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Global Sustainable Investement Alliance

Global and Regional Sustainable Investment Characteristics Having already established the range of sustainable investment strategies across the world, it may not be surprising that there is also variation in the type of investor who engages in these strategies. One normally segments the investment industry into two parts—institutional and retail investors. Professional investors and asset owners managing assets on behalf of clients or beneficiaries comprise the institutional category and retail covers individuals investing or saving on their own behalf. Using approximations in some markets, we estimate that the global sustainable investment figure of US$ 13.6 trillion is comprised 89 percent of institutional assets and 11 percent of retail assets. In Europe, the retail industry has struggled to build significant assets overall, with 94 percent of assets reported as institutional. However, there is great variability within European markets. The proportion of retail assets ranges from over half the total in Switzerland to almost none in Spain. In the US, the retail market is more buoyant than in Europe, with over US$ 830 billion out of US$ 3.74 trillion reported as retail assets. Indications are that, compared to Europe, Africa and Asia, the US market benefits from its larger overall size and the lack of fragmentation in terms of legislation and language, which assists in fund marketing and can lead to funds with greater scale than in elsewhere. In Canada, sustainable investments began in the retail market. However, as in Europe, this segment is now dwarfed by the growing number of large pension funds with active sustainable investment programs. In contrast to the traditional hubs of sustainable investment in Europe, Australia, and North America, sustainable investment strategies managed in Asia predominately have retail clients. Investment mandates with ESG provisions issued by Asia-based institutional asset owners are limited. Institutional asset owners headquartered in Japan and Korea have generally been the exceptions with Thailand and Malaysia also showing capacity. In terms of asset allocation, the asset classes mirror the type of investor concerned. For example, as most of the investors incorporating ESG concerns in Europe are institutional, the asset allocation is similar to institutional investors in general, with approximately 50 percent of assets in fixed income and 30 percent in equities. Looking beyond equities and bonds, however, there is a noticeable appetite for sustainable property investments, especially in Europe and the US. Asia’s private markets tend to adopt a sustainability-themed investment approach, particularly in environmental technology, with ten infrastructure fund managers involved in sustainability- themed strategies based in Asia. Other asset classes where significant sustainable investments are reported include private equity, venture capital, and hedge funds. Global Sustainable Investment Review 2012 15


Global Sustainable Investement Alliance
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