One in four dollars invested with a financial professional in the U.S. is invested using sustainable, responsible and impact strategies (SRI), according to a report by the US SIF released Wednesday.
The increase from $8.7 trillion in 2016 to nearly $12 trillion at the beginning of this year represents a 38 percent increase in investments using SRI strategies, according to US SIF, the Forum for Sustainable and Responsible Investing. The assets included in the report are those controlled by money managers for retail investors and for institutional investors.
The entire category of SRI investing, which in these calculations incorporates environmental, social and governance (ESG) investing, has grown dramatically since SIF began measuring it in 1995, when the total was $639 billion. Some changes in focus and differences between how money managers handling individual investors’ funds and those handling institutional investors’ funds emerged in the past two years, the report said.
The largest percentage growth in the past two years for individual investors has been in product-specific investments, such as investments that avoid guns or tobacco, US SIF said. This category grew more than 125 percent, from $2 trillion to $4.5 trillion. Investments that avoid guns saw a five-fold increase and investments avoiding tobacco saw a four-fold increase.
However, investments that took climate change issues into consideration received the largest input of funds at $3 trillion, more than doubling in two years for money managers for individuals.
Institutional investors, on the other hand, put the largest emphasis on avoiding investments in terrorist and conflict free regions. Product specific investments and climate change issues were second and third considerations for institutional investors, the study said.
The most prominent social issue for institutional investors after conflict risk was equal employment opportunity and diversity, affecting $1.6 trillion of institutional assets, a 128 percent increase from 2016.
US SIF also reported on shareholder resolutions filed from the beginning of 2016 until the middle of 2018. During that time, 165 institutional investors and 54 investment managers, collectively controlling nearly $1.8 trillion in assets at the start of 2018, filed or co-filed shareholder resolutions on ESG issues. Resolutions filed by faith-based investors made up the majority of the resolutions.
The leading issue raised in shareholder proposals continued to be proxy access and the ability of shareholders to nominate directors to corporate boards. As a result of the strong investor support for these proposals in the past, the share of S&P 500 companies with proxy access policies grew from 1 percent in 2013 to 65 percent in 2017, US SIF said.
Disclosure and management of corporate political spending and lobbying were also top concerns, the report said. Shareholders filed 295 proposals on this subject from 2016 through the first half of 2018. Many of the targets were companies that have supported lobbying organizations that oppose regulations to curb greenhouse gas emissions.