GLOBAL SUSTAINABLE
INVESTMENT REVIEW 2020

RBC Global Asset Management

RobecoRBC 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.

Robeco is a pure-play international asset manager founded in 1929
with headquarters in Rotterdam, the Netherlands, and 17 offices
worldwide. A global leader in sustainable investing since 1995, its
unique integration of sustainable as well as fundamental and quantitative research enables the company to offer institutional and private 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.

We believe that being an active and responsible owner empowers us to enhance the long-term, sustainable performance of ourportfolios.

More information is available at www.robeco.com.
For more information visit www.rbcgam.com/ri.

MEMBERS OF THE GLOBAL SUSTAINABLE INVESTMENT ALLIANCE INCLUDE:CONTACT US

gsia-alliance.org@GlobalSIF

Global Sustainable Investment Alliance© Global Sustainable Investment Alliance 2021

2

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Contents

FOREWORD

4

FIGURESEXECUTIVE SUMMARY

5

FIGURE 1 Snapshot of global sustainable investing assets,

A NOTE ON METHODOLOGY6

DEFINING SUSTAINABLE INVESTMENT 

7

GLOBAL SUSTAINABLE INVESTMENTS 2018-2020

9in local currency 2014-2020

Growth and proportion of global sustainable investment

9

Sustainable investment strategies

10

FIGURE 4 Proportion of sustainable investing assets

Market developments and characteristics

12

REGIONAL HIGHLIGHTS

15

Europe

2016-2018-2020 (USD billions)

9

FIGURE 2 Snapshot of global assets under management

2016-2018-2020 (USD billions)

9

FIGURE 3 Growth of sustainable investing assets by region

10

relative to total managed assets 2014-2020

10

FIGURE 5 Proportion of global sustainable investing assets

by region 2020

10

15

FIGURE 6 Sustainable investing assets by strategy & region 2020

11

United States

16

FIGURE 7 Global growth of sustainable investing strategies 2016-2020

11

Canada18

Australia and New Zealand

19Japan

20

United Kingdom

22
22

China

23

Latin America

24

ADDITIONAL REGIONAL HIGHLIGHTS
South Africa, Nigeria and Kenya

24

Additional Asia market insights

25

APPENDIX 1 - METHODOLOGY AND DATA

28

Europe28

United States

28

Japan

29

Canada29

Australia & New Zealand

29

APPENDIX 2 - DATA TABLE30

ACKNOWLEDGEMENTS

31

FIGURE 8 Regional shares, by asset weight, in global use ofsustainable investing strategies 2020

12

FIGURE 9 Global shares of institutional and retailsustainable investing assets 2016-2020

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202013

3

Foreword

The Global Sustainable Investment Alliance (GSIA) is an international collaboration of membership-based sustainable investment
organisations around the world. Our mission is to deepen the impact 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 andwhere all regions of the world have coverage by vigorous membership-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 sustainable investment1 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 companies and others seeking to raise capital in those global markets.
This report brings together regional data from across the UnitedStates, Canada, Japan, Australasia and Europe. Together, sustainable investment in these markets has reached USD35.3 trillion in assets under management (AUM), having grown by 15% in two years.
The report also includes additional market insights from the United Kingdom, China, and across Latin America, Africa and Asia, toform 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 andsecondary sources.
But beyond these top line results, this year’s report highlights anindustry that is in transition, with rapid developments across regions that are resetting expectations of sustainable investment,with an emphasis on moving the industry towards best standardsof practice.
This is playing out in various ways in different markets, includingtightening regulatory frameworks and industry standards, and consumer expectations rising. For example, the European Union Sustainable Finance Action Plan has set new definitions for sustainable
and responsible investment embedded in legislation. This has reshaped the way sustainable investment is defined in Europe, whichis reflected in the report by a new source of data that starts to alignwith these new definitions.2
Concurrent to this transition is a global acceleration of an international 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 roleof finance.

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GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Increasingly, there are expectations that sustainable investment isdefined not just by the strategies involved, but by the short- andlong-term impacts that investors are having from their sustainable
investment approach.
The global network of sustainable investment organisations thatmake up the GSIA all work in their individual markets to progress
this transition, ensuring sustainable investment is delivered ina manner aligned with best practice standards, driving positivechange in corporate policies and performance and ultimately, aligning with a more sustainable future.
We would like to thank the many sponsors – listed in the acknowledgements section – of the regional research reports used to prepare the Global Sustainable Investment Review 2020, and othercontributing 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 support of these sponsors, this research and the report would not havebeen possible.

Sincerely

Masaru Arai, Chair,Japan Sustainable
Investment Forum

Dustyn Lanz, CEO,Responsible Investment
Association Canada

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

Simon O’Connor, CEO,Responsible Investment
Association Australasia

1 In this report, consistent with previous reports, ‘sustainable investment’ refers to a broad and inclusive definitionof approaches to investment that include environmental, social and governance factors in portfolio selection andmanagement 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 different
interpretation and additional regulatory guidance is expected. As a result, the data used is starting to align with the
new settings.

