GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

GLOBAL SUSTAINABLE

INVESTMENT REVIEW 2020

Robeco

Robeco is a pure-play international asset manager founded in 1929

with headquarters in Rotterdam, the Netherlands, and 17 oices

worldwide. A global leader in sustainable investing since 1995, its

unique integration of sustainable as well as fundamental and quan-

titative research enables the company to oer institutional and pri-

vate investors an extensive selection of active investment strategies,

for a broad range of asset classes. Robeco is a subsidiary of ORIX

Corporation Europe N.V.

More information is available at www.robeco.com.

RBC Global Asset Management

RBC Global Asset Management is a provider of global investment

management services and solutions to institutional, high-net-worth

and individual investors through separate accounts, pooled funds,

mutual funds, hedge funds, exchange traded funds and specialty

strategies.

We believe that being an active and responsible owner empow-

ers us to enhance the long-term, sustainable performance of our

portfolios.

For more information visit www.rbcgam.com/ri.

MEMBERS OF THE GLOBAL SUSTAINABLE INVESTMENT ALLIANCE INCLUDE:

Global Sustainable Investment Alliance@GlobalSIFgsia-alliance.org

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Contents

FOREWORD 

EXECUTIVE SUMMARY 

A NOTE ON METHODOLOGY 

DEFINING SUSTAINABLE INVESTMENT 

GLOBAL SUSTAINABLE INVESTMENTS 2018-2020 

Growth and proportion of global sustainable investment 9

Sustainable investment strategies 10

Market developments and characteristics 12

REGIONAL HIGHLIGHTS 

Europe 15

United States 16

Canada 18

Australia and New Zealand 19

Japan 20

ADDITIONAL REGIONAL HIGHLIGHTS 

United Kingdom

China

Latin America 24

South Africa, Nigeria and Kenya 24

Additional Asia market insights 25

APPENDIX 1 - METHODOLOGY AND DATA 

Europe 28

United States 28

Japan 29

Canada 29

Australia & New Zealand 29

APPENDIX 2 - DATA TABLE 

ACKNOWLEDGEMENTS 

FIGURES

FIGURE  Snapshot of global sustainable investing assets,

2016-2018-2020 (USD billions) 9

FIGURE  Snapshot of global assets under management

2016-2018-2020 (USD billions) 9

FIGURE  Growth of sustainable investing assets by region

in local currency 2014-2020 10

FIGURE  Proportion of sustainable investing assets

relative to total managed assets 2014-2020 10

FIGURE  Proportion of global sustainable investing assets

by region 2020 10

FIGURE  Sustainable investing assets by strategy & region 2020 11

FIGURE  Global growth of sustainable investing strategies 2016-2020 11

FIGURE  Regional shares, by asset weight, in global use of

sustainable investing strategies 2020 12

FIGURE  Global shares of institutional and retail

sustainable investing assets 2016-2020 13

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Foreword

The Global Sustainable Investment Alliance (GSIA) is an interna-

tional collaboration of membership-based sustainable investment

organisations around the world. Our mission is to deepen the im-

pact and visibility of sustainable investment organisations at the

global level. Our vision is a world where sustainable investment

is integrated into financial systems and the investment chain and

where all regions of the world have coverage by vigorous member-

ship-based institutions that represent and advance the sustainable

investment community.

This year’s Global Sustainable Investment Review 2020 (GSIR) is

the fifth in our series of biennial reports mapping the state of sus-

tainable investment

in the major financial markets globally.

The report again demonstrates that sustainable investment is a major

force shaping global capital markets, and, in turn is influencing com-

panies and others seeking to raise capital in those global markets.

This report brings together regional data from across the United

States, Canada, Japan, Australasia and Europe. Together, sustaina-

ble investment in these markets has reached USD35.3 trillion in as-

sets under management (AUM), having grown by 15% in two years.

The report also includes additional market insights from the Unit-

ed Kingdom, China, and across Latin America, Africa and Asia, to

form a global picture of the sustainable investment industry. The

report compiles the most comprehensive data from across regional

surveys, analysis and other available data, from both primary and

secondary sources.

But beyond these top line results, this year’s report highlights an

industry that is in transition, with rapid developments across re-

gions that are resetting expectations of sustainable investment,

with an emphasis on moving the industry towards best standards

of practice.

This is playing out in various ways in dierent markets, including

tightening regulatory frameworks and industry standards, and con-

sumer expectations rising. For example, the European Union Sus-

tainable Finance Action Plan has set new definitions for sustainable

and responsible investment embedded in legislation. This has re-

shaped the way sustainable investment is defined in Europe, which

is reflected in the report by a new source of data that starts to align

with these new definitions.

Concurrent to this transition is a global acceleration of an inter-

national sustainability agenda driven by international agreements

such as the Paris Agreement and the United Nations Sustainable

Development Goals, both of which are calling out the important role

of finance.

Increasingly, there are expectations that sustainable investment is

defined not just by the strategies involved, but by the short- and

long-term impacts that investors are having from their sustainable

investment approach.

The global network of sustainable investment organisations that

make up the GSIA all work in their individual markets to progress

this transition, ensuring sustainable investment is delivered in

a manner aligned with best practice standards, driving positive

change in corporate policies and performance and ultimately, align-

ing with a more sustainable future.

We would like to thank the many sponsors – listed in the acknowl-

edgements section – of the regional research reports used to pre-

pare the Global Sustainable Investment Review 2020, and other

contributing organisations who provided regional insights.

In particular, we would like to thank RBC Global Asset Management

and Robeco for the support for this global report. Without the sup-

port of these sponsors, this research and the report would not have

been possible.

Sincerely

Masaru Arai, Chair,

Japan Sustainable

InvestmentForum

Dustyn Lanz, CEO,

Responsible Investment

Association Canada

Simon O’Connor, CEO,

Responsible Investment

AssociationAustralasia

Victor Van Hoorn,

ExecutiveDirector, Eurosif -

The European Sustainable

Investment Forum

Lisa Woll, CEO,

US SIF: The Forum for

Sustainable and Responsible

Investment and the US SIF

Foundation

1 In this report, consistent with previous reports, ‘sustainable investment’ refers to a broad and inclusive definition

of approaches to investment that include environmental, social and governance factors in portfolio selection and

management across the seven strategies of sustainable or responsible investment as set out in this report. GSIA uses

this inclusive definition recognising there are distinctions and regional variations in its meaning and use, and related

orinterchangeable terms such as responsible investment and socially responsible investment.

2 Some of the definitions contained in the EU Sustainable Finance Disclosure Regulation (SFDR) are subject to dierent

interpretation and additional regulatory guidance is expected. As a result, the data used is starting to align with the

newsettings.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Executive summary

This 2020 Global Sustainable Investment Review (GSIR) is the fifth

in a series of biennial reports. It maps the state of sustainable and

responsible investment of major financial markets globally, report-

ing on data as at the beginning of 2020

This report shows the continuing prevalence of sustainable invest-

ment across the global investment industry, with assets under man-

agement reaching USD35.3 trillion, a growth of 15% in two years,

and in total equating to 36% of all professionally managed assets

across regions covered in this report.

This report outlines the state of the sustainable investment industry

based on the globally recognised sustainable investing definitions,

as used globally and developed by the GSIA members. These defi-

nitions were revised in October 2020 to reflect the most up-to-date

practice and thinking in the global sustainable investment industry.

‘Sustainable investment’

, as referred to in this report, is a term that

is inclusive of investment approaches that consider environmen-

tal, social and governance (ESG) factors in portfolio selection and

management across seven strategies of sustainable or responsible

investment (as detailed in the ‘Defining Sustainable Investment’

section). For the purpose of articulating our shared sustainable in-

vestment work in the broadest way, GSIA uses this inclusive defi-

nition, recognising there are distinctions and regional variations in

its meaning and use, and related or interchangeable terms such as

responsible investing and socially responsible investing.

This report shows that beyond the top line growth in sustaina-

ble investment assets, this is an industry that is in transition, with

rapid developments across regions that are reshaping sustainable

investment to increasingly focus on moving the industry towards

best standards of practice. Increasingly, there are expectations that

sustainable investment is defined not just by the strategies involved,

but by the short- and long-term impacts that investors are having

from their sustainable investment approach.

This transition is playing out dierently in dierent regions, and this

report includes a regional highlights section that provides deep in-

sights into the dierent paths that various regions are now taking

and the distinct drivers behind these changes.

This transition is leading to variations in the scale and growth of

sustainable investment in dierent regions. In this 2021 report, many

regions continue to see strong growth in sustainable investment as-

sets under management – most notably Canada, the United States

and Japan. Other regions are slowing down their rate of growth or

have seen a reported reversal – in particular Europe and Australasia.

In both cases, this is largely due to changes in how sustainable in-

vestment is defined, either by law as in the case of the EU or by new

industry standards as is the case in Australasia.

This report maps out these global and regional distinctions in the

evolution of sustainable investment, articulated in both the data

presented, but also in the regional narrative summaries.

This report includes additional market insights from China, Latin

America, Africa, the United Kingdom and other areas of Asia, all

showing unique markets for sustainable investment.

Key findings in this year’s report include:

▶ At the start of 2020, global sustainable investment reached

USD35.3 trillion in five major markets, a 15% increase in

the past two years (2018-2020).

▶ Sustainable investment assets under management make

up a total of 35.9% of total assets under management,

upfrom 33.4% in 2018.

▶ Sustainable investment assets are continuing to grow

in most regions, with Canada experiencing the largest

increase in absolute terms over the past two years (48%

growth), followed by the United States (42% growth),

Japan (34% growth) and Australasia (25% growth) from

2018 to 2020. Europe reported a 13% decline in the growth

of sustainable investment assets in 2018 to 2020 due

to a changed measurement methodology from which

European data is drawn for this year’s report. This reflects

a period of transition associated with revised definitions of

sustainable investment that have become embedded into

legislation in the European Union as part of the European

Sustainable Finance Action Plan.

▶ Canada is now the market with the highest proportion of

sustainable investment assets at 62%, followed by Europe

(42%), Australasia (38%), the United States (33%) and

Japan (24%).

▶ The United States and Europe continue to represent more

than 80% of global sustainable investing assets during

2018 to 2020.

▶ The most common sustainable investment strategy is ESG

integration, followed by negative screening, corporate

engagement and shareholder action, norms-based

screening and sustainability-themed investment.

3 All 2020 assets are reported as at 31 December 2019, except for Japan which reports as at 31 March 2020.

4 ‘Sustainable investment’ as used in this report is dierent from the European regulatory definition of ‘sustainable

investment’ enshrined in the EU SFDR regulation. This report is not claiming that all funds and strategies covered by the

data would meet the EU regulatory definition.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

A note on methodology

This report provides a snapshot of sustainable investing across Eu-

rope, the United States, Japan, Canada, Australia and New Zealand

(Australasia) based on the regional and national reports from GSIA

members or in the case of Europe, from secondary industry data.

GSIA members are the US SIF: The Forum for Sustainable and

Responsible Investment (US SIF), Japan Sustainable Investment

Forum (JSIF), the Responsible Investment Association Canada (RIA

Canada) and the Responsible Investment Association Australasia

(RIAA). Reference to ‘global data’ or ‘regions’ in this section refers to

data from these regions unless otherwise specified.

Assets presented in this report have been converted to US dollars.

Each region or country covered by this report uses a dierent meth-

od to collect data for its respective report. The consolidation in this

report is made on a best eort basis, based on best available region-

al data. Note in particular, that Europe and Australasia have enacted

significant changes in the way sustainable investment is defined in

these regions, so direct comparisons between regions and with pre-

vious versions of this report are not easily made.

