American ESG Investing Reaches $12 Trillion Assets, Says US SIF Foundation

by | Nov 2, 2018

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Investors in the United States consider environmental, social and governance (ESG) factors across $12 trillion of professionally managed assets, a new report from the US SIF Foundation concluded. That represents a 38% increase since 2016.

The Report on US Sustainable, Responsible and Impact Investing Trends 2018 shows, through surveying and research undertaken this year, that the total US-domiciled assets under management using sustainable, responsible, and impact (SRI) strategies grew from $8.7 trillion at the start of 2016 to $12.0 trillion at the start of 2018.

“This represents 26% — or 1 in 4 dollars — of the $46.6 trillion in total US assets under professional management,” according to the report published by the foundation supporting US SIF, an organization whose members include investment management and advisory firms, mutual fund companies, asset owners, financial planners, community investing organizations, and nonprofits.

In 1995, the US SIF Foundation first measured the sustainable and responsible investment universe in the United States to total $639 billion. These assets increased more than 18-fold since then, the foundation says, at a compound annual growth rate of 13.6%.

Top specific ESG criteria for money managers in 2018 were climate change and carbon ($3 trillion), tobacco-related restrictions ($2.89 trillion), conflict risk ($2.26 trillion), human rights ($2.22 trillion), and transparency and anti-corruption ($2.22 trillion).

Over the past two years, tobacco-related restrictions saw the greatest growth of any ESG criteria, increasing 432%, the report found. “Climate change was the most important specific ESG issue considered by money managers in asset-weighted terms,” according to the foundation. “The assets to which this criterion applies more than doubled from 2016 to 2018 to $3.0 trillion.”

Lisa Woll, CEO of US SIF, told Barron’s that she attributes the overall increase in American sustainable investment to interest from advisors as well as the country’s political landscape.

“The election of Donald Trump has helped, in large part because of climate-change concerns,” Woll said. “The federal government is closed for business, rolling back climate and other important social and environmental initiatives. So it’s no wonder people are starting to ask: How do I make this happen on the issues that I care about?”

Compared to the rest of the world, wealthy US investors had the slowest rate of sustainable investing adoption, a separate report from UBS found recently. The survey of more than 5,300 millionaires worldwide was conducted between June and August 2018.

Of the wealthy Americans who do make sustainable investments, however, 49% of their portfolios were dedicated to those assets compared to the 36% of their global counterparts.

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