Executive summary

This 2020 Global Sustainable Investment Review (GSIR) is the fifth
in a series of biennial reports. It maps the state of sustainable andresponsible investment of major financial markets globally, reporting on data as at the beginning of 20203.
This report shows the continuing prevalence of sustainable investment across the global investment industry, with assets under management 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 definitions were revised in October 2020 to reflect the most up-to-date
practice and thinking in the global sustainable investment industry.
‘Sustainable investment’4, as referred to in this report, is a term thatis inclusive of investment approaches that consider environmental, social and governance (ESG) factors in portfolio selection andmanagement across seven strategies of sustainable or responsible
investment (as detailed in the ‘Defining Sustainable Investment’section). For the purpose of articulating our shared sustainable investment work in the broadest way, 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 investing and socially responsible investing.
This report shows that beyond the top line growth in sustainable 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 thatsustainable investment is defined not just by the strategies involved,
but by the short- and long-term impacts that investors are havingfrom their sustainable investment approach.
This transition is playing out differently in different regions, and thisreport includes a regional highlights section that provides deep insights into the different 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 ofsustainable investment in different regions. In this 2021 report, many
regions continue to see strong growth in sustainable investment assets under management – most notably Canada, the United States
and Japan. Other regions are slowing down their rate of growth orhave seen a reported reversal – in particular Europe and Australasia.
In both cases, this is largely due to changes in how sustainable investment 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 theevolution 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, allshowing 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 makeup a total of 35.9% of total assets under management,up from 33.4% in 2018.
▶ Sustainable investment assets are continuing to growin 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) from2018 to 2020. Europe reported a 13% decline in the growthof 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 ofsustainable 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 ofsustainable investment assets at 62%, followed by Europe(42%), Australasia (38%), the United States (33%) andJapan (24%).
▶ The United States and Europe continue to represent morethan 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 different 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 thedata would meet the EU regulatory definition.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

5

A note on methodology

This report provides a snapshot of sustainable investing across Europe, 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 andResponsible 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 todata 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 different method to collect data for its respective report. The consolidation in thisreport is made on a best effort basis, based on best available regional data. Note in particular, that Europe and Australasia have enacted
significant changes in the way sustainable investment is defined inthese regions, so direct comparisons between regions and with previous 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 theregional sustainable investment organisations.

6

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

All 2020 assets are reported as of 31 December 2019, except forJapan which reports as of 31 March 2020. For figures which are notdisplayed in the region’s local currency, currencies have been converted 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 anddata used in this report. Refer to Appendix 2 for a table of assets ineach region in its local currency in 2018 and 2020, and the percentage growth for both the regional and global strategy totals over thisperiod.

Defining sustainable investment

Sustainable investment is an investment approach that considers
environmental, social and governance (ESG) factors in portfolio selection and management. For the purpose of this global report andfor articulating our shared work in the broadest way, GSIA uses an
inclusive definition of sustainable investing which is presented in thestrategies in the table below. The term sustainable investment may
be used interchangeably with responsible investment and socially responsible investment, among other terms, whilst recognising
there are distinctions and regional variations in its meaning and use.

The GSIA articulation of sustainable investment strategies were initially published in the 2012 Global Sustainable Investment Review
and have emerged as a global standard of classification. These definitions 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 related definitions are:

In most regions, like Europe and Australasia, it is increasingly thecase that the same investment product or strategy will combine several sustainable investment strategies, such as negative/exclusionary screening, ESG integration and corporate engagement.

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, andproxy 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 suchas 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 isprovided 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 20207

Global sustainable investments 2018-2020

GROWTH AND PROPORTION OF GLOBALSUSTAINABLE INVESTMENT

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.

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% increase in the past two years (2018-2020) and 55% increase in thepast four years (2016-2020).

In Australasia, sustainable assets continued to rise, but at a slower pace than between 2016 and 2018 with a growth of 25% from2018 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.

The total professionally managed assets under management during
the reporting period has grown to USD98.4 trillion, as shown in Figure 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 percentage points.

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.

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 difficult.5

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

FIGURE 1 Snapshot of global sustainable investing assets, 2016-2018-2020 (USD billions)

REGION

2016

2018

2020

Europe*12,04014,07512,017

United States

8,723

11,99517,081

Canada

1,086

1,699

2,423

Australasia*

516

734

906

Japan

474

2,180

2,874

22,83930,68335,301

Total (USD billions)Global sustainable
investment at$35.3 trillion

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, theUK, Norway, Switzerland, Liechtenstein.
*Europe and Australasia have enacted significant changes
in the way sustainable investment is defined in theseregions, so direct comparisons between regions and withprevious versions of this report are not easily made.

