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Global Sustainable Investement Alliance

Judging by the information collected by the research partners, the processes used by asset managers for negative screening, positive screening and integration appear to be well defined, and the reported figures can be reasonably used to compare assets across regions. There will still be a difference in the degree of application by asset managers, so for example within negative screening some will only exclude tobacco producers while others will have a few dozen exclusion criteria, but the process is still comparable. Beyond the strategies of negative screening, positive screening and integration, however, the data becomes less comparable. For example, norms-based screening, which is one of the largest and fastest-growing strategies in Europe, is not widely identified in other regions, so almost all of these assets are managed in Europe7. Similarly, sustainability themed investments, such as clean energy and water are not counted separately in the United States. Instead, the focus of US reporting is on what specific ESG issues affect fund management. Many of these issues, such as climate change, would overlap with thematic investments counted elsewhere, but incorporating a thematic issue in fund management and managing a fund according to a dedicated theme is not the same thing. This difference in counting assets goes some way to explaining why 75 percent of reported global thematic investments are managed in Europe, although appetite for these investments clearly exists in the US. The relative dominance of Europe is therefore likely over-emphasized in relation to other regions for both norms-based screening and thematic investments. A different methodological challenge presents itself under the umbrella of impact investing as this strategy can have different connotations in the various markets and regions. In this report, impact investing is considered to be a strategy within sustainable investing referring to targeted investments, typically made in private markets, aimed at providing solutions to social or environmental problems. This can take the form of financing businesses or enterprising (i.e. revenue-generating) non-profits with a clear social or environmental purpose. It also includes community investing, where capital is specifically directed to traditionally underserved individuals or communities. According to the reported figures there is US$ 89 billion invested globally in impact/community investments. Of this, US$ 61 billion in assets is reported in the US from community investing institutions, defined as banks, credit unions, loan funds and venture capital funds with an explicit mission of serving low- and moderate-income communities. The US$ 7 billion reported in Japan is mostly social impact bonds and community investments, and the US$ 1.5 billion reported in Australia is primarily community investment assets. In Europe, about half of the US$ 11 billion in this category is microfinance investments (both in developing countries and elsewhere), while the rest is local community investments or social business/ entrepreneurship funds. Development finance investments such as the European Investment Bank and the European Bank for Reconstruction and Development, and client deposits in banks that support community finance or ethical banks are not counted in impact investing in Europe. In Canada, impact investing is a mix of community investment funds, aboriginal investment vehicles, targeted regional development loan funds and private equity funds with strong social and environmental mandates. 7 There may for example be instances of norms-based screening in other regions, but this is not captured as a separate data point outside of Europe and Africa. Global Sustainable Investment Review 2012 12


Global Sustainable Investement Alliance
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