Asset managers seeking new levels of diversification and
risk awareness are wholeheartedly embracing investing programs designed with environmental, social and governance (ESG) themes in mind, according to a new report from
U.S. SIF, the research and advocacy organization supporting ESG and sustainable
and responsible investing (SRI).
According to U.S. SIF researchers, ESG/SRI investing assets have expanded to $8.72
trillion in the United States, up an impressive 33% from $6.57 trillion in 2014.
Important to note, much of the interest and growth is driven by asset managers themselves, rather than their institutional and retail
clients. Investment firms, looking to better map risk exposure and reduce asset
correlations, now consider ESG criteria across $8.10 trillion in assets, up a
whopping 69% from $4.8 trillion in 2014.
Some investors, for
example, are thinking deeply about how the social interconnectivity of the
world has dramatically impacted market correlations and the competitive
landscape in which all for-profit enterprises operate. Other investors, it
could be said, are actually hedging the possibility of negative environmental
impacts from climate change within their portfolios, positioning themselves to
be ready to take advantage of new solutions that will undoubtedly be needed in
a climate-stressed future. At a high level, the top two issues considered both
by money managers and by their institutional investor clients are “conflict
risk” and “climate change,” the researchers observe.
“The trend of robust growth in sustainable and impact investing
is continuing as investment managers apply ESG criteria across broader portions
of their portfolios, often in response to client demand,” adds Lisa Woll, U.S.
SIF Foundation CEO. “Asset managers, institutional investors, advisers and
individuals are moving toward sustainable and impact investing to advance
critical social, environmental and governance issues in addition to seeking long-term
NEXT: Robust embrace
of ESG themes