FIGURE 2 Snapshot of global assets under management 2016-2018-2020 (USD billions)

REGIONS

2016

2018

2020

Total AUM of regions

81,94891,82898,416

Total sustainable investments only AUM

22,87230,68335,301% Sustainable investments

27.9%

33.4%

35.9%

5.5%

2.5%

Increase of % sustainable investments(compared to prior period)

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

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

9FIGURE 3 Growth of sustainable investing assets by region in local currency 2014-2020
GROWTH PER PERIODCOMPOUND ANNUALGROWTH GROWTHGROWTH RATE
2016-2018 2018-2020(CARG) 2014-2020

2014

2016

2018

2020

GROWTH
2014-2016

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%

Proportion of sustainable investing relative to total
managed assets

FIGURE 4 Proportion of sustainable investing assets relative to total

managed assets 2014-2020
70%

63.2

58.8

60%

52.6

50%

37.9
21.6

17.9

20%

Canada

25.7

33.2

18.3

24.3

EuropeAustralia/NZ
United States
Japan

16.6

10%
0%

41.6

48.8

31.3

30%

As shown in Figure 4, the proportion of sustainable investing relative to total managed assets continued to grow strongly in Canada,
the United States and Japan.

50.6

50.6
37.8

40%

61.8

3.4

2014

2016

2018

2020

REGION

2014

2016

2018

2020

Europe*

58.8%

52.6%

48.8%

41.6%

United States

17.9%

21.6%

25.7%

33.2%

Canada

31.3%

37.8%

50.6%

61.8%

Australasia*

16.6%

50.6%

63.2%

37.9%

3.4%

18.3%

24.3%

Japan

NOTE: Asset values are expressed inbillions. New Zealand assets wereconverted to Australian dollars. In
2020, Europe includes Austria, Belgium,
Bulgaria, Denmark, France, Germany,
Greece, Italy, Spain, Netherlands,
Poland, Portugal, Slovenia, Sweden, theUK, Norway, Switzerland, Liechtenstein.
*Europe and Australasia have enacted
significant changes in the way
sustainable investment is defined inthese regions, so direct comparisons
between regions and with previous
versions of this report are noteasily made.

*Europe and Australasia have enacted significant changes in the way sustainable investment is defined in theseregions, so direct comparisons between regions and with previous versions of this report are not easily made.

In contrast, Australasia and Europe both reported a lower proportionof sustainable investing assets relative to total managed assets for2018 to 2020. This reflects significant changes in the way sustainable investment is defined in these regions, making comparisonswith previous versions of this report very difficult, and highlights anevolution of the sustainable investment markets in both regions. In
Europe, this was driven in large part by a strong legislative pushthat now explicitly sets out sustainability standards for sustainablefinance products. In Australasia, this was due to two main factors:
one being a shift in sustainable investment standards expected forinclusion in the regional survey data undertaken by RIAA, as well asa 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 unchanged over the past two years.

FIGURE 5 Proportion of global sustainable investing assets by region 2020

Australia/NZ*
Canada

Japan

3%
7%

SUSTAINABLE INVESTMENT STRATEGIES
8%Europe*34%

48%
United States* Europe and Australasia have enacted significant changes in the way sustainable investment is defined in theseregions, so direct comparisons between regions and with previous versions of this report are not easily made.

10

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Proportion of sustainable investing assets by strategy
and region
The largest sustainable investment strategy globally is ESG integration, 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) followedby 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

strategy. This shift towards ESG integration was particularly pronounced in Japan where ESG integration became the most common sustainable investment strategy, taking over from corporate
engagement and shareholder action. European sustainable investing strategies data in this year’s report is based on an extrapolationfrom historical data taken from previous versions of this report, due
to no data being available for 2020 at a strategy level.

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 consistent growth during the period. However, norms-based screening,
positive screening as well as negative screening have all experienced a more variable trajectory since 2016.

What is also increasingly evident by reports from across the major
regions is that many investment organisations are using a combination of strategies, rather than solely relying on just one.

FIGURE 6 Sustainable investing assets by strategy & region 2020
■ $1 ■ $17 ■ $212

Impact/community investing■ Europe■ United States■ Canada■ Australia/NZ■ Japan■ $16 ■ $106
■ $3

■ $136 ■ $658
■ $16 ■ $572

Positive/best-in-class screening
Sustainability themed investing$1,688

Norms-based screening$3,074

Corporate engagement and shareholder action$4,743

Negative/exclusionary screening$9,242

ESG integration$4,140■ $3 ■ $74■ $37 ■ $145
■ $803■ $262$1,980$2,045$1,735■ $1,042 ■ $89$3,404■ $1,254$16,0590$2,302 $794 $1,900

5k

10k

15k

20k

25k

NOTE: Asset values are expressedin billions of US dollars. European
sustainable investing strategy
data is based on extrapolationfrom historic data from the2018 GSIR report and applying
the same proportion to 2020
sustainable investing data
across the different 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 notreport on the category of normsbased screening and Australasia
on the category positive/best-inclass screening.