Detailed information on the policy, regulatory, industry, customer

and market drivers across global regions has been provided by the

regional sustainable investment organisations.

All 2020 assets are reported as of 31 December 2019, except for

Japan which reports as of 31 March 2020. For figures which are not

displayed in the region’s local currency, currencies have been con-

verted to US dollars at the exchange rate prevailing on 31 December

2019, (or 31 March 2020 in the case of Japan) for comparability.

Refer to Appendix 1 for further information on the methodology and

data used in this report. Refer to Appendix 2 for a table of assets in

each region in its local currency in 2018 and 2020, and the percent-

age growth for both the regional and global strategy totals over this

period.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Dening sustainable investment

Sustainable investment is an investment approach that considers

environmental, social and governance (ESG) factors in portfolio se-

lection and management. For the purpose of this global report and

for articulating our shared work in the broadest way, GSIA uses an

inclusive definition of sustainable investing which is presented in the

strategies in the table below. The term sustainable investment may

be used interchangeably with responsible investment and social-

ly responsible investment, among other terms, whilst recognising

there are distinctions and regional variations in its meaning and use.

In most regions, like Europe and Australasia, it is increasingly the

case that the same investment product or strategy will combine sev-

eral sustainable investment strategies, such as negative/exclusion-

ary screening, ESG integration and corporate engagement.

The GSIA articulation of sustainable investment strategies were in-

itially published in the 2012 Global Sustainable Investment Review

and have emerged as a global standard of classification. These defi-

nitions were revised in October 2020 to reflect the most up-to-date

practice and thinking in the global sustainable investment industry.

The seven core approaches to sustainable investment and their re-

lated definitions are:

ESG integration The systematic and explicit inclusion by investment managers of environmental, social and governance factors into

financial analysis.

Corporate engagement & shareholderaction Employing shareholder power to influence corporate behaviour, including through direct corporate engagement (i.e.,

communicating with senior management and/or boards of companies), filing or co-filing shareholder proposals, and

proxy voting that is guided by comprehensive ESG guidelines.

Norms-based screening Screening of investments against minimum standards of business or issuer practice based on international norms such

as those issued by the UN, ILO, OECD and NGOs (e.g. Transparency International).

Negative/exclusionary screening The exclusion from a fund or portfolio of certain sectors, companies, countries or other issuers based on activities

considered not investable.

Exclusion criteria (based on norms and values) can refer, for example, to product categories (e.g., weapons, tobacco),

company practices (e.g., animal testing, violation of human rights, corruption) or controversies.

Best-in-class/positive screening Investment in sectors, companies or projects selected for positive ESG performance relative to industry peers, and that

achieve a rating above a defined threshold.

Sustainability themed/thematicinvesting Investing in themes or assets specifically contributing to sustainable solutions - environmental and social -

(e.g., sustainable agriculture, green buildings, lower carbon tilted portfolio, gender equity, diversity).

Impact investing and communityinvesting

Impact investing

Investing to achieve positive, social and environmental impacts - requires measuring and reporting against these impacts,

demonstrating the intentionality of investor and underlying asset/investee, and demonstrating the investor contribution.

Community investing

Where capital is specifically directed to traditionally underserved individuals or communities, as well as financing that is

provided to businesses with a clear social or environmental purpose. Some community investing is impact investing, but

community investing is broader and considers other forms of investing and targeted lending activities.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Global sustainable investments 2018-2020

GROWTH AND PROPORTION OF GLOBAL

SUSTAINABLE INVESTMENT

Growth of global sustainable investing assets

At the start of 2020, global sustainable investment reached USD35.3

trillion in the five major markets covered in this report, a 15% in-

crease in the past two years (2018-2020) and 55% increase in the

past four years (2016-2020).

The total professionally managed assets under management during

the reporting period has grown to USD98.4 trillion, as shown in Fig-

ure 2. Reported sustainable investment assets under management

make up a total of 35.9% of total assets under management. This

represents a growth from the previous reporting period of 2.5 per-

centage points.

Sustainable investment assets are continuing to climb globally,

with the exception of Europe which appears to indicate a decline,

however this is due to significant changes in the way sustainable

investment is defined in this region under EU legislation, making

comparisons with previous versions of this report very diicult.

As shown in Figure 3, the largest increase over the past two years

was in Canada, where sustainably managed assets grew over 48%.

The United States closely followed Canada with a growth of 42%,

followed by Japan at 34% from 2018 to 2020.

In Australasia, sustainable assets continued to rise, but at a slow-

er pace than between 2016 and 2018 with a growth of 25% from

2018 to 2020 compared with 46% from 2016 to 2018. This slow down

reflects an industry transition whereby industry standards on what

constitutes sustainable investment, as defined and measured by

RIAA, have tightened.

Europe reported a 13% decline in the growth of sustainable invest-

ment assets in 2018 to 2020 due to a changed measurement meth-

odology from which European data is drawn for this year’s report.

This reflects a period of transition associated with revised defini-

tions of sustainable investment that have become embedded into

legislation in the European Union as part of the European Sustaina-

ble Finance Action Plan.

FIGURE 1

Snapshot of global sustainable investing assets, 2016-2018-2020 (USD billions)

Global sustainable

investment at

$35.3 trillion

REGION   

Europe* 12,040 14,075 12,017

United States 8,723 11,995 17,081

Canada 1,086 1,699 2,423

Australasia* 516 734 906

Japan 474 2,180 2,874

Total (USD billions) 22,839 30,683 35,301

NOTE: Asset values are expressed in billions of US

dollars. Assets for 2016 were reported as of 31/12/2015

for all regions except Japan as of 31/03/2016. Assets

for 2018 were reported as of 31/12/2017 for all regions

except Japan, which reported as of 31/03/2018. Assets

for 2020 were reported as of 31/12/2019 for all regions

except Japan, which reported as of 31/03/2020.

Conversions from local currencies to US dollars were at

the exchange rates prevailing at the date of reporting.

In 2020, Europe includes Austria, Belgium, Bulgaria,

Denmark, France, Germany, Greece, Italy, Spain,

Netherlands, Poland, Portugal, Slovenia, Sweden, the

UK, Norway, Switzerland, Liechtenstein.

*Europe and Australasia have enacted significant changes

in the way sustainable investment is defined in these

regions, so direct comparisons between regions and with

previous versions of this report are not easily made.

FIGURE 2

Snapshot of global assets under management 2016-2018-2020 (USD billions)

35.9% of total assets

under management are

sustainable investments

NOTE: Asset values are expressed in billions of US

dollars. Global assets are based on data reported by

Europe, US, Canada, Australia, New Zealand and Japan

for the purpose of the 2016, 2018 and 2020 GSIRs.

REGIONS   

Total AUM of regions 81,948 91,828 98,416

Total sustainable investments only AUM 22,872 30,683 35,301

% Sustainable investments 27.9% 33.4% 35.9%

Increase of % sustainable investments

(compared to prior period)

5.5% 2.5%

5 The decline in Europe is due to the fact that the data is taking account of regulatory definitions which may result in the

fact that not all products or strategies considered in the past would meet these new regulatory definitions. The European

marketplace is in constant and fast transition and therefore it is too early to draw definitive conclusions on trends.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Proportion of sustainable investing relative to total

managed assets

As shown in Figure 4, the proportion of sustainable investing rela-

tive to total managed assets continued to grow strongly in Canada,

the United States and Japan.

In contrast, Australasia and Europe both reported a lower proportion

of sustainable investing assets relative to total managed assets for

2018 to 2020. This reflects significant changes in the way sustain-

able investment is defined in these regions, making comparisons

with previous versions of this report very diicult, and highlights an

evolution of the sustainable investment markets in both regions. In

Europe, this was driven in large part by a strong legislative push

that now explicitly sets out sustainability standards for sustainable

finance products. In Australasia, this was due to two main factors:

one being a shift in sustainable investment standards expected for

inclusion in the regional survey data undertaken by RIAA, as well as

a changed data source used to define the total market size based on

the domestic central bank definition.

Proportion of global sustainable investing assets

byregion

The United States and Europe continued to represent more than

80% of global sustainable investing assets during 2018 to 2020.

The proportions of global sustainable investing assets in Canada

(7%), Japan (8%) and Australasia (3%) have remained relatively un-

changed over the past two years.

SUSTAINABLE INVESTMENT STRATEGIES

Proportion of sustainable investing assets by strategy

and region

The largest sustainable investment strategy globally is ESG integra-

tion, as shown in Figure 6, with a combined USD25.2 trillion in assets

under management employing an ESG integration approach, also

being the most commonly reported strategy in most regions. The

next most commonly deployed sustainable investment strategies

include negative/exclusionary screening (USD15.9 trillion) followed

by corporate engagement/shareholder action (USD10.5 trillion).

This result shows a change from 2018 when negative/exclusionary

screening was reported as the most popular sustainable investment

FIGURE 4

Proportion of sustainable investing assets relative to total

managed assets 2014-2020

2014 2016 2018 2020

10%

20%

30%

40%

50%

60%

70%

Europe

United States

Canada

Australia/NZ

Japan

58.8

52.6

48.8

41.6

17.9

21.6

25.7

33.2

31.3

37.8

50.6

61.8

16.6

50.6

63.2

37.9

3.4

18.3

24.3

*Europe and Australasia have enacted significant changes in the way sustainable investment is defined in these

regions, so direct comparisons between regions and with previous versions of this report are not easily made.

REGION    

Europe* 58.8% 52.6% 48.8% 41.6%

United States 17.9% 21.6% 25.7% 33.2%

Canada 31.3% 3 7. 8% 50.6% 61.8%

Australasia* 16.6% 50.6% 63.2% 37.9%

Japan 3.4% 18.3% 24.3%

FIGURE 5

Proportion of global sustainable investing assets by region 2020

Europe*

United States

Canada

Australia/NZ*

Japan

34%

48%

* Europe and Australasia have enacted significant changes in the way sustainable investment is defined in these

regions, so direct comparisons between regions and with previous versions of this report are not easily made.

FIGURE 3

Growth of sustainable investing assets by region in local currency 2014-2020

   

GROWTH PER PERIOD

COMPOUND ANNUAL

GROWTH RATE

CARG 

GROWTH



GROWTH



GROWTH



Europe* (EUR) €9,885 €11,045 €12,306 €10,730 12% 11% -13% 1%

United States (USD) $6,572 $8,723 $11,995 $17,081 33% 38% 42% 17%

Canada (CAD) $1,011 $1,505 $2,132 $3,166 49% 42% 48% 21%

Australasia* (AUD) $203 $707 $1,033 $1,295 248% 46% 25% 36%

Japan (JPY) ¥840 ¥57,056 ¥231,952 ¥310,039 6,692% 307% 34% 168%

NOTE: Asset values are expressed in

billions. New Zealand assets were

converted to Australian dollars. In

2020, Europe includes Austria, Belgium,

Bulgaria, Denmark, France, Germany,

Greece, Italy, Spain, Netherlands,

Poland, Portugal, Slovenia, Sweden, the

UK, Norway, Switzerland, Liechtenstein.

*Europe and Australasia have enacted

significant changes in the way

sustainable investment is defined in

these regions, so direct comparisons

between regions and with previous

versions of this report are not

easilymade.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

FIGURE 6

Sustainable investing assets by strategy & region 2020

NOTE: Asset values are expressed

in billions of US dollars. European

sustainable investing strategy

data is based on extrapolation

from historic data from the

2018 GSIR report and applying

the same proportion to 2020

sustainable investing data

across the di erent sustainable

investing strategies. US SIF data

extrapolates from numbers

provided by a subset of overall

respondents in its 2020 Trends

report. US and Australasia did not

report on the category of norms-

based screening and Australasia

on the category positive/best-in-

class screening.

