Sustainable investments total $35.3 trillion, or more than a third of all assets in five of the world’s biggest markets, a report from the Global Sustainable Investment Alliance on Monday showed.

Investors are increasingly driven by environmental, social and governance-related (ESG) factors that traditionally have not been captured in a company’s balance sheet, but that can influence future returns.

The GSIA, whose member bodies track growth in their region, said professionally managed assets, using a broad gauge of what it means to invest sustainably, account for 36 per cent of total assets under management.

While some assessments of industry growth focus on retail-focused mutual funds with a specific sustainability mandate, the GSIA also includes wholesale and institutional assets.

The report also includes money invested using a process that assesses the risk and return impact of issues, such as climate change, even if the strategy’s mandate does not have a formal, explicit sustainability focus, so-called ‘ESG integration’.
The biennial industry survey looked at assets in the United States, Europe, Australasia, Japan and Canada, using data from end-2019 for all regions except Japan, where the data was to end-March 2020.

Since the last report, total assets across the markets had risen 15 per cent, the report said.

“This growth is being fuelled by rising consumer expectations, strong financial performance and the increasing materiality of social and environmental issues – from biodiversity to racial equity to climate change,” Simon O’Connor, chair of the GSIA, said.

Canada and the United States saw the strongest growth over the last two years, the report said, at 48 per cent and 42 per cent, respectively.
The GSIA is a collaboration of membership-based sustainable investment organisations around the world. The GSIA’s mission is to deepen the impact and visibility of sustainable investment organizations at the global level. Its vision is a world where sustainable investment is integrated into financial systems and the investment chain and where all regions of the world have coverage by vigorous membership based institutions that represent and advance the sustainable investment community.