U.S. assets invested based on environmental, social and governance (ESG) criteria increased nearly 30 percent to $3.314 trillion at year-end 2011 from 2009, US SIF reports.

The group's foundation announced the finding in its 2012 Report On Sustainable And Responsible Investing Trends In The United States, which it released today. US SIF represents financial advisors, firms, institutions and others involved in SRI.

The report also found that more than 200 institutional investors or money managers representing $1.54 trillion in U.S.-domiciled assets filed or co-filed shareholder resolutions on ESG issues at public companies between 2010 and 2012.

The US SIF concluded total SRI assets -- those involved in ESG investing, shareholder resolutions or a combination of both -- are now at $3.74 trillion, a 22 percent increase since year-end 2009. Assets engaged in SRI practices now represent 11.3 percent of the $33.3 trillion in total assets under management, the report says.

"From 1995, when US SIF Foundation first measured the size of the U.S. sustainable and responsible investing market, to 2012, the SRI universe has increased 486 percent, while the broader universe of assets under management professional management in the United States, according to estimates from Thomson Reuters Nelson, has grown 376 percent," the report says.

US SIF also found the number of investment funds, excluding separate accounts, tracked as incorporating ESG criteria and the assets within them have grown dramatically since 2007. As of this year, there were 720 ESG funds with $1.01 trillion in assets. The number of funds increased from 46 percent in 2010 and nearly tripled from the 260 funds in 2007. Assets increased 78 percent from 2010 and more than 400 percent since 2007.

One segment in particular to show dramatic growth since 2010 are alternative investment vehicles -- private equity and venture capital funds, responsible property funds and hedge funds -- that incorporate ESG criteria. US SIF Foundation identified 301 such vehicles with $132 billion in AUM, an increase of about 250 percent from $37.8 billion in 2010.

US SIF found SRI has grown and evolved in recent years because of trends that include:

More money managers are incorporating ESG factors into their investment analysis and portfolio construction. The increase has come as a result of demand from their institutional and individual investors and the values of their management firms.

Institutional investors and money managers are continuing to divest from Sudan because of risks from the region's volatile and repressive regime. Sudan-related investment policies represent the most prevalent ESG criteria incorporated into investment management, the report says.

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