0 5k 10k 15k 20k 25k

Impact/community investing

Positive/best-in-class screening

Sustainability themed investing

Norms-based screening

Corporate engagement and shareholder action

Negative/exclusionary screening

ESG integration

$3,074

$4,743

$9,242

$4,140

$1,688

$1,980

$3,404

$16,059

$2,045

$2,302 $794

$1,735

$1,900

■

$16

■

$17

■

$106

■

$212

■

$16

■

$136

■

$572

■

$658

■

$37

■

$803

■

$1,042

■

$262

■

$1,254

■

$74

■

$145

■

$89

■ Europe

■ United States

■ Canada

■ Australia/NZ

■ Japan

FIGURE 7

Global growth of sustainable investing strategies 2016-2020

NOTE: Asset values are expressed

in billions of US dollars.

0 5k 10k 15k 20k 25k

Impact/community investing

Positive/best-in-class screening

Sustainability themed investing

Norms-based screening

Corporate engagement and shareholder action

Negative/exclusionary screening

ESG integration

$352

$1,384

$1,948

$4,140

$10,504

$15,030

$25,195

$444

$1,842

$1,018

$4,679

$9,835

$19,771

$17,544

$248

$818

$276

$6,195

$8,385

$15,064

$10,353

■  ■  ■  GROWTH



COMPOUND ANNUAL

GROWTH RATE

Impact/community investing $352 $444 $248 42% 9%

Positive/best-in-class screening $1,384 $1,842 $818 69% 14%

Sustainability-themed investing $1,948 $1,018 $276 605% 63%

Norms-based screening $4,140 $4,679 $6,195 -33% -10%

Corporate engagement and shareholder action $10,504 $9,835 $8,385 25% 6%

Negative/exclusionary screening $15,030 $19,771 $15,064 0% 0%

ESG integration $25,195 $17,544 $10,353 143% 25%

■ 2020

■ 2018

■ 2016

strategy. This shift towards ESG integration was particularly pro-

nounced in Japan where ESG integration became the most com-

mon sustainable investment strategy, taking over from corporate

engagement and shareholder action. European sustainable invest-

ing strategies data in this year’s report is based on an extrapolation

from historical data taken from previous versions of this report, due

to no data being available for 2020 at a strategy level.

What is also increasingly evident by reports from across the major

regions is that many investment organisations are using a combina-

tion of strategies, rather than solely relying on just one.

Popularity of sustainable investing strategies

Figure 7 demonstrates the global growth of sustainable investing

strategies from 2016-2020. Sustainability-themed investing, ESG

integration and corporate engagement have all experienced con-

sistent growth during the period. However, norms-based screening,

positive screening as well as negative screening have all experi-

enced a more variable trajectory since 2016.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Proportion of sustainable investing strategies by asset

weight and region

Regional dierences in the prevalence of sustainable investing

strategies can be seen in Figure 8. These are due to a number of

factors, some of which are regionally specific.

For example, Australasia combines positive, negative and norms-

based screening into one bucket and does not track corporate en-

gagement as a stand-alone strategy, so those assets are restricted

to four of the seven strategies shown in Figure 8. The United States

does not track norms-based screening, and for the purposes of pro-

ducing an overall tally of sustainable investing assets, counts only

the portion of corporate engagement assets that are deployed in

filing shareholder resolutions on ESG issues.

Nonetheless, we are able to see some interesting regional varia-

tions. Although Japan holds 8% of global sustainable investing as-

sets, it accounts for a much greater share of global assets dedicated

to corporate engagement and shareholder action (17%). The United

States holds the greater proportion of global assets in sustainabili-

ty-themed investing, impact/community investing, positive/best-in-

class investing, and ESG integration.

As mentioned above, investors may utilise multiple sustainable in-

vesting strategies as a means of integrating sustainability risks and

opportunities as part of their investment processes. As such, seg-

regating these strategies may not be representative of the holistic

trends facing the sustainable investment industry globally.

FIGURE 8

Regional shares, by asset weight, in global use of sustainable investing strategies 2020

NOTE: European sustainable investing strategy

data is based on extrapolation from historic

data from the 2018 GSIR report and applying the

same proportion to 2020 sustainable investing

data across the di erent sustainable investing

strategies. US SIF data extrapolates from numbers

provided by a subset of overall respondents in

its 2020 Trends report. US and Australasia did not

report on the category of norms-based screening

and Australasia on the category positive/best-

in-class screening. Australasia also includes

corporate engagement within ESG integration.

0% 20% 40% 60% 80% 100%

Impact/community investing

Positive/best-in-class screening

Sustainability themed investing

Norms-based screening

Corporate engagement and shareholder action

Negative/exclusionary screening

ESG integration

30%

41%

74%

45%

61%

16%

60%

48%

86%

19%

23%

64%

19%

10%

17%

■ EUROPE ■ UNITED

STATES

■ CANADA ■ AUSTRALIA/

NEW ZEALAND

■ JAPAN

Impact/community investing 30% 60% 4% 5% 0%

Positive/best-in-class screening 41% 48% 1% 0% 10%

Sustainability-themed investing 7% 86% 2% 0% 4%

Norms-based screening 74% - 19% - 6%

Corporate engagement and shareholder action 45% 19% 19% - 17%

Negative/exclusionary screening 61% 23% 7% 1% 8%

ESG integration 16% 64% 9% 3% 8%

■ Europe ■ United States ■ Canada

■ Australia/NZ ■ Japan

Historically Europe made up the majority of assets with norms-

based and negative/exclusionary screening strategies. As the re-

cent European Union Sustainable Finance Disclosure Regulation

sets out requirements for investment managers to incorporate sus-

tainability risks in their investments, this means that negative/ex-

clusionary screening, norms-based screening and ESG integration

have become part of the expected practice of all financial products

in the region.

MARKET DEVELOPMENTS AND

CHARACTERISTICS

Institutional and retail investors

Investments managed by professional asset managers are often

classified as either retail or institutional. Retail assets are personal

investments by individuals in professionally managed funds pur-

chased in banks or through investment platforms with relatively low

minimum investment levels, while assets classified as ‘institutional’

are managed on behalf of institutional asset owners such as pen-

sion funds, universities, foundations and insurers through invest-

ment products with higher minimum investment levels.

Although institutional investors tend to dominate the financial

market, interest by retail investors in sustainable investing has

been steadily growing since this report began dierentiating be-

tween these two investment classifications in 2012. At that time,

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

institutional investors held 89% of assets compared with 11% held

by retail investors. Figure 9 shows that at the start of 2020, the retail

portion sits at one quarter of total sustainable investing assets. This

has remained stable since 2018.

Developments in global instruments and norms

The Paris Agreement, the Sustainable Development Goals, the Task

Force on Climate-related Financial Disclosures, and the United

Nations Environment Program Finance Initiative (UNEP FI) Sus-

tainable Financial Roadmap Initiative are four examples of global

developments that have greatly impacted the sustainable investing

industry and the financial services industry more broadly.

The Paris Agreement is a legally binding international treaty on cli-

mate change that entered into force in 2016. The Paris Agreement

was signed at the United Nations Climate Change Conference

(COP21), and at the time of writing 195 parties have signed, and 189

parties have ratified the agreement. The goal of the agreement is

to limit global warming to well below 2°C, preferably to 1.5°C, com-

pared to pre-industrial levels. The Paris Agreement has been the

driving force of many state-based legislations to limit greenhouse

gas emissions and set net zero emission targets. Although the Paris

Agreement is a state-based agreement, investors, asset owners and

asset managers are increasingly looking to align their portfolios to

the goal of the Paris Agreement, and monitor and limit greenhouse

gas emissions, or are required to in alignment with changes in state-

based legislation.

The Sustainable Development Goals (SDGs) contain 17 globally set

goals to achieve a better and more sustainable future for all by 2030

and were adopted by all United Nations Member States in 2015.

There are a total of 231 indicators and 169 targets that recognise

ending poverty and other deprivations must go hand-in-hand with

strategies that improve health and education, reduce inequality,

and spur economic growth – all while tackling climate change and

working to preserve our oceans and forests. Although the SDGs are

a state-based framework, businesses and investors have also been

encouraged to adopt the SDG framework. The UN Global Compact

and their regional associations have been leading the development

of business-based guidance for SDG implementation. The Princi-

ples for Responsible Investment (PRI) has also provided guidance

to investors on the SDGs Investment Case.

FIGURE 9

Global shares of institutional and retail sustainable investing

assets 2016-2020

20%

40%

60%

80%

100%

2016 2018 2020

80% 75% 75%

20%

25% 25%

NOTE: This data was not collected in Australasia or Europe for 2020.■ Retail ■ Institutional

The Taskforce on Climate-related Financial Disclosures (TCFD)

was established by the Financial Stability Board. The launch of the

Recommendations of the TCFD in 2017 has influenced policy and

regulation globally, and greatly changed expectations on investors,

asset managers and asset owners. The TCFD recommendations are

designed to help companies to provide better information on how

organisations provide information on climate-related risks and op-

portunities and disclosures structured around governance, strategy,

risk management metrics and targets. In 2021, a new Taskforce on

Nature-related Financial Disclosures (TNFD) was created to de-

liver a framework for organisations to report and act on evolving

nature-related risks.

The United Nations Environment Program Finance Initiative (UNEP

FI) Sustainable Financial Roadmap Initiative proposes an integrated

approach to accelerate the transformation towards a sustainable

financial system. Regionally, there have been localised Sustainable

Finance Roadmaps created dedicated to accelerating sustainable

financial systems locally in many markets around the world.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Regional highlights

This section illustrates examples of policy and regulatory develop-

ments, industry drivers and collaboration, customer preferences

and demand, and operational and market drivers across the specific

regions covered in the previous section (Europe, the United States,

Canada, Australia/New Zealand and Japan).

EUROPE

Policy & regulatory drivers

Regulatory and policy drivers have influenced the sustainable and

responsible investment market across Europe. The most important

regulatory developments in Europe include:

▶ The European Union Sustainable Finance Action Plan,

published in 2018, and in particular the Sustainable Finance

Disclosure Regulation (SFDR) has significant impacts on

the ESG/responsible investments market through new

definitions set in law. SFDR requires institutional investors,

asset managers and advisers to report how they integrate

sustainability risks and adverse impacts at entity level, and

to classify and report their ESG products’ sustainability

risks and adverse impacts. The EU Sustainable Finance

Disclosure Regulation obliges all investment managers to

incorporate sustainability risks in their investments, thus

making sustainable investment strategies as defined by

GSIA such as negative/exclusionary screening, norms-

based screening and ESG integration part of the expected

practice of all financial products.

▶ Corporate Sustainability Reporting Directive proposal

(amending Non-financial reporting directive) - requires

large companies to publish regular reports on the social

and environmental impacts of their activities.

▶ The European Union’s proposed Markets in Financial

Instruments Directive 2 (MiFID II) suitability rules

ensure that investors’ ESG preferences are taken into

consideration during investment advice and portfolio

management.

▶ The EU Taxonomy Regulation entered into force in 2020

and establishes the framework for the EU taxonomy by

setting out four overarching conditions that an economic

activity has to meet in order to qualify as environmentally

sustainable. The delegated acts containing the technical

screening criteria for climate change adaptation and

mitigation, published in April 2021 further details this. Next

to environmental objectives, a social taxonomy and no

significant harm taxonomy are in the pipeline.

