11.17.2020

US Sustainable Investing Assets Reach $17.1 Trillion

  • The Trends report counts two main strategies as sustainable investing: ESG incorporation—applying various environmental, social and governance (ESG) criteria in investment analysis and portfolio selection—and filing shareholder resolutions on ESG issues.
  • The total US-domiciled assets under management using sustainable investing strategies grew from $12.0 trillion at the start of 2018 to $17.1 trillion at the start of 2020, an increase of 42 percent.
  • This is 33 percent – or 1 in 3 dollars – of the total US assets under professional management.
  • The top three specific issues for money managers and their institutional investor clients are climate change/carbon emissions, sustainable natural resources/agriculture and board issues.
  • From 2018 through the first half of 2020, 149 institutional investors and 56 investment managers controlling $1.98 trillion in AUM led or co-led shareholder resolutions on ESG issues.

The US SIF Foundation’s 2020 biennial Report on US Sustainable and Impact Investing Trends, found that sustainable investing assets now account for $17.1 trillion—or 1 in 3 dollars—of the total US assets under professional management. This represents a 42 percent increase over 2018.

The Trends report—first published in 1995 and now in its 13th edition—is the most comprehensive study of sustainable and impact investing in the United States. The report provides data on the US asset management firms and institutional asset owners using sustainable investment strategies and examines the environmental, social and corporate governance (ESG) issues they consider in managing their portfolios. From the first report when assets totaled just $639 billion to today, the sustainable investing industry has grown more than 25-fold, a compound annual growth rate of 14 percent. The most rapid growth has occurred since 2012.

The report identified $16.6 trillion in US-domiciled assets at the beginning of 2020 held by 530 institutional investors, 384 money managers and 1,204 community investment institutions that practice ESG incorporation. The largest percentage of money managers cited managing risk as their top motivation for pursuing ESG incorporation, and money managers reported that ESG integration was the most prevalent ESG incorporation strategy. The largest number of institutional investors cited fulfilling mission and pursuing social or environmental impact as their top motivations.

In addition, 149 institutional investors and 56 investment managers controlling $1.98 trillion in assets under management led or co-led shareholder resolutions on ESG issues from 2018 through the first half of 2020.

Eliminating double counting for assets involved in both ESG incorporation and filing shareholder resolutions produces the net total of $17.1 trillion in sustainable investing strategies at the start of 2020.

“Money managers and institutional investors are using ESG criteria and shareholder engagement to address a plethora of issues including climate change, sustainable natural resources and agriculture, labor, diversity and political spending,” said Lisa Woll, US SIF Foundation CEO. “Additionally, retail and high net worth individuals are increasingly using this investment approach with $4.6 trillion in sustainable investment assets, a 50 percent increase from 2018.”

Ellen Dorsey, Executive Director of the Wallace Global Fund, a progressive foundation that has made sustainable and just investing central to the management of its endowment and has supported the Trends report since 2010, noted, “Amidst compounding crises, is not sufficient to simply fund good causes; we must also align our investments with our mission. We support the US SIF Foundation’s research as a critical tool to track crucial trends in the industry and ensure our own investments remain in alignment with our mission to support people-powered movements, advance democracy and rights, and to fight for a healthy planet.”

“As a practitioner of sustainable investing for over three decades, we believe it is more urgent than ever to embrace ESG considerations to help alleviate the crises our society faces, from income inequality to global warming, and to manage risk and improve investment performance,” said  Iyassu Essays, Director of ESG Research of Parnassus Investments, Visionary Sponsor and member of the US SIF Board. “We hope that the findings will drive new investors—from large institutions to retail investors to utilize sustainable investment strategies.”

Source: US SIF

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