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Global Sustainable Investement Alliance

Conclusion This report finds that there is US$ 13.6 trillion worth of professionally managed assets incorporating environmental, social and governance factors into investment selection and management. This comprises 21.8 percent of the funds under management in the regions surveyed, conclusively showing that the sustainable investment industry has significant scale in the global arena. While overall, the sustainable investment market is larger in Europe, it commands significant portions of the United States, Canadian and Australian markets, at 11.2, 20.2, and 18 percent respectively. These three regions together account for 96 percent of sustainable investing assets across all regions covered in this report. While relatively small in the other regions covered in this report, and at an emerging or non- existent level in most of Africa, other than South Africa, there is a growing appetite by investors in these areas for investment incorporating ESG factors. In addition, in growth markets like South Korea and South Africa, leading organization such as Korea’s National Pension Service and South Africa’s Government Employees Pension Fund are having tremendous impact on local investment landscape through their own sustainable investment policies and practices. Across the different regions, the use of a particular sustainable investment strategy is very much a function of the legal, structural, cultural and other differences that characterize that region. For example, shareholder stewardship varies greatly across jurisdictions. In some markets, such as the US and Canada, shareholders take an active role in filing and co-filing shareholder resolutions and voting shares. In other markets, such as in Europe, the preferred vehicle for instigating change is private dialogue with company management or the board of directors and pushing for change on the political legislative front. Other strategies, broadly speaking, are used in similar fashion across regions, including negative and positive screening and integration. Negative screening is the most consistently applied approach across the markets covered in this study, as it is found in significant scale in all markets except Japan. Presently, the US market accounts for the largest portion of impact investing assets but all regions that track these investments have seen significant growth. It is expected that growing interest in this area will drive future investment growth. Today, there are seven billion people in the world, a number that is likely to rise to nine billion by 2050. This growth will be associated with dramatic increases in demands for energy, water and other resources. Our current patterns of economic activity, where many social and environmental impacts remain off the balance sheets and outside of mainstream business and financial models, will simply not be able to continue without serious negative consequences. The Global Sustainable Investment Alliance believes that ESG factors will increasingly affect investment risk and opportunity as issues like climate change, water scarcity, and human rights become progressively more important to long-term performance and sustainability. The investment strategies highlighted in this report represent the predominant approaches to managing environmental, social and governance issues. The asset owners and managers that direct these funds are the leaders who, by demonstrating the critical link between ESG factors and financial performance, will be joined by an increasing number of other investors concerned about sustainability and sustainable investment returns. Global Sustainable Investment Review 2012 35


Global Sustainable Investement Alliance
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