One major milestone of EU Taxonomy is the embodiment of the dou-

ble materiality concept. Double materiality implies that companies

and investors not only report on risks and opportunities immedi-

ately financially material to corporate valuation, but also issues that

are impacting on environmental and social objectives over time and

on geography should be considered. The impacts on environment

and social aspects are defined with a threshold of significant contri-

bution or significant harm to six environmental objectives (climate

mitigation, climate adaptation, water, circular economy, pollution,

and biodiversity) in the Taxonomy.

The forthcoming Sustainable Finance strategy by the European

Commission is likely to underpin the substance of investors’ cor-

porate engagement and net zero commitments. Gradually, this is

expected to lead investors and asset owners to increasingly focus

on outcomes and impacts of their investments in the future.

Industry drivers

Three notable milestones of sustainable and responsible industry

initiatives and collaboration in Europe targeting improved ESG out-

comes are described below.

First, the promotion of voluntary sustainable fund labels as a means

to demonstrate the ESG credentials of the fund to end investors.

National labels exist in France, Belgium, Luxembourg and Austria,

while there are cross-border labels for the German speaking re-

gion (Switzerland, Germany and Austria) and for the Nordic region.

Nearly 1,500 investment funds carry at least one of these European

sustainable finance labels, representing EUR827 billion in AUM as of

31 March 2021 (Novethic).

Second, FinDatEx (Financial Data Exchange Templates), a collab-

orative initiative of the European financial services sector to stand-

ardise and facilitate data flows, is creating a simplified ‘European

ESG Template (EET)’ to meet the regulatory compliance (SFDR,

clients’ sustainability preference in MiFID II/IDD) and related client

inquiries. A working draft is expected in September for public con-

sultation with an aim of launching EET in early 2022.

Third, the United Nations-convened Net Zero Asset Owner Alliance

(NZAOA), where 32 of 42 groups of institutional investors are head-

quartered in Europe and representing USD6.6 trillion in AUM, is ac-

celerating its action to align portfolios to the 1.5°C scenario.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Customer drivers

In Europe, the sustainable and responsible investment industry has

experienced a strong demand of retail investors in the first half of

2020, as evidenced by net inflows of EUR14 billion of EU-domiciled

ESG equity funds in contrast to net outflows of EUR77 billion of

other equity funds. The consistent outperformance of ESG indices

over the last few years has also increased the ESG product oers to

the retail market.

The European Commission aims to steer retail investors towards

more ESG product choices by introducing amendments to the

MiFID II. MiFID II amendments require financial advisers to inquire

‘sustainability preferences’ of each client and advise appropriate

products.

There have been dierent surveys conducted across Europe that

account for interest in sustainable and responsible investment the-

matics and products. 2DII conducted a series of surveys on sustain-

ability objectives in 2019 and found out that two-thirds of French

and German retail investors want to invest in an environmentally

responsible manner.

Market drivers

Morningstar Manager Research, published in 2021, reveals that

while a majority of new fund oerings for 2020 were broad ESG

funds, environmental focused funds accounted for 13% of new fund

oerings. Other products in the European market in 2020 embed

sustainability-related themes including gender, smart cities, the

ocean, and the SDGs.

Eective engagement and meaningful stewardship have been ex-

amined mainly by industry as a tool to drive positive outcomes.

For example, the European Union’s investor stewardship tool, the

Shareholder Rights Directive II, aims to promote the adoption of

corporate sustainability measures through engagement activities.

Sustainable investment association in the region

– Eurosif

The European Sustainable Investment Forum (Eurosif) is a Europe-

an sustainable and responsible investment membership organisa-

tion whose mission is to promote sustainability through European

financial markets. Eurosif works as a partnership of Europe-based

national Sustainable Investment Fora (SIFs) with the direct support

of their network which spans over 400 Europe-based organisations

drawn from the sustainable investment industry value chain. More

information on the developments in the region can be found on the

Eurosif website.

UNITED STATES

Policy & regulatory drivers

In the United States, the regulatory policy environment for sus-

tainable investing has drastically changed between the former and

current administrations. The administration under former President

Donald Trump sought to limit sustainable investing through ac-

tions taken at the Department of Labor (DOL) and Securities and

Exchange Commission (SEC). President Biden’s administration has

taken measures to mitigate or reverse those actions. Despite all the

regulatory and policy shifts in the last several years, investor interest

in sustainable investing continued to accelerate.

Some notable regulatory and policy drivers since the election of

President Biden include:

▶ In March 2021, the Department of Labor released

a statement of non-enforcement of two previous

administration rules related to consideration of ESG

factors in retirement options and exercising their ability

to vote proxies related to environmental, social or

governance issues. The DOL also committed to revisit

and release new guidance on these rules to allow

consideration of ESG criteria and proxy voting in private

sector retirement plans.

▶ In May 2021, a bill was introduced in the Senate which

states that ESG criteria may be considered in ERISA-

governed retirement plans. A companion bill was

introduced in the House of Representatives. Passage of

such legislation in both houses of Congress would end

the back and forth on regulatory interpretations at the

Department of Labor.

▶ In March 2021, the SEC issued a request for information on

climate risk and ESG disclosures. This is expected to lead

to a regulatory proposal for mandatory issuer disclosure

on climate change and potentially a broader set of ESG

issues.

▶ In May 2021, the White House released an Executive

Order on Climate-Related Financial Risk, which included

measures seeking to advance ESG disclosure as well as

accelerating the use of ESG criteria in ERISA-governed

retirement plans and in the Federal Thrift Retirement Plan,

the largest retirement plan in the United States.

▶ In addition to the aforementioned regulatory changes,

the US government is currently focused on tackling

specific ESG themes such as labour rights and climate

change. One example includes the work conducted by

the White House Task Force on Worker Organizing and

Empowerment with the aim of strengthening labour rights.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Industry collaboration

During the reporting period, there have been multiple strong sus-

tainable investment industry collaborations across a wide range of

ESG themes.

In 2020, the Racial Justice Investing (RJI) Coalition released the

Investor Statement of Solidarity to Address Systemic Racism and

Call to Action endorsed by over 120 investors and organisations. The

Statement calls for accountability and action from the investment

community to dismantle systemic racism and promote racial equity

and justice. This initiative was launched after the murders by police

of George Floyd and Breonna Taylor, the murder of Ahmaud Arbery,

ongoing police violence against black communities, and the dispro-

portionate health and economic impact of COVID-19 on black and

other minority populations.

Another notable development is the CFA Institute project to estab-

lish voluntary disclosure requirements for investment products with

ESG-related features. In May 2021, the CFA Institute released an

Exposure Draft of the standards to solicit feedback.

Collaborations around corporate engagement have become an in-

creasingly used tool for investors. US SIF reviewed the ESG themes

of shareholder proposals filed between 2018-2020 and found the

most popular thematic concern of shareholder proposals is corpo-

rate political activity, followed by labour and equal employment op-

portunity, climate change/carbon, executive pay, then independent

board chair.

Customer drivers

The 2020 US SIF Foundation Trends Report identified USD4.6 tril-

lion in ESG assets managed for individual retail or high-net-worth

clients, up from USD3 trillion in 2018.

According to a 2019 Morgan Stanley study, 85% of individual inves-

tors surveyed were interested in sustainable investing, up 10% from

2017. Among millennials, 95% were interested, up 9% from 2017.

The study found that individual investor survey respondents were

most interested in the themes of plastic reduction (46%) and climate

change (46%), community development (42%), circular economy

(39%) and SDGs (36%).

In a 2019 survey by Natixis Global Asset Management of partici-

pants in retirement contribution plans, 75% of respondents said it

was important to make the world a better place while growing their

wealth. Sixty-one percent said including sustainable investment op-

tions would make them more likely to contribute to their plan.

6 2020 US SIF Foundation Trends Report

Market drivers

The United States has seen a new focus on racial justice investing. A

number of asset managers, service providers, non-profits and other

institutions have developed policies and frameworks to help the

investment community counter injustice and advance racial equity.

There has been a continued focus on gender lens investing in light

of the #MeToo movement and the impact of COVID-19 on women,

particularly women of colour.

There has also been increased investment in community devel-

opment financial institutions, which serve low-income and other

marginalised communities who are underserved by many financial

institutions.

The last several years have also been characterised by a strong push

for multi-stakeholder company models in the United States with a

focus on communities, environment, and better labour conditions in

addition to shareowners.

Sustainable investment association in the region

- USSIF

US SIF: The Forum for Sustainable and Responsible Investment is

the non-profit hub for the sustainable and impact investment sector

in the United States. More information on the developments in the

region can be found on the US SIF website and the US SIF Founda-

tion Report on US Sustainable and Impact Investing Trends 2020.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

CANADA

Policy & regulatory drivers

The principal drivers of the growth of the sustainable and respon-

sible investment market, as it is referred to in Canada, have been

the market participants. Important sustainable and responsible

investment related regulatory and policy developments in Canada

include:

▶ The Expert Panel on Sustainable Finance released its

final report in 2019 which sets out 15 recommendations

to mobilise sustainable finance in Canada to support

the transition to a climate-smart, low-carbon economy.

One key recommendation was implemented in May 2021

with the formation of the Sustainable Finance Action

Council (SFAC), which will make recommendations to the

government on critical market infrastructure needed to

attract and scale sustainable finance in Canada.

▶ The Canadian Government announced the Large

Employer Emergency Financing Facility (LEEFF) in May

2020 as part of COVID-19 economic response. In order

to access the LEEFF, loans companies must commit to

publishing an annual climate-related financial disclosure

report.

▶ Under amendments to the Canada Business Corporations

Act (CBCA) that came into force on 1 January 2020,

Canada became the first jurisdiction to require diversity

disclosure beyond gender, for federally incorporated

public companies. Designated groups include women,

Indigenous peoples, persons with disabilities, and people

of colour.

Regulatory developments across Canadian provinces that impact

the sustainable and responsible investment industry include:

▶ Under the Ontario Pension Benefits Act Regulation, which

came into eect in 2016, a plan’s statement of investment

policies and procedures (SIPP) is required to include

information as to whether ESG factors are incorporated

into the plan’s investment policies and procedures and,

if so, how those factors are incorporated. This legislation

gave impetus for greater discussion and developments in

ESG and responsible investment across Canada.

▶ In January 2021, Ontario’s Capital Markets Modernization

Taskforce Final Report included several ESG-related

recommendations that would aect reporting issuers,

such as mandatory climate change-related disclosure

compliant with the TCFD recommendations and

mandatory board and executive management-level

diversity targets and implementation timelines.

▶ Quebec’s Autorité des marchés financiers (AMF)

released their Annual Statement of Priorities in June 2021.

The Statement intends to provide thought and action

leadership – in Québec, Canada and internationally –

regarding the impact of climate change on the financial

system and the incorporation of ESG issues into financial

activities and decisions.

There have also been the following environmental and social legis-

lative developments in Canada during the reporting period that may

have ramifications on the financial industry:

Bill S-216, An Act to enact the Modern Slavery Act and amend the

Customs Tari, passed Second Reading in the Senate in March 2021

and was referred to the Standing Senate Committee on Banking,

Trade and Commerce for further study.

Bill C-12, The Canadian Net-Zero Emissions Accountability Act, was

introduced in 2020 to legislate Canada’s target of net zero green-

house gas emissions by 2050. At the time of writing, the Bill is before

the Senate.

Bill C-15, The UN Declaration on the Rights of Indigenous Peoples

Act, proposes a framework to align Canada’s laws with the UN

Declaration on the Rights of Indigenous Peoples (UNDRIP). The Bill

received Royal Assent in June 2021.

Industry collaboration

In June 2020, Canadian universities launched the Investing to Ad-

dress Climate Change charter calling on universities to incorporate

ESG factors into investment practices; measure the carbon foot-

prints of their portfolios and set targets to reduce the footprints over

time; engage with companies to encourage them to reduce emis-

sions; and evaluate external managers against these objectives.