FIGURE 7 Global growth of sustainable investing strategies 2016-2020
$352
$444
$248

Impact/community investing■ 2020■ 2018■ 2016$1,384$1,842

Positive/best-in-class screening$818$1,948$1,018$276

Sustainability themed investing$4,140$4,679Norms-based screening$6,195

Corporate engagement and shareholder action$8,385$10,504$9,835$15,030

Negative/exclusionary screening$19,771$15,064

ESG integration
0

5k

10k

$25,195$17,544$10,35315k

20k■ 2020■ 2018■ 2016

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$8,38525%

6%Negative/exclusionary screening$15,030$19,771$15,0640%0%

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

143%

25%

25k

GROWTH COMPOUND ANNUAL
2016-2020
GROWTH RATE

NOTE: Asset values are expressedin billions of US dollars.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

11FIGURE 8 Regional shares, by asset weight, in global use of sustainable investing strategies 2020

Impact/community investing30%

Positive/best-in-class screening

41%

Sustainability themed investing

7%

Norms-based screening

74%

Corporate engagement and shareholder action

45%

Negative/exclusionary screening

61%

ESG integration

16%

60%

4%
48%

1% 10%

86%

2% 4%
19%
19%

19%

17%
7%

64%

9%

20%

40%

■ EUROPE■ UNITED■ CANADA

Impact/community investing

30%

60%

Positive/best-in-class screening

41%

Sustainability-themed investing60%■ JAPAN

4%

5%

0%

48%

1%

0%

10%

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%

STATES

Proportion of sustainable investing strategies by asset
weight and region
Regional differences in the prevalence of sustainable investing
strategies can be seen in Figure 8. These are due to a number offactors, some of which are regionally specific.
For example, Australasia combines positive, negative and normsbased screening into one bucket and does not track corporate engagement 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 producing an overall tally of sustainable investing assets, counts only
the portion of corporate engagement assets that are deployed infiling shareholder resolutions on ESG issues.
Nonetheless, we are able to see some interesting regional variations. Although Japan holds 8% of global sustainable investing assets, it accounts for a much greater share of global assets dedicatedto corporate engagement and shareholder action (17%). The UnitedStates holds the greater proportion of global assets in sustainability-themed investing, impact/community investing, positive/best-inclass investing, and ESG integration.
As mentioned above, investors may utilise multiple sustainable investing strategies as a means of integrating sustainability risks andopportunities as part of their investment processes. As such, segregating these strategies may not be representative of the holistic
trends facing the sustainable investment industry globally.

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

NEW ZEALAND

1% 8%
3%

80%

■ AUSTRALIA/

12

6%

23%

0%

5%

■ Europe ■ United States■ Australia/NZ ■ Japan

8%
100%■ Canada

NOTE: European sustainable investing strategy
data is based on extrapolation from historic
data from the 2018 GSIR report and applying thesame proportion to 2020 sustainable investingdata across the different 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 notreport on the category of norms-based screening
and Australasia on the category positive/bestin-class screening. Australasia also includes
corporate engagement within ESG integration.

Historically Europe made up the majority of assets with normsbased and negative/exclusionary screening strategies. As the recent European Union Sustainable Finance Disclosure Regulation
sets out requirements for investment managers to incorporate sustainability risks in their investments, this means that negative/exclusionary screening, norms-based screening and ESG integration
have become part of the expected practice of all financial productsin 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 purchased 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 pension funds, universities, foundations and insurers through investment 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 differentiating between these two investment classifications in 2012. At that time,institutional investors held 89% of assets compared with 11% heldby retail investors. Figure 9 shows that at the start of 2020, the retailportion 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) Sustainable 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 climate 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, compared to pre-industrial levels. The Paris Agreement has been thedriving force of many state-based legislations to limit greenhousegas emissions and set net zero emission targets. Although the Paris
Agreement is a state-based agreement, investors, asset owners andasset managers are increasingly looking to align their portfolios to
the goal of the Paris Agreement, and monitor and limit greenhousegas emissions, or are required to in alignment with changes in statebased 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 withstrategies that improve health and education, reduce inequality,
and spur economic growth – all while tackling climate change andworking to preserve our oceans and forests. Although the SDGs area state-based framework, businesses and investors have also beenencouraged to adopt the SDG framework. The UN Global Compact
and their regional associations have been leading the developmentof business-based guidance for SDG implementation. The Principles 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
100%

80%

20%

25%

25%

80%

75%

75%

2016

2018

2020

60%

40%

20%

0%

■ Retail ■ Institutional

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

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 andregulation globally, and greatly changed expectations on investors,
asset managers and asset owners. The TCFD recommendations aredesigned to help companies to provide better information on howorganisations provide information on climate-related risks and opportunities 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 deliver a framework for organisations to report and act on evolving
nature-related risks.
The United Nations Environment Program Finance Initiative (UNEPFI) Sustainable Financial Roadmap Initiative proposes an integrated
approach to accelerate the transformation towards a sustainablefinancial system. Regionally, there have been localised Sustainable
Finance Roadmaps created dedicated to accelerating sustainablefinancial systems locally in many markets around the world.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202013

