Impact investing has seen rapid growth in Europe over the past few years. According to the latest Global Sustainable Investment Alliance (GSIA) report, Europe continues to lead globally in total sustainable investing assets under management, reaching $352 billion in 2020. This represents a 15% increase over 2018.
European asset owners increased allocations to impact strategies
The GSIA report shows that asset owners across Europe, including pension funds, insurance companies, sovereign wealth funds, increased their allocations to impact investing strategies in 2020. This growth was driven by asset owners’ commitments to allocate capital in a way that generates positive social and environmental impact alongside financial returns.
ESG integration was the dominant strategy
According to GSIA, ESG integration was the largest sustainable investing strategy implemented in Europe in 2020. This involves systematically including ESG factors in financial analysis and investment decisions. Negative and norms-based screening strategies also saw increased adoption.
Institutional investors continued to dominate
Institutional investors such as pension funds, insurance companies and sovereign wealth funds have long been at the forefront of sustainable and impact investing in Europe. While interest from retail investors is growing steadily, institutional investors still accounted for the vast majority of impact capital invested in 2020.
Public equities and fixed income were key asset classes
Listed equities and corporate fixed income assets like green bonds saw the highest allocations from European impact investors in 2020. However, allocations to alternative asset classes like private equity, real estate and infrastructure are also growing.
In summary, the European impact investing market experienced robust growth in 2020, reaching $352 billion in assets under management. Key drivers were increased commitments from institutional asset owners, greater adoption of ESG integration strategies, and higher allocations to public equities and fixed income impact investments.