The RIA coordinated the development of the Canadian Investor

Statement on Diversity & Inclusion which launched in October

2020. As of 31 December 2020, the Statement had support from

66 signatories, including 48 institutional investors with more than

USD4 trillion in assets under management. Signatories to the State-

ment pledge to take steps to integrate diversity & inclusion (D&I)

into their investment processes, and also to strengthen D&I prac-

tices within their own institutions. The RIA is also currently coor-

dinating a Canadian Investor Net Zero Pledge with a small group

of experts. The Exposure Draft will be released in summer 2021 for

industry consultation.

In November 2020, the CEOs of eight leading Canadian pension

plan investment managers, representing approximately CAD1.6 tril-

lion of assets under management issued a joint statement calling on

companies and investors to provide ‘consistent and complete’ ESG

information.

In 2021, the RIA is working in collaboration with several industry part-

ners to establish and launch Climate Engagement Canada (CEC).

CEC will be a national programme to facilitate collaborative investor

engagements with Canadian issuers regarding the transition to a

low carbon economy and alignment with Canada’s commitment to

the Paris Agreement. This initiative was a key recommendation of

the Expert Panel on Sustainable Finance.

Customer drivers

Designated sustainable and responsible investment retail products,

including mutual funds and ETFs, have experienced a growth in

popularity in Canada. Net asset flows for Canada-domiciled sustain-

able and responsible investment mutual funds and ETFs, estimated

by Morningstar, were CAD5.3 billion for Q1 2021, already exceeding

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

the CAD3.3 billion in 2020. In addition, a total of 17 sustainable and

responsible investment funds launched in the first quarter of 2021,

compared to 40 in 2020.

According to the 2020 RIA Investor Opinion Survey, which tracks in-

dividual investors’ perspectives on responsible investing over time,

interest in sustainable and responsible investment remains high,

and the majority of retail investors would like their financial services

provider to inform them about sustainable and responsible invest-

ment options. In 2020 and 2019, 72% of respondents were ‘very’ or

‘somewhat’ interested in responsible investment, compared to 60%

of respondents in 2018. However, only about one-quarter of retail

investors surveyed have been asked about responsible investment.

Each year, the RIA’s Investor Opinion Surveys focus on a current

theme: Recent highlights included:

▶ 2020: Diversity & Inclusion – 73% of respondents

would like a portion of their portfolio to be invested in

organisations providing opportunities for the advancement

of women and diverse groups.

▶ 2019: Plastic – 82% of respondents believe it is important

for companies in their investment portfolio to reduce

plastic waste.

▶ 2018: Climate Change – 70% of respondents believe

climate change will have negative financial impacts on

companies in some industries in the next five years, while

66% of respondents would like a portion of their portfolio

to be invested in companies providing solutions to climate

change and environmental challenges.

Market drivers

Impact investment has been steadily growing in Canada, although

it still represents a relatively small percentage of responsible invest-

ment strategies being used. The broader discussion around measur-

ing ESG and engagement outcomes is still in its early development

in Canada. According to the 2020 RIA Canadian RI Trends Report,

sustainable and responsible investment assets grew from CAD2.1

trillion at the end of 2017 to CAD3.2 trillion as at 31 December 2019.

This represents a 48% increase in responsible investment assets

under management over two years.

Issuance of green bonds in Canada has been primarily at the provin-

cial level (predominantly Ontario and Quebec). In 2021 the federal

government announced its intention to issue its first green bond in

fiscal 2021-2022 with a target of raising CAD5 billion, and is also

considering issuing social bonds in the future.

Sustainable investment association in the region - RIA

The Responsible Investment Association (RIA) is Canada’s industry

association for sustainable and responsible investment. More infor-

mation on the developments in the region can be found on the RIA

website, 2020 RIA Investor Opinion Survey and 2020 RIA Canadian

RI Trends Report.

AUSTRALIA AND NEW ZEALAND

Policy & regulatory drivers

The growth in sustainable and responsible investment, as it is re-

ferred to in the Australasian region, has seen strong developments

from regulatory drivers. In New Zealand, the policy makers and

regulators have driven the growth in sustainable and responsible

investment, whereas the growth in Australia has been led by indus-

try commitments. Regulators in Australia have been progressing

requirements with regards to climate change risk, however, policy

makers on the issue have been largely absent during the reporting

period.

Across the region a strong focus has been on climate change risk

management, with central regulators requiring companies and in-

vestors to disclose climate change risks. In Australia, the Australian

Prudential Regulation Authority (APRA) has highlighted the finan-

cial nature of climate change risks and strengthened its monitoring

of climate change risk disclosures, and the Australian Securities and

Investments Commissions (ASIC) has been progressing require-

ments for directors to consider climate change risk. New Zealand

has moved towards legislating mandated Task Force on Climate-re-

lated Financial Disclosures (TCFD) reporting for companies and fi-

nancial services organisations. An important recent development in

New Zealand was the requirement in the default pension schemes

(KiwiSaver) to have responsible investment policies in place, as well

as exclusions across illegal weapons, tobacco and fossil fuels.

Other important legislative developments that have influenced the

investment market include:

▶ The Modern Slavery Act 2018 in Australia, which includes

a reporting requirement for entities (including investors)

with an operating revenue threshold of above AUD100

million.

▶ The Climate Change Response (Zero Carbon) Amendment

Act 2019 in New Zealand, which provides a framework for

New Zealand to develop and implement Paris Agreement

aligned climate change policies.

Industry collaboration

Industry has been driving sustainable investment throughout the

Australasian Region through cross-industry collaboration for the

purpose of policy and structural change and engagement purposes.

An example of cross industry collaboration for structural change is

the Australian Sustainable Finance Initiative (ASFI) that developed

a roadmap for aligning Australia’s financial system with a sustaina-

ble, resilient, and prosperous future for all Australians. An example

of industry collaboration for the purpose of engagement is Climate

Action 100+, an initiative focused on climate change-related en-

gagement and voting outcomes among Australian Stock Exchange

(ASX) listed companies.

RIAA created a Human Rights Working Group (HRWG) in 2017

with the objective of building members’ understanding and capa-

bilities for assessing and respecting human rights and mitigating

human risks in investment; facilitating the sharing of leading prac-

tice knowledge and resources pertaining to human rights and in-

vestment decision-making and engagement; and designing and

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

delivering significant human rights research, implementation and

advocacy opportunities as relevant, through collaborating with

other RIAA working groups and industry forums. Since its inception,

the HRWG has created an Investor Toolkit on Human Rights, collab-

orated with NGOs and First Nations organisations, and worked on

addressing issues such as the nexus between Climate Change and

Human Rights.

Customer drivers

Retail demand for sustainable and responsible investment has ac-

celerated in the Australasian region, shaping the distribution and

development of sustainable investment projects. For example, addi-

tional products have been embedded into investment platforms to

ensure strong ESG menus for advisers and clients.

RIAA runs annual consumer-based surveys in Australia and New

Zealand to document consumer drivers.

Market drivers

As demonstrated by the data, there has been growing interest and

activity in impact investment in the Australasian region. In New Zea-

land, place-based investment has also been of strong focus.

The market has also experienced a growing focus for investors to

map their portfolios to the SDGs and align investment strategies to

target specific SDGs.

Net zero emissions commitments have been made by increasing

numbers of institutional investors, which is starting to shift capital

flows towards cleaner assets. There has also been early growth in

sustainability-linked loans and green bonds across the region.

Sustainable investment association in the region

– RIAA

The Responsible Investment Association Australasia’s (RIAA) mis-

sion is to promote, advocate for, and support approaches to re-

sponsible investment that align capital with achieving a healthy and

sustainable society, environment and economy. RIAA advocates for

strong sustainability standards that embed real world outcomes as

a measure of focus, and this focus is incorporated in RIAA’s policy

work, research and Certification Standards. More information on

the developments in the region can be found on the RIAA website,

the 2020 Responsible Investment Benchmark Report Australia and

2020 Responsible Investment Benchmark Report New Zealand.

JAPAN

Policy & regulatory drivers

Policy and regulatory drivers have been key to the development of

the sustainable investment market in Japan. The most notable policy

and regulatory drivers in Japan over the reporting period include:

▶ The Ministry of Economy, Trade and Industry (METI) and

other ministries introduced a Green Growth Strategy

Through Achieving Carbon Neutrality in 2050 in 2021 after

Prime Minister Yoshihide Suga pledged to cut Japan’s

greenhouse gas emissions to net zero by 2050.

▶ The Financial Services Agency (FSA), METI and the

Ministry of the Environment jointly released in 2021 the

Basic Guidelines on Climate Transition Finance, which is

aligned with ICMA’s Climate Transition Finance Handbook

and aims to strengthen the position of climate transition

finance. The FSA also established the Working Group

on Social Bonds to publish Guidelines on Social Bonds

aligned with ICMA.

▶ The Tokyo Stock Exchange’s Corporate Governance

Code and the Guidelines for Investors’ and Companies’

Dialogue was amended in 2021 to make specific mention

of sustainability topics, including specifically climate

change, human rights, and fair and appropriate treatment

of the workforce.

▶ The Financial Services Agency (FSA) revised the

Stewardship Code in 2020 and mentioned sustainability

clearly, including ESG factors and applying the code to

assets other than listed equities.

A major specific thematic regulatory policy development was the in-

ter-ministerial committee launch of Japan’s National Action Plan on

Business and Human Rights in 2020. JSIF participated in the adviso-

ry board of the committee to incorporate the sustainable investment

perspective and role in respecting human rights.

Industry collaboration

Sustainable industry collaborations are becoming more common

across Japan. An ESG Disclosure Study Group was established in

2021 participated by 83 corporations, institutional investors, and

eight other organisations, including JSIF, aiming to explore eective

and eicient ESG disclosure frameworks, accumulate good practice

examples and promote mutual understanding between stakehold-

ers and investors for better decision making.

There have also been industry collaborations on specific ESG the-

matics across the financial service industries. For example, in 2020,

the Life Insurance Association of Japan published a Climate Change

Starter’s Guide that promotes and supports climate change initia-

tives by member life insurers.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Customer drivers

Japan has found an increase in investor demand for ESG products.

The Global ESG High-Quality Growth Equity Fund, launched in July

2020, raised JPY383 billion, the second-largest initial launch amount

in history, and exceeded JPY1 trillion before the end of the year.

With regards to retail client demand, the Awareness Survey on

ESG Investment conducted by Nomura Asset Management in 2020

found that 30% of all respondents were interested in ESG invest-

ments and 50% of respondents who own stocks are interested in

ESG investment.

Market drivers

Global investors have been driving ESG improvements in Japanese

companies, in particular with regards to corporate governance and

climate change. For example, global shareholder activists have been

championing board independence and diversity at company Annual

General Meetings of Tokyo Stock Exchange (TSE) listed companies.

This has been met with some opposition, with the Japanese gov-

ernment legislating changes to limit shareholder activism through

limiting the number of proposals submitted by a shareholder at a

meeting and ensuring foreign investors in certain sectors submit

prior-investment notification if they want to join company boards or

put proposals to shareholder meetings.

Using sustainable investment as a vehicle for driving positive out-

comes is still in its early stage in Japan. The multi-stakeholder Social

Impact Management Initiative was established in 2016 to promote

the social impacts and values of projects generated by Japanese

businesses.