Regional highlights

This section illustrates examples of policy and regulatory developments, industry drivers and collaboration, customer preferencesand demand, and operational and market drivers across the specificregions 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 andresponsible 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 integratesustainability risks and adverse impacts at entity level, andto classify and report their ESG products’ sustainability
risks and adverse impacts. The EU Sustainable Finance
Disclosure Regulation obliges all investment managers toincorporate sustainability risks in their investments, thus
making sustainable investment strategies as defined by
GSIA such as negative/exclusionary screening, normsbased 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 socialand 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 2020and establishes the framework for the EU taxonomy bysetting out four overarching conditions that an economic
activity has to meet in order to qualify as environmentally
sustainable. The delegated acts containing the technicalscreening criteria for climate change adaptation andmitigation, 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 double materiality concept. Double materiality implies that companies
and investors not only report on risks and opportunities immediately financially material to corporate valuation, but also issues thatare impacting on environmental and social objectives over time andon geography should be considered. The impacts on environmentand social aspects are defined with a threshold of significant contribution 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’ corporate 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 outcomes 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 region (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 collaborative initiative of the European financial services sector to standardise 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 consultation 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 headquartered in Europe and representing USD6.6 trillion in AUM, is accelerating its action to align portfolios to the 1.5°C scenario.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202015

Customer drivers
In Europe, the sustainable and responsible investment industry has
experienced a strong demand of retail investors in the first half of2020, as evidenced by net inflows of EUR14 billion of EU-domiciled
ESG equity funds in contrast to net outflows of EUR77 billion ofother equity funds. The consistent outperformance of ESG indicesover the last few years has also increased the ESG product offers 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 different surveys conducted across Europe that
account for interest in sustainable and responsible investment thematics and products. 2DII conducted a series of surveys on sustainability 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 thatwhile a majority of new fund offerings for 2020 were broad ESG
funds, environmental focused funds accounted for 13% of new fundofferings. Other products in the European market in 2020 embedsustainability-related themes including gender, smart cities, theocean, and the SDGs.
Effective engagement and meaningful stewardship have been examined mainly by industry as a tool to drive positive outcomes.
For example, the European Union’s investor stewardship tool, theShareholder 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 European sustainable and responsible investment membership organisation 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 supportof their network which spans over 400 Europe-based organisations
drawn from the sustainable investment industry value chain. Moreinformation on the developments in the region can be found on theEurosif website.

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GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

UNITED STATESPolicy & regulatory drivers
In the United States, the regulatory policy environment for sustainable investing has drastically changed between the former andcurrent administrations. The administration under former President
Donald Trump sought to limit sustainable investing through actions taken at the Department of Labor (DOL) and Securities andExchange Commission (SEC). President Biden’s administration has
taken measures to mitigate or reverse those actions. Despite all theregulatory and policy shifts in the last several years, investor interestin 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 whichstates that ESG criteria may be considered in ERISAgoverned retirement plans. A companion bill was
introduced in the House of Representatives. Passage ofsuch 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 leadto 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 climatechange. One example includes the work conducted by
the White House Task Force on Worker Organizing andEmpowerment with the aim of strengthening labour rights.

Industry collaboration

Market drivers

During the reporting period, there have been multiple strong sustainable investment industry collaborations across a wide range of
ESG themes.

The United States has seen a new focus on racial justice investing. A
number of asset managers, service providers, non-profits and otherinstitutions have developed policies and frameworks to help theinvestment community counter injustice and advance racial equity.
There has been a continued focus on gender lens investing in lightof the #MeToo movement and the impact of COVID-19 on women,
particularly women of colour.

In 2020, the Racial Justice Investing (RJI) Coalition released theInvestor Statement of Solidarity to Address Systemic Racism andCall to Action endorsed by over 120 investors and organisations. The
Statement calls for accountability and action from the investmentcommunity to dismantle systemic racism and promote racial equity
and justice. This initiative was launched after the murders by policeof George Floyd and Breonna Taylor, the murder of Ahmaud Arbery,
ongoing police violence against black communities, and the disproportionate health and economic impact of COVID-19 on black andother minority populations.
Another notable development is the CFA Institute project to establish 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 increasingly used tool for investors. US SIF reviewed the ESG themesof shareholder proposals filed between 2018-2020 and found themost popular thematic concern of shareholder proposals is corporate political activity, followed by labour and equal employment opportunity, climate change/carbon, executive pay, then independent
board chair.6

There has also been increased investment in community development financial institutions, which serve low-income and othermarginalised communities who are underserved by many financial
institutions.
The last several years have also been characterised by a strong pushfor multi-stakeholder company models in the United States with afocus on communities, environment, and better labour conditions inaddition 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 theregion can be found on the US SIF website and the US SIF Foundation Report on US Sustainable and Impact Investing Trends 2020.

Customer drivers
The 2020 US SIF Foundation Trends Report identified USD4.6 trillion in ESG assets managed for individual retail or high-net-worthclients, up from USD3 trillion in 2018.
According to a 2019 Morgan Stanley study, 85% of individual investors surveyed were interested in sustainable investing, up 10% from2017. Among millennials, 95% were interested, up 9% from 2017.
The study found that individual investor survey respondents weremost interested in the themes of plastic reduction (46%) and climatechange (46%), community development (42%), circular economy(39%) and SDGs (36%).
In a 2019 survey by Natixis Global Asset Management of participants in retirement contribution plans, 75% of respondents said it
was important to make the world a better place while growing theirwealth. Sixty-one percent said including sustainable investment options would make them more likely to contribute to their plan.

