manager level. To avoid double-counting across jurisdictions we will seek to ask asset managers only for the value of assets managed on behalf of clients within the surveyed jurisdiction. Asset owners will be asked, where possible, for the names and locations of their managers with the value of those mandates.




METHODLOGY

Assets under management can be assigned to specific national markets based on where: (1) the asset owner or manager is located, (2) the investment solutions are distributed and (3) the solutions are domiciled. In today’s global asset management industry, sustainable investment funds can be domiciled in one country, managed in a second and registered for sale in several jurisdictions. As a result, defining national sustainable investing markets is not straightforward. While fund managers are rather easy to locate, the ultimate investors are not.

GSIA defines a national market by the country where the sustainable investing assets are managed (i.e. where the sustainable investing asset management team is located). As a consequence, the report attempts to measure the size of the sustainable investing asset management markets, rather than the sustainable investing markets (supply not demand). For example, if sustainable investment flows into Asia were tallied, based on both management location and sales and distribution, then the reported figures would be prone to double counting. 

Consequently, identified sustainable investing fund management in Asia lags behind sales of Asian sustainable investing funds, as providers of sustainable investing products for Asia continue to base their fund management near to the major sources of global sustainable investing demand, namely Europe, Australia and North America.

More than 500 investment managers globally who invest in Africa across any asset class were canvassed through surveys and selected follow-up interviews, all respondents will be acknowledged in the report. On completion of the online survey's 25 questions, respondents were able to view the real-time aggregated responses. Secondary and market research included data, reports, network statistics and information, secondary desk-based research reviewing media reports, company and investor websites, and data from project partners, for example RisCura, MSCI, Bloomberg, Thomson Reuters and others, as well as recent market reports commissioned by the IFC in Sub-Saharan Africa and Middle East North Africa regions. More details on methodology at http://www.africasif.org/trends-2012-survey-methodology.php.



DRAFT Report Structure

  • Foreword
  • Executive Summary
  • Introduction
  • Global Sustainable Investment
    • Assets broken down by strategy
    • Assets by investor type
  • Comparisons across regions
  • Global and Regional Trends
  • Conclusion
  • Methodology
  • Appendices

Sustainable investment is a growing force in the global investment landscape. Currently, an exciting new project is underway to measure and track this growth. The world’s leading sustainable investment organizations are joining up to measure and report on the size of global sustainable investments. This project will result in a report that shows the types of investors involved, breaks down the strategies that they employ and makes international market comparisons. Using detailed surveys, localized knowledge, and secondary sources, this report will evaluate and compare the actual investment practices of asset owners and asset managers around the world. The report will measure all asset classes, from public equities and fixed income to hedge funds and microfinance. Investment strategies such as screening, integration, and engagement will be highlighted and broken down across jurisdictions. This original research, undertaken by the US Sustainable Investment Forum (USSIF), the European Sustainable Investment Forum (Eurosif), the Canadian Social Investment Organization (SIO), the Responsible Investment Association Australasia (RIAA), and the Association for Sustainable & Responsible Investment in Asia (ASrIA) as well as AfricaSIF.org, will be a valuable resource to investors and policy makers and will serve as the baseline for future research.