Sustainable investment association in the region -

Japan SIF

The Japan Sustainable Investment Forum (JSIF) is Japan’s not-for-

profit organisation promoting the concept and practices of sustain-

able and responsible investment in the country. More information

on the developments in Japan can be found on the JSIF website, the

Sustainable Investment Survey in Japan 2019 and the White Paper

on Sustainable Investment in Japan 2020.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Additional regional highlights

7 UK data for this report is included as part of the European data, however this regional section is included for a deeper

insight into the UK sustainable investment market.

8 China is included in this regional section for the first time in this report, reflecting this growing and significant market

in sustainable investment. Content has been provided by China SIF.

UNITED KINGDOM



Policy & regulatory drivers

The role of regulation and policy has been critical in driving forward

the development of sustainable and responsible investment in the

UK. The most important regulatory and policy developments in re-

cent years have included:

▶ The UK became the first major economy to legislate a cut

in greenhouse gas emissions to net zero by 2050, followed

recently by a new 2035 target for 78% emissions reduction

from 1990 levels.

▶ UK leadership on climate change disclosure, as the

first G20 country to make TCFD-aligned disclosures

mandatory across the economy.

▶ The UK’s recent changes to its regime for stewardship,

including reforms to the voluntary Stewardship Code,

which stresses the importance of outcomes of investors’

stewardship activity, which includes reporting on details of

investors’ engagement with assets and their voting records.

▶ Changes to the pensions landscape, including measures

in the recent Pensions Schemes Act requiring schemes

to take into account the Paris Goals in their investment

strategy and ensuring schemes report against TCFD.

▶ The UK’s commitment to the development of a UK Green

Taxonomy, that aims to support investors, consumers and

businesses to make green financial decisions and prevent

‘greenwashing’.

Industry drivers

An abundance of industry collaborations across a range of ESG the-

matics have been in operation in the UK during the reporting period.

This includes, but is not limited to:

▶ Investor net zero initiatives, for example the Net-Zero

Asset Owner Alliance, Net-Zero Asset Managers Initiative,

as well as Make My Money Matter’s ‘Green Pensions

Charter’ calling on pensions schemes to agree net zero

targets for investments ahead of COP26.

▶ 30% Club Investor Group, coordinating the investment

community’s approach to diversity, and in particular

the investment case for more diverse boards and senior

management teams.

▶ The Asset Management Taskforce, encouraging greater

dialogue between the government, industry and the UK

regulator the Financial Conduct Authority. The Taskforce

recently published the Investing with Purpose Report on

ways for the UK to build its status as a global hub for good

stewardship.

Customer drivers

Retail savers and other clients’ demand for sustainable and respon-

sible investment products and funds is steadily rising in the UK, and

the industry has been taking steps to help meet this demand. For

example, in its latest publicly available figures for April 2021, Invest-

ment Association’s monthly fund figures showed responsible invest-

ment funds receiving a net retail inflow of £1.6 billion, with respon-

sible investment funds under management standing at £72 billion.

There has been limited research to demonstrate retail thematic pref-

erences across the UK, though a survey by Morgan Stanley in 2017

found that 86% of millennials say they are interested in sustainable

investing and are twice as likely to invest in companies targeting

social or environmental goals, compared to the overall population.

Market drivers

Investors’ increased focus on active stewardship has been among

the most important market developments in helping drive positive

outcomes.

Further, many UK managers now oer a wide range of sustainable

and responsible investment products, such as ESG ETFs and cli-

mate-change funds that seek to mitigate the risks of climate-change

and social impact funds. Increasingly, new funds are being launched

to specifically address biodiversity related risks and opportunities.

This is in alignment with the creation of the Taskforce on Nature-re-

lated Financial Disclosures.

Sustainable investment association in the region

- UKSIF

The UK Sustainable Investment and Finance Association (UKSIF)

brings together the UK’s sustainable finance and investment com-

munity and supports its members to expand, enhance and promote

this sector. More information on the developments in the region can

be found on the UKSIF website.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

CHINA



Policy & regulatory drivers

Regulatory and policy drivers play a key role driving sustainable in-

vestment in China, in addition to pressure from overseas sharehold-

ers and clients. Key regulatory and policy drivers include:

▶ The Green Credit Guidelines, the first national-level green

finance policy released by the China Banking Regulatory

Commission (CBRC). The guidelines were launched in

2012 and by the end of 2020, the green credit balance of

21major domestic banks reached CNY11.5 trillion.

▶ The Guidelines for Establishing the Green Financial

System, which were issued in 2016 and set the green

finance development pathways for China. Since 2016,

more than 700 green finance policies on both national

and local level have been issued according to SynTao

Green Finance’s ‘China Green Finance Policy Database’.

These policies cover selecting pilot areas, sectors, and

enterprises, establishing a green projects registration

platform, and providing tax and financial incentives to

investors and issuers.

▶ The Guiding Opinions on Promoting Investment and

Financing to Address Climate Change, was issued in

2020. This is the first ministry-level document on climate

change mitigation after China announced the 2060

carbon neutrality target. The Guiding Opinions includes a

timeline for having relevant policies for investment ready

by 2025 and emphasises the necessity for regulators to

support and incentivise financial institutions in developing

and supporting climate and green finance products and

projects.

China’s carbon peak and neutrality commitments have been an

important driving force for the development of China’s sustainable

investment market. The launch of the national carbon emission trad-

ing scheme in June 2021 is expected to drive the transition to low

carbon investment.

Industry collaboration

In 2018, Asset Management Association of China (AMAC) promul-

gated China’s first self-regulation standard for the asset manage-

ment sector on green investment, the Green Investment Guidelines

(for Trial Implementation). The Guidelines aim to encourage fund

management firms to focus on environmental sustainability and

build awareness of environmental risks, define the scope and ap-

proaches of green investment, propel green investment of the fund

industry, improve the environmental performance of investment ac-

tivities, and foster green and sustainable economic growth.

Though there is no public data on the scale of green and ESG in-

vestment in the Chinese private equity market, among the survey

of AMAC members, eight out of 197 private funds reported that they

have issued or are issuing products targeting green investment;

19 out of 224 venture capital firms reported 21 products employing

green investment strategies, targeting clean energy, energy conser-

vation, emission reduction and green agriculture. These numbers are

expected to grow with the setting of China’s carbon neutrality target.

Customer drivers

According to China SIF, ESG mutual funds have witnessed dramatic

growth of ESG products since 2015. More than 20 ESG mutual funds

were issued in 2020. The size of ESG mutual funds also grew signif-

icantly to more than twofold of that in 2019, the fastest growth on

record.

The Survey of Public Attitudes towards Sustainable Investment con-

ducted by China SIF and Sina Finance in October 2020 found that

a majority of individual investors do consider factors such as ‘envi-

ronment’, ‘labour’, ‘health’, and ‘business ethics’ in their investment,

although they may not understand the term SRI or ESG. The survey

found that 86% of the respondents express that they will consider

sustainable investment factors. In terms of key ESG thematics, the

survey found individual investors’ concerns on ESG focus on two

themes: financial fraud and product quality. In addition, more than

half of the respondents believe that safety issues and environmental

violation influence their investment decisions.

The top five themes are:

▶ Financial fraud

▶ Product quality

▶ Health and safety

▶ Environmental violation

▶ Corruption and bribery

Market drivers

In December 2015, the People’s Bank of China (PBoC) first intro-

duced green financial bonds into the Chinese market. Use of pro-

ceeds of green financial bonds must be green projects as defined

in the Green Bond Endorsed Project Catalogue (2015 Edition). The

catalogue was updated in April 2021, to harmonise domestic and

international standards and specifications. As at June 2021, China

is the second largest green bond market, with an issuance volume

of over CNY1.2 trillion and a balance of CNY813.2 billion by the end

of 2020. China introduced new types of sustainable bonds recently

including sustainability-linked bonds, blue bonds, and carbon-neu-

trality bonds.

Commercial banks in China have made attempts at launching ESG-

themed wealth management products. More than 10 commercial

banks and their wealth management subsidiaries issued about 60

ESG wealth management products by the end of 2020.

Sustainable investment association in the region -

China SIF

China Social Investment Forum (China SIF) is facilitated by SynTao

Green Finance. It is a non-profit membership association that aims

to provide a platform for investors and other stakeholders to discuss

sustainable investment opportunities in China, and promote the

development of China’s sustainable investment market. China SIF

publishes the list of top performers in ESG in the A-share market

and disseminates research to encourage sustainable investment

practices in the region. More information on the developments in

the region can be found on the SynTao Green Finance website.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

LATIN AMERICA

Policy & regulatory drivers

Regulations mandating pension funds in key markets in Latin

America is driving sustainable investment in the region. The poli-

cy developments in Chile and Columbia have a specific focus on

addressing climate risk. Some of the most important sustainable

investment-sector specific regulatory or policy developments in the

Latin American region include:

▶ Regulation mandating pension funds in Mexico to

integrate ESG in their investment process.

▶ 276 Norm in Chile mandating pension funds to integrate

ESG and climate risk in their investment process, which

came into force in May 2021.

▶ 007 Norm in Colombia mandating pension funds and

insurance companies to integrate ESG and climate risk in

their investment process.

Industry collaboration

Industry collaboration to improve ESG outcomes is not yet a com-

mon practice in Latin America. However, there have been sporadic

examples of industry collaboration on ESG issues. For example, In

September 2020, 80 institutional investors, insurance companies

and investment funds issued a public declaration demanding that

Mexican Stock Exchange (BMV) listed companies disclose ESG in-

formation in a standardised and considered manner.

Customer drivers

ESG products are now oered to retail clients in Brazil, Mexico, Chile

and Colombia. Latin America has not conducted any research on

the level of retail client interest in sustainable investment or retail

customer preferences on sustainable investment or ESG themes

and issues.

Market drivers

The Latin America market is early in its development of ESG prod-

ucts. The Latin American market has shown a growing interest in

innovative products including Gender Bonds, with the funds raised

aiming at promoting gender equality and the empowerment of

women in the Latin America region.

Another example of an innovative ESG product in the region in-

cludes a MXN-denominated structured note linked corporate sus-

tainability index developed by the Inter-American Development

Bank (IDB). A portion of the revenues generated through the note

will be channelled to the IDB to support sustainable development

activities in the Latin America region.

Sustainable investment association in the region

As of June 2021, there are no existing sustainable investment industry

associations or sustainable investment forums representing the Latin

America region. The Principles for Responsible Investment (PRI) has

a presence in Latin America and continues to work to advance sus-

tainable and responsible investment practices in the region.

SOUTH AFRICA, NIGERIA AND KENYA

Policy & regulatory drivers

Regulatory and policy drivers have been central in South Africa, the

financial hub in the region, in addition to Kenya and Nigeria. Notable

regulatory and policy drivers in South Africa include:

▶ Regulation 28 which integrates sustainable and

responsible investment requirements into the retirement

regulation. Regulation 28 is currently undergoing

consultation for a potential amendment to clarify the

parameters and imperative for pension funds to invest in

building economic and social infrastructure. The Code for

Responsible Investing in South Africa (CRISA), was first

published in 2011 to support the amended Regulation 28,

and is undergoing its first amendment. Notably, one of the

envisioned amendments is for the code to be applicable

to all asset classes in order to address the bias towards

equity investments.

▶ The Sustainable Stock Exchange Initiative (SSEI), has

provided guidance for companies in disclosing relevant

ESG information and increased awareness regarding

the Task Force on Climate-related Financial Disclosures

(TCFD). Progressively, stock exchanges from the regions

have amended listing rules to include ESG reporting

requirements for listed companies.

▶ The information on the pay gaps amongst dierent levels

and racial profiles of company employees collected

through the EEA4 form. This is influencing reporting (and

possibly transparent disclosure) on income inequality and

addressing issues of employment equity.