6 2020 US SIF Foundation Trends Report

GLOBAL SUSTAINABLE INVESTMENT REVIEW 2020

17

CANADA
Policy & regulatory drivers
The principal drivers of the growth of the sustainable and responsible 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 thegovernment 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 orderto access the LEEFF, loans companies must commit topublishing 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 peopleof colour.
Regulatory developments across Canadian provinces that impact
the sustainable and responsible investment industry include:▶ Under the Ontario Pension Benefits Act Regulation, whichcame into effect 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 affect reporting issuers,
such as mandatory climate change-related disclosurecompliant with the TCFD recommendations andmandatory 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.

18

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

There have also been the following environmental and social legislative 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 theCustoms Tariff, 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, wasintroduced in 2020 to legislate Canada’s target of net zero greenhouse 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 Address Climate Change charter calling on universities to incorporate
ESG factors into investment practices; measure the carbon footprints of their portfolios and set targets to reduce the footprints overtime; engage with companies to encourage them to reduce emissions; 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 from66 signatories, including 48 institutional investors with more than
USD4 trillion in assets under management. Signatories to the Statement pledge to take steps to integrate diversity & inclusion (D&I)
into their investment processes, and also to strengthen D&I practices within their own institutions. The RIA is also currently coordinating a Canadian Investor Net Zero Pledge with a small groupof experts. The Exposure Draft will be released in summer 2021 forindustry consultation.
In November 2020, the CEOs of eight leading Canadian pension
plan investment managers, representing approximately CAD1.6 trillion 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 partners 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 inpopularity in Canada. Net asset flows for Canada-domiciled sustainable and responsible investment mutual funds and ETFs, estimatedby Morningstar, were CAD5.3 billion for Q1 2021, already exceedingthe CAD3.3 billion in 2020. In addition, a total of 17 sustainable andresponsible investment funds launched in the first quarter of 2021,
compared to 40 in 2020.

AUSTRALIA AND NEW ZEALAND

According to the 2020 RIA Investor Opinion Survey, which tracks individual 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 investment 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 retailinvestors surveyed have been asked about responsible investment.

The growth in sustainable and responsible investment, as it is referred to in the Australasian region, has seen strong developmentsfrom regulatory drivers. In New Zealand, the policy makers andregulators have driven the growth in sustainable and responsible
investment, whereas the growth in Australia has been led by industry 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.

Each year, the RIA’s Investor Opinion Surveys focus on a current
theme: Recent highlights included:

Across the region a strong focus has been on climate change risk
management, with central regulators requiring companies and investors to disclose climate change risks. In Australia, the Australian
Prudential Regulation Authority (APRA) has highlighted the financial nature of climate change risks and strengthened its monitoringof climate change risk disclosures, and the Australian Securities andInvestments Commissions (ASIC) has been progressing requirements for directors to consider climate change risk. New Zealandhas moved towards legislating mandated Task Force on Climate-related Financial Disclosures (TCFD) reporting for companies and financial 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.

▶ 2020: Diversity & Inclusion – 73% of respondents
would like a portion of their portfolio to be invested inorganisations providing opportunities for the advancementof women and diverse groups.
▶ 2019: Plastic – 82% of respondents believe it is importantfor companies in their investment portfolio to reduce
plastic waste.
▶ 2018: Climate Change – 70% of respondents believe
climate change will have negative financial impacts oncompanies 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 climatechange and environmental challenges.

Market drivers
Impact investment has been steadily growing in Canada, although
it still represents a relatively small percentage of responsible investment strategies being used. The broader discussion around measuring 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 provincial 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 information 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.

Policy & regulatory drivers

Other important legislative developments that have influenced theinvestment 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 Agreementaligned climate change policies.

Industry collaboration
Industry has been driving sustainable investment throughout theAustralasian 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 sustainable, 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 engagement and voting outcomes among Australian Stock Exchange(ASX) listed companies.
RIAA created a Human Rights Working Group (HRWG) in 2017with the objective of building members’ understanding and capabilities for assessing and respecting human rights and mitigating
human risks in investment; facilitating the sharing of leading practice knowledge and resources pertaining to human rights and investment decision-making and engagement; and designing and

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202019

delivering significant human rights research, implementation andadvocacy opportunities as relevant, through collaborating withother RIAA working groups and industry forums. Since its inception,
the HRWG has created an Investor Toolkit on Human Rights, collaborated with NGOs and First Nations organisations, and worked on
addressing issues such as the nexus between Climate Change andHuman Rights.

Customer drivers
Retail demand for sustainable and responsible investment has accelerated in the Australasian region, shaping the distribution anddevelopment of sustainable investment projects. For example, additional products have been embedded into investment platforms toensure 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 andactivity in impact investment in the Australasian region. In New Zealand, 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 totarget 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 insustainability-linked loans and green bonds across the region.

