Sustainable investing, which considers environmental, social, and governance (ESG) factors, has gained tremendous momentum globally in recent years. The global sustainable investment review provides an overview of the current landscape and future directions of this rapidly growing field. With rising awareness of sustainability issues, investors are increasingly incorporating ESG factors into their decisions to better manage risks and identify opportunities. This article will analyze sustainable investing’s global scale, regional differences, dominant strategies, and projections, with the key terms sustainable investment comprehensively covered. Sustainable investing’s rise reflects and propels the sustainable development agenda’s progress worldwide.
The global sustainable investment assets under management almost doubled within 4 years
According to the Global Sustainable Investment Alliance’s (GSIA) 2018 review, global sustainable investing assets totaled over $30 trillion in the five major markets, accounting for over 33% of total professionally managed assets. From 2014 to 2018, sustainable investing assets under management almost doubled from $18 trillion to $31 trillion, evidencing the field’s tremendous growth.
Europe leads in sustainable investment asset scale, while the US and Canada dominate in strategy adoption
Looking across regions, Europe accounted for the largest sustainable investment assets base, totaling $14 trillion in 2018. However, the proportion of sustainable investments in Europe’s total investment market slipped from 67% in 2014 to 28% in 2018 due to tightened standards. The US overtook Europe to become the world’s largest sustainable investing market, with over half of global sustainable investment assets. Canada, Australia and New Zealand also actively adopted sustainable investing strategies, with sustainable investments making up 48-50% of total managed assets.
Negative screening and ESG integration stood out as the most used sustainable investing strategies
Among various sustainable investing approaches, negative screening and ESG integration were most widely adopted. Negative screening, avoiding sectors or companies based on specific ESG criteria, involved assets of $19.8 trillion globally. ESG integration, systematically including ESG risks and opportunities into financial analysis, was also extensively applied worldwide. Europe led in negative screens application, while ESG integration was more prominent in the US, Canada, Australia and New Zealand.
Global momentum behind sustainable development will likely boost sustainable investing growth
The global consensus on pursuing sustainable development as explicated in initiatives like the UN Sustainable Development Goals has expanded sustainable investing’s scope. With growing evidence that incorporating ESG factors need not sacrifice returns, sustainable investing will likely continue flourishing. Emerging markets also present huge potential for sustainable investment growth.
The global sustainable investment review shows sustainable investing gained great traction worldwide, with assets doubling from 2014-2018. Europe led in scale while North America adopted sustainable investing strategies most extensively. Negative screening and ESG integration were the dominant approaches. Sustainable investing’s future looks bright amid the sustainability agenda’s rising prominence.