During the reporting period, two notable taxes that target the re-

duction of negative environmental and social outcomes of investee

company operations and products have been introduced. On the

environmental side, a carbon tax in South Africa eective from 2019

and on the social side there was an introduction of sugar tax ef-

fective from 2018. The Carbon trading market in South Africa has

not taken o. There are, however, eorts to develop carbon markets

in East and West Africa as market actors have formed alliances to

develop emissions trading markets.

There is a long history of strengthening ESG disclosure require-

ments in South Africa. In 2016, the fourth issue of the local volun-

tary King CSR code was published and applies to all organisations

– including companies, trusts and NGOs. Since 2009 the Johannes-

burg Stock Exchange (JSE) made it compulsory for companies that

want to be listed to ‘comply or explain’ with regard to the King CSR

Code. In 2011, a preamble was introduced in the revised pension

fund regulation stipulating that pension funds should integrate ESG

factors in their investment decision-making if they are deemed to be

financially material. Since 2018, the South African financial regulato-

ry body proposed reinforcing and specifying the exact type of ESG

disclosure that should be required from pension funds, but initially,

this would be accomplished through voluntary guidance.

In 2017, the Kenyan government released an apply or explain Stew-

ardship Code for Institutional Investors that includes two principles

out of seven covering sustainable investing and sustainability topics.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

In 2018, the Nigerian government released an apply or explain vol-

untary Corporate Governance Code with a full section on sustaina-

bility and ESG issues that companies need to handle.

Industry drivers

There has been a growing trend towards the development of region-

al green bond markets to drive positive environmental outcomes.

Green bond guides have been developed in Nigeria, Kenya and

South Africa to enable issuers to certify and issue green bonds for

investors seeking fixed income instruments. Additionally, the 2020

African Green Bond Toolkit, developed by Financial Sector Deepen-

ing Africa (FSD Africa) in collaboration with Congo Basin Institute

(CBI) and UK Aid, to provide the African capital markets with the

guidance on how to issue green bonds that are in line with interna-

tional best practices and standards.

Another notable collaboration has been by the PRI’s RI Academy

and local pension associations to build capacity for improved cli-

mate outcomes through the development of a free online training

programme for African trustees.

In South Africa, there have been targeted eorts to capacitate mar-

ket actors (particularly asset owners and fund managers) to be able

to target ESG outcomes. A partnership amongst the South African

Government, financial sector players and retirement funds has seen

the development of a green finance taxonomy through the South Af-

rica Sustainable Finance Initiative. This follows from the publishing of

a technical paper which proposes a road map for sustainable finance

in South Africa. Similar sustainable finance roadmaps have been de-

veloped in Nigeria and to a lesser degree in Kenya where the focus

of the Kenyan initiatives has been in banking.

On the retail side, there has been a launch of an ESG rating platform

which rates unit trusts according to MSCI ESG scores to enable retail

investors to compare unit trusts. The platform, launched in 2021 is

in its early stages and will enable fund managers in the South Af-

rica market to have their unit trusts rates for the retail market. The

growing demand from retail clients is encouraging fund managers to

make retail products and services available.

Customer drivers

A survey was conducted in 2020 by the University of Cape Town

(UCT) Retirement Fund, a retirement fund that ranks in the top 100

in South Africa in terms of assets under management. Notably the

survey revealed more than 90% of members expected investee

companies to be engaged on these ESG issues. The fund members/

beneficiaries were asked to rank the top issues of concerns under

environmental, social and governance themes. The environmental

issues of concern for the individual members were climate change/

transition, land & ocean sustainability and biodiversity. The top social

issues of concern were water & food security, inequality and employ-

ment security. The top issues related to governance were corruption,

ethical business practices and equitable remuneration.

Market drivers

The central market drivers in the region are developments and activi-

ties to increase the use of green bonds and impact investing funds as

vehicles to drive positive outcomes with SDGs as a reference point.

The investment market in South Africa notably under the influence

of pan African players such as Old Mutual have driven sustainable

investment in the region, primarily through the use of ESG inte-

gration and corporate engagement strategies. Private and public

retirement funds are also playing a central role in integrating ESG

strategies in the region. South Africa has also developed a blended

finance approach to impact investments for social and environmen-

tal outcomes. Innovation in South Africa can also be seen in The

Green Outcomes Fund which enables mainstream fund managers

to be crowded in by allocators of concessionary capital to invest for

positive environmental outcomes and green jobs.

There has been an increase in the amount of green bond listing over

the past four years, which can be partially attributed to the develop-

ment of green bond segments on Stock exchanges such as JSE in

South Africa and the Nigerian Stock Exchange.

Notably West Africa’s largest economy, Nigeria, issued the first

sovereign green bond on the continent in 2017. The Nigerian gov-

ernment has subsequently issued more sovereign bonds and, in

the process, galvanised broader market actors to participate in the

growing green bond market.

Sustainable investment association in the region

At the time of this report, there is not a SIF in the Eastern, Southern

or Western African Region. It should be noted that the University of

Cape Town Graduate Business School has supported the collection

of the data in this report. This includes the development of the Afri-

can Investing for Impact Barometer.

ADDITIONAL ASIA MARKET INSIGHTS

Policy & regulatory drivers

Regulatory and policy drivers have been critical to the strong growth

in several Asia financial centres, influencing investor confidence

and driving new sustainable investment products in the region.

Examples of regulatory developments across the region during the

reporting period include:

▶ In South Korea, the National Pension Service (NPS)

adopted a Stewardship Code in 2018 and established

a department dedicated to fulfilling its stewardship

responsibilities. The NPS has started to actively exercise

the code which sets out principles aimed at encouraging

corporate governance, and has been revised to reflect the

incorporation of ESG issues as a component of standard

fiduciary duties.

▶ In Singapore, the Monetary Authority of Singapore (MAS)

issued a set of consultation papers in 2020 for proposed

Guidelines on Environmental Risk Management for banks,

insurers and asset managers. The Guidelines aim to

enhance resilience to environmental risk and support the

financial sector’s role in supporting the transition to an

environmentally sustainable economy.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

▶ In Taiwan, the Corporate Governance Roadmap

(2018~2020) encourages active participation of

companies and investors in corporate governance.

Further, in 2020, the Financial Supervisory Commission

amended and implemented a new set of regulations,

requiring specific TWSE- and TPEx-listed companies

to disclose information on their governance on climate-

related risks and opportunities.

▶ In Hong Kong, the Cross-Agency Steering Group

launched a green and sustainable finance strategy in

2020 with five key action points to strengthen climate

related financial risk management. In 2020, the Hong

Kong Monetary Authority (HKMA) released the Common

Assessment Framework on Green Sustainable Banking

intended to facilitate authorised institutions in reviewing

readiness and preparedness in addressing climate and

environmental risks. There have also been discussions

relating to the TCFD recommendations, with the HKMA

stating that TCFD reporting will be mandatory across

relevant sectors no later than 2025. Further the Hong

Kong Securities and Futures Commission (SFC) released

a list of verified ESG funds in 2020 as a tool against

greenwashing and mislabelling of investment strategies.

Industry collaboration

Global investors have also created pressure in the Asian markets to

integrate sustainable investment strategies and corporates to ad-

dress and integrate ESG issues. Within Asia, there are some exam-

ples of cross-collaborations among industry players. For example, in

Taiwan the Life Insurance Association and the Bankers Association

respectively issued TCFD framework guidance to business owners.

Customer drivers

Asia ex-Japan’s sustainable investment market continues to expe-

rience strong growth, with demand for environmental-related sus-

tainable investments leading to an ever greater focus on products

relating to renewable energy, low carbon, environmental protection,

and green transport.

Market drivers

Pledges from world leaders to reach carbon neutrality are expected

to drive promising changes to the sustainable investments in re-

lation to decarbonisation, renewable energy, green transport, and

more. In 2020, South Korean President Moon announced South

Korea’s commitment to become carbon neutral by 2050. Green

recovery plans by governments have also been positive drivers in

sustainable investments.

There has been an increasing uptake in sustainable investment

strategies such as ESG integration, negative screening, and themed

investing in Asia ex-Japan. There has also been a growth in ESG

related indices and ETFs across the Asian market.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Appendix 1 - Methodology and data

Each region covered by this report uses a dierent method to col-

lect data for its respective report. The consolidation in this report is

made on a best eort basis based on best available data sourced in

conjunction with the regional SIFs, however due to methodological

dierences across regions, and changes in methodologies by re-

gions as explained in the text, direct comparisons between regions

and with previous versions of this report are not easily made.

All 2020 assets are reported as of 31 December 2019, except for

Japan which reports as of 31 March 2020. For figures which are not

displayed in the region’s local currency, currencies have been con-

verted to US dollars at the exchange rate prevailing on 31 December

2019, (or 31 March 2020, in the case of Japan) for comparability. All

2018 assets are reported as of 31 December 2017, except for Japan

which reports as of 31 March 2018. For figures which are not dis-

played in the region’s local currency, currencies have been convert-

ed to US dollars at the exchange rate prevailing on 31 December

2017, (or 31 March 2018, in the case of Japan) for comparability. His-

torical 2016 data are reported as of 31 December 2015, except for

Japan, which is reported as of 31 March 2016. Historical 2014 data

are reported as of 31 December 2013, except for Japan, which is

reported as of 30 September 2014. Figures which compare trends

within a region have been kept in their local currencies to avoid in-

troducing the eects of fluctuating currency exchange rates into the

calculations; aggregated global totals have been converted to US

dollars as of the dates these asset totals were reported. Readers

should consult each regional report for more detail on data and data

collection methods.

Exchange rates used in this report

EUROPE

The European data for 2020 are drawn from publicly available

third-party data. Eurosif took an entity-level data of EFAMA

and

then complemented with other sources to cover some of the coun-

tries not included in the original dataset. EFAMA data were compiled

based on Belgium, Bulgaria, Denmark, France, Germany, Greece,

Italy, Liechtenstein, the Netherlands, Norway, Poland, Portugal, Slo-

venia, Sweden, Switzerland, and the United Kingdom. Together with

the other sources, the European data cover 18 European countries

including UK, Norway, Switzerland, Liechtenstein.

The data encompass several strategies previously covered by com-

piling the AUM of institutions that exercise ESG integration, exclu-

sions and engagement but does not necessarily reflect in precise

detail the distribution of assets managed under each of the sustain-

able and responsible investment strategies such as best-in-class,

norms-based screening, and sustainability-theme investments.

However, Eurosif believes it is the most available and reasonable

data that reflect the current state of industry evolution.

Notably, driven by regulations and industry pressures it is becoming

the norm to combine several strategies like engagement, exclusions

and ESG integration to manage portfolio risks and opportunities in

Europe. The recent SFDR regulation will only strengthen this trend,

as all institutional investors, irrespective of managing ESG or con-

ventional investments, must report how they consider sustainability

risks on an entity level.

UNITED STATES

With its research partner, the Croatan Institute, the US SIF Founda-

tion developed an information request that was circulated via email

to 682 money managers and 1,146 institutional investors. Money

managers and institutional investors responding to this informa-

tion request provided much of the data for this report. Supple-

mentary data were obtained through other primary and secondary

source research.

The US SIF Foundation also used the online information request

to gather responses from money managers and institutional asset

owners that would provide insights into the motivations, techniques

and additional activities behind their sustainable and impact invest-

ment practices.