Sustainable investment association in the region– RIAAThe Responsible Investment Association Australasia’s (RIAA) mission is to promote, advocate for, and support approaches to responsible investment that align capital with achieving a healthy andsustainable society, environment and economy. RIAA advocates forstrong sustainability standards that embed real world outcomes asa 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 and2020 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) andother ministries introduced a Green Growth Strategy
Through Achieving Carbon Neutrality in 2050 in 2021 afterPrime Minister Yoshihide Suga pledged to cut Japan’s
greenhouse gas emissions to net zero by 2050.
▶ The Financial Services Agency (FSA), METI and theMinistry of the Environment jointly released in 2021 theBasic Guidelines on Climate Transition Finance, which isaligned with ICMA’s Climate Transition Finance Handbook
and aims to strengthen the position of climate transition
finance. The FSA also established the Working Groupon Social Bonds to publish Guidelines on Social Bondsaligned 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 mentionof sustainability topics, including specifically climatechange, human rights, and fair and appropriate treatmentof the workforce.
▶ The Financial Services Agency (FSA) revised the
Stewardship Code in 2020 and mentioned sustainability
clearly, including ESG factors and applying the code toassets other than listed equities.
A major specific thematic regulatory policy development was the inter-ministerial committee launch of Japan’s National Action Plan on
Business and Human Rights in 2020. JSIF participated in the advisory 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, andeight other organisations, including JSIF, aiming to explore effective
and efficient ESG disclosure frameworks, accumulate good practice
examples and promote mutual understanding between stakeholders and investors for better decision making.
There have also been industry collaborations on specific ESG thematics 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 initiatives by member life insurers.

20

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 amountin 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 investments and 50% of respondents who own stocks are interested in
ESG investment.

Market drivers
Global investors have been driving ESG improvements in Japanesecompanies, in particular with regards to corporate governance andclimate change. For example, global shareholder activists have beenchampioning 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 government legislating changes to limit shareholder activism throughlimiting 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 outcomes 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 Japanesebusinesses.

Sustainable investment association in the region Japan SIF
The Japan Sustainable Investment Forum (JSIF) is Japan’s not-forprofit organisation promoting the concept and practices of sustainable and responsible investment in the country. More informationon the developments in Japan can be found on the JSIF website, theSustainable Investment Survey in Japan 2019 and the White Paper
on Sustainable Investment in Japan 2020.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202021

Additional regional highlights

UNITED KINGDOM7Policy & 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 recent 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 thefirst G20 country to make TCFD-aligned disclosuresmandatory 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 ofinvestors’ engagement with assets and their voting records.
▶ Changes to the pensions landscape, including measuresin 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 andbusinesses to make green financial decisions and prevent‘greenwashing’.

Industry drivers
An abundance of industry collaborations across a range of ESG thematics 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 zerotargets for investments ahead of COP26.
▶ 30% Club Investor Group, coordinating the investmentcommunity’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 onways for the UK to build its status as a global hub for goodstewardship.

22

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Customer drivers
Retail savers and other clients’ demand for sustainable and responsible investment products and funds is steadily rising in the UK, andthe industry has been taking steps to help meet this demand. For
example, in its latest publicly available figures for April 2021, Investment Association’s monthly fund figures showed responsible investment funds receiving a net retail inflow of £1.6 billion, with responsible investment funds under management standing at £72 billion.
There has been limited research to demonstrate retail thematic preferences 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 targetingsocial 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 offer a wide range of sustainable
and responsible investment products, such as ESG ETFs and climate-change funds that seek to mitigate the risks of climate-change
and social impact funds. Increasingly, new funds are being launchedto specifically address biodiversity related risks and opportunities.
This is in alignment with the creation of the Taskforce on Nature-related Financial Disclosures.

Sustainable investment association in the region- UKSIFThe UK Sustainable Investment and Finance Association (UKSIF)
brings together the UK’s sustainable finance and investment community and supports its members to expand, enhance and promote
this sector. More information on the developments in the region canbe found on the UKSIF website.

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.

CHINA8
Policy & regulatory drivers
Regulatory and policy drivers play a key role driving sustainable investment in China, in addition to pressure from overseas shareholders 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 in2012 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, andenterprises, establishing a green projects registration
platform, and providing tax and financial incentives toinvestors and issuers.
▶ The Guiding Opinions on Promoting Investment and
Financing to Address Climate Change, was issued in2020. This is the first ministry-level document on climatechange mitigation after China announced the 2060
carbon neutrality target. The Guiding Opinions includes atimeline for having relevant policies for investment readyby 2025 and emphasises the necessity for regulators to
support and incentivise financial institutions in developing
and supporting climate and green finance products andprojects.
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 trading scheme in June 2021 is expected to drive the transition to low
carbon investment.

Industry collaboration
In 2018, Asset Management Association of China (AMAC) promulgated China’s first self-regulation standard for the asset management sector on green investment, the Green Investment Guidelines(for Trial Implementation). The Guidelines aim to encourage fundmanagement firms to focus on environmental sustainability andbuild awareness of environmental risks, define the scope and approaches of green investment, propel green investment of the fundindustry, improve the environmental performance of investment activities, and foster green and sustainable economic growth.
Though there is no public data on the scale of green and ESG investment in the Chinese private equity market, among the surveyof 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 conservation, 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 significantly to more than twofold of that in 2019, the fastest growth onrecord.
The Survey of Public Attitudes towards Sustainable Investment conducted by China SIF and Sina Finance in October 2020 found thata majority of individual investors do consider factors such as ‘environment’, ‘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, thesurvey found individual investors’ concerns on ESG focus on twothemes: financial fraud and product quality. In addition, more thanhalf 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 introduced green financial bonds into the Chinese market. Use of proceeds of green financial bonds must be green projects as definedin the Green Bond Endorsed Project Catalogue (2015 Edition). The
catalogue was updated in April 2021, to harmonise domestic andinternational standards and specifications. As at June 2021, Chinais the second largest green bond market, with an issuance volume
of over CNY1.2 trillion and a balance of CNY813.2 billion by the endof 2020. China introduced new types of sustainable bonds recently
including sustainability-linked bonds, blue bonds, and carbon-neutrality bonds.
Commercial banks in China have made attempts at launching ESGthemed 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 discusssustainable investment opportunities in China, and promote thedevelopment 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

23

LATIN AMERICA

SOUTH AFRICA, NIGERIA AND KENYA

Policy & regulatory drivers

Policy & regulatory drivers

Regulations mandating pension funds in key markets in Latin
America is driving sustainable investment in the region. The policy developments in Chile and Columbia have a specific focus onaddressing climate risk. Some of the most important sustainable
investment-sector specific regulatory or policy developments in the
Latin American region include:

Regulatory and policy drivers have been central in South Africa, thefinancial hub in the region, in addition to Kenya and Nigeria. Notable
regulatory and policy drivers in South Africa include:▶ Regulation mandating pension funds in Mexico tointegrate ESG in their investment process.
▶ 276 Norm in Chile mandating pension funds to integrate
ESG and climate risk in their investment process, whichcame into force in May 2021.
▶ 007 Norm in Colombia mandating pension funds andinsurance companies to integrate ESG and climate risk intheir investment process.

Industry collaboration
Industry collaboration to improve ESG outcomes is not yet a common 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 information in a standardised and considered manner.

Customer drivers
ESG products are now offered to retail clients in Brazil, Mexico, Chileand Colombia. Latin America has not conducted any research on
the level of retail client interest in sustainable investment or retailcustomer preferences on sustainable investment or ESG themes
and issues.

Market drivers
The Latin America market is early in its development of ESG products. The Latin American market has shown a growing interest ininnovative 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 includes a MXN-denominated structured note linked corporate sustainability 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 sustainable and responsible investment practices in the region.

24

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE▶ Regulation 28 which integrates sustainable andresponsible investment requirements into the retirement
regulation. Regulation 28 is currently undergoing
consultation for a potential amendment to clarify theparameters and imperative for pension funds to invest inbuilding economic and social infrastructure. The Code for
Responsible Investing in South Africa (CRISA), was firstpublished in 2011 to support the amended Regulation 28,
and is undergoing its first amendment. Notably, one of theenvisioned 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), hasprovided 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 different levels
and racial profiles of company employees collected
through the EEA4 form. This is influencing reporting (andpossibly transparent disclosure) on income inequality andaddressing issues of employment equity.
During the reporting period, two notable taxes that target the reduction of negative environmental and social outcomes of investee
company operations and products have been introduced. On theenvironmental side, a carbon tax in South Africa effective from 2019and on the social side there was an introduction of sugar tax effective from 2018. The Carbon trading market in South Africa has
not taken off. There are, however, efforts to develop carbon markets
in East and West Africa as market actors have formed alliances todevelop emissions trading markets.
There is a long history of strengthening ESG disclosure requirements in South Africa. In 2016, the fourth issue of the local voluntary King CSR code was published and applies to all organisations– including companies, trusts and NGOs. Since 2009 the Johannesburg Stock Exchange (JSE) made it compulsory for companies thatwant 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 befinancially material. Since 2018, the South African financial regulatory 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 Stewardship Code for Institutional Investors that includes two principles
out of seven covering sustainable investing and sustainability topics.

In 2018, the Nigerian government released an apply or explain voluntary Corporate Governance Code with a full section on sustainability and ESG issues that companies need to handle.

Industry drivers
There has been a growing trend towards the development of regional green bond markets to drive positive environmental outcomes.
Green bond guides have been developed in Nigeria, Kenya andSouth Africa to enable issuers to certify and issue green bonds forinvestors seeking fixed income instruments. Additionally, the 2020
African Green Bond Toolkit, developed by Financial Sector Deepening Africa (FSD Africa) in collaboration with Congo Basin Institute(CBI) and UK Aid, to provide the African capital markets with theguidance on how to issue green bonds that are in line with international best practices and standards.
Another notable collaboration has been by the PRI’s RI Academy
and local pension associations to build capacity for improved climate outcomes through the development of a free online training
programme for African trustees.
In South Africa, there have been targeted efforts to capacitate market 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 Africa Sustainable Finance Initiative. This follows from the publishing ofa technical paper which proposes a road map for sustainable financein South Africa. Similar sustainable finance roadmaps have been developed in Nigeria and to a lesser degree in Kenya where the focusof 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 retailinvestors to compare unit trusts. The platform, launched in 2021 isin its early stages and will enable fund managers in the South Africa market to have their unit trusts rates for the retail market. The
growing demand from retail clients is encouraging fund managers tomake 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 thesurvey 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 underenvironmental, 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