The research team also reviewed annual reports, financial state-

ments, SEC Form ADV from money managers, IRS Form 990 fil-

ings by non-profit organisations and US Department of Labor Form

5500 filings by plan sponsors. In addition, the team gathered data 9 EFAMA: Market Insights Issue #3 ESG strategies

CONVERSION EXCHANGE RATE REPORTING DATE

EUR/USD 1.11986 31/12/2019

CAD/USD 0.76524 31/12/2019

AUD/USD 0.69939 31/12/2019

NZD/AUD 0.9608 31/12/2019

NZD/USD 0.67209 31/12/2019

JPY/USD 0.00927 31/03/2020

SOURCE: OANDA Currency converter

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

from third-party service providers and trade associations of com-

munity investing institutions, investment companies and institu-

tional investors.

More detail on the methodology is available in the Report on US

Sustainable and Impact Investing Trends 2020, available from the

US SIF Foundation website.

JAPAN

The Japan Sustainable Investment Forum (JSIF) undertook two sur-

veys to provide the data included in this report. The first survey took

place in September 2019 and received 41 responses from institu-

tional investors, and JSIF added the reported figures of two public

pension funds. The second took place in September 2020 with 45

responses from institutional investors and reported figures of the

two public pension funds.

JSIF solicited the cooperation of the PRI Japan Network to spread

awareness of the survey. The 47 institutions reported JPY754 tril-

lion in total assets, of which 51.6% - JPY389 trillion – was managed

using sustainable investing strategies. To obtain the net sustain-

able investing assets amounting to JPY310 trillion in Figure 3, the

assets that were managed by fund managers and which came

from pension funds were subtracted from JPY389 trillion to avoid

double-counting. To calculate the percentage presented in Figure

4, JSIF divided the net sustainable investing assets by the total pro-

fessionally managed assets in Japan, using the most reliable and

extensive data set of Japan’s Flow of Funds Accounts compiled by

the Bank of Japan.

More information about the Sustainable Investment Surveys can be

found on the JSIF website.

CANADA

The Responsible Investment Association (RIA) collected data from

104 asset managers and asset owners via electronic surveys and

emails between July and October 2020. The RIA supplemented the

survey data with secondary research, using dozens of publicly avail-

able sources such as annual reports, responsible investing reports,

website data, and PRI Transparency Reports. All figures shown in

this report are in Canadian dollars as at 31 December 2019.

To count total Canadian RI assets, the RIA used a methodology

based on the criterion of certainty. For instance, if an investment

manager indicated that its responsible investment policies apply

to ‘a majority’ of its AUM, the RIA counted only 51% of its AUM as

responsible investment assets. Therefore, the RIA’s methodology in-

dicates a conservative estimate of Canadian responsible investment

assets, since the cautious approach likely excluded some respon-

sible investment assets. The RIA took precautions to avoid double

counting. The result is that Canada’s estimated total responsible

investment AUM is very conservative.

More detail on the methodology is available in the 2020 Canadian

Responsible Investment Trends Report.

AUSTRALIA & NEW ZEALAND

Data used to compile the Responsible Investment Association

Australasia’s Australia and New Zealand Responsible Investment

Benchmark Reports were collected from the following sources: di-

rectly supplied by asset managers and asset owners; Morningstar

statistics which provided data for the average performance of main-

stream managed fund categories and also provided a secondary

source of AUM data for some of the funds listed; RIAA’s databases;

desktop research of publicly available information regarding assets

under management, performance data and investment approach-

es from sources including company websites, annual reports and

PRI Responsible Investment Transparency Reports. Because many

asset managers apply several investment strategies to the same as-

sets, the data collection survey required respondents to identify a

single primary responsible investment strategy.

For the Australian benchmark report a total of 165 investment

managers were targeted as respondents to this survey; 54 finan-

cial institutions responded by providing information directly while

111 were assessed through desktop analysis. For the New Zealand

benchmark report a total of 58 investment managers were targeted

as respondents to this survey; 22 financial institutions responded

by providing information directly while 36 were assessed through

desktop analysis. The surveys also requested that respondents

nominate any secondary strategies applied in order to determine

the depth of responsible investment strategies applied, to identify

any overlap of approaches and to assist in categorising funds.

All New Zealand assets were converted to Australian dollars as of

31 December 2019, in order to combine assets for the region for this

report. Since RIAA has one category for screening which includes

positive/best-in-class, negative/exclusionary and norms-based

screening strategies, all of these assets have been categorised in

the negative/exclusionary category for this report.

More detail on the methodology is available in the Responsible

Investment Benchmark Report 2020 Australia and Responsible In-

vestment Benchmark Report 2020 New Zealand.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

Appendix 2 - Data table

 BILLIONS

EUROPE

EUR

UNITED STATES

USD

CANADA

CAD

AUSTRALIA/NEW

ZEALAND AUD

JAPAN

JPY

GLOBAL

USD

Impact/community investing €109 $295 $15 $8 ¥823 $444

Positive/best-in-class-screening €586 $1,102 $12 - ¥6,425 $1,842

Sustainability-themed investing €149 $781 $41 $31 ¥1,192 $1,018

Norms-based screening €3,148 - $981 - ¥31,604 $4,679

Corporate engagement and shareholder action €4,858 $1,763 $1,497 - ¥140,755 $9,835

Negative/exclusionary screening €9,464 $7,921 $878 $226 ¥ 1 7, 3 2 8 $19,771

ESG integration €4,240 $9,503 $1,890 $768 ¥121,512 $17,544

TOTAL Sustainable Investing* €12,306 $11,995 $2,132 $1,033 ¥231,952 $30,683

 BILLIONS

EUROPE

EUR

UNITED STATES

USD

CANADA

CAD

AUSTRALIA/NEW

ZEALAND AUD

JAPAN

JPY

GLOBAL

USD

Impact/community investing €95 $212 $20 $25 ¥140 $352

Positive/best-in-class screening €511 $658 $21 $4 ¥14,643 $1,384

Sustainability-themed investing €130 $1,688 $48 $5 ¥7,989 $1,948

Norms-based screening €2, 745 - $1,050 - ¥28,308 $4,140

Corporate engagement and shareholder action €4,236 $1,980 $2,673 - ¥187,170 $10,504

Negative/exclusionary screening €8,253 $3,404 $1,361 $127 ¥135,263 $15,030

ESG integration €3,697 $16,059 $3,008 $1,135 ¥204,958 $25,195

TOTAL Sustainable Investing* $10,730 $17,081 $3,166 $1,295 ¥310,039 $35,301

GROWTH 

EUROPE

EUR

UNITED STATES

USD

CANADA

CAD

AUSTRALIA/NEW

ZEALAND AUD

JAPAN

JPY

GLOBAL

USD

Impact/community investing - -28% 38% 203% -83% -21%

Positive/best-in-class screening - -40% 75% 100% 128% -25%

Sustainability-themed investing - 116% 17% -84% 570% 91%

Norms-based screening - - 7% - -10% -12%

Corporate engagement and shareholder action - 12% 79% - 33% 7%

Negative/exclusionary screening - -57% 55% -44% 681% -24%

ESG integration - 69% 59% 48% 69% 44%

TOTAL Sustainable Investing* -13% 42% 48% 25% 34% 15%

NOTE:

Assets for 2018 were reported as of 31/12/2017 for all regions except Japan, which reported as of 31/03/2018. Assets for 2020 were reported as of 31/12/2019 for all regions except Japan, which reported as of 31/12/2020. European sustainable investing

strategy data is based on extrapolation from historic data from the 2018 GSIR report and applying the same proportion to 2020 sustainable investing data across the di erent sustainable investing strategies. Conversions from local currencies to US dollars

were at the exchange rates prevailing at the date of reporting. Europe and Australasia have enacted significant changes in the way sustainable investment is defined in these regions, so direct comparisons between regions and with previous versions of

this report are not easily made. For its 2018 data, US SIF Foundation extrapolated from numbers provided by a subset of overall 2018 respondents. For its 2020 data, US SIF Foundation extrapolated from numbers provided by a di erent subset of overall 2020

respondents. This is an optional question in each year’s survey, and therefore a di erent set of respondents choose to respond. As such, direct comparisons between 2018 and 2020 data for the United States in this appendix should not be made.

*The totals shown are net values after adjustments to remove double-counting, since managers may apply more than one strategy to a given pool of assets.

Assets in each sustainable investment strategy, per region and global

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Acknowledgements

The Global Sustainable Investment Alliance thanks Ester Adler, Nina

Haysler and Alan Dayeh of Point Advisory for collating and analys-

ing the data from the GSIA member organisations for the 2018 Glob-

al Sustainable Investment Review.

We thank Point Advisory and Simon O’Connor at RIAA for additional

writing contributions on the Review and Min Wah Voon at RIAA for

project management.

The Alliance is also grateful for the overall financial support for this

edition of the Global Sustainable Investment Review provided by

RBC Global Asset Management and Robeco.

In addition, numerous organisations provided financial support for

the regional surveys and reports conducted by Alliance members,

as noted below.

JSIF: The Japanese research for this report was made possible by

support from: the PRI Japan Network, Sompo Asset Management,

Trust Forum Foundation, CSR Design Green Investment Advisory,

GPSS Holdings and Edge International Inc.

RIA CANADA: The Canadian research for this report was made pos-

sible by a generous contribution from NEI Investments, the sponsor

of the 2020 Canadian Responsible Investment Trends Report. Cana-

dian impact investing research was conducted in collaboration with

Canadian Institutional Investment Network, RIA Canada’s partner

on the 2020 Canadian Responsible Investment Trends Report.

RIAA: The research on Australia and New Zealand for this report

was made possible by financial support from AXA Investment Man-

agers, BT Financial Group, PIMCO, Teachers Mutual Bank Limited

and the New Zealand Super Fund.

US SIF: The US research for this report was made possible by a

grant from Wallace Global Fund and financial support from Parnas-

sus Investments, Calvert Research and Management, Candriam

Investors Group, ClearBridge Investments, Federated Hermes, Ca-

rillion Tower Advisors, Domini Impact Investments, MFS Investment

Management, Natixis Investment Managers, North Sky Capital,

Saturna Capital, Boston Trust Walden, Brown Advisory, Community

Capital Management, F.L Putnam Investment Management, Gov-

ernance & Accountability Institute, Natural Investments, Neuberger

Berman, Nuveen A TIAA Company, RBC SRI Wealth Management

Group, Trillium Asset Management.

DISCLAIMER

Point Advisory’s input into this report has been prepared at the re-

quest of the Responsible Investment Association Australasia (RIAA)

in accordance with the terms of Point Advisory’s engagement letter

dated 10th of May 2021. The information in this report is general in

nature and does not constitute financial advice.

The services provided in connection with this engagement com-

prise an advisory engagement, which is not subject to Australian

Auditing Standards or Australian Standards on Review or Assur-

ance Engagements, and consequently no opinions or conclusions

intended to convey assurance have been expressed.

Point Advisory acts in a professional manner and exercises all rea-

sonable skill and care in the provision of its professional services.

Point Advisory is not responsible for any liability and accepts no

responsibility whatsoever arising from the misapplication or misin-

terpretation by third parties of the contents of its reports.

Except where expressly stated, Point Advisory does not attempt

to verify the accuracy, validity or comprehensiveness of any infor-

mation supplied to Point Advisory for its reports. We have indicat-

ed within this report the sources of the information provided. The

sources of this information are provided in this report. We are under

no obligation in any circumstance to update this report, in either

oral or written form, for events occurring after the report has been

issued in final form.

Neither RIAA, GSIA nor Point Advisory endorse or recommend any

particular firm or fund manager to the public. Other than Point Ad-

visory’s responsibility to RIAA, neither Point Advisory nor any mem-

ber or employee of Point Advisory undertakes responsibility arising

in any way from reliance placed by a third party on this report. Any

reliance placed is that party’s sole responsibility.

The findings in this report have been formed on the above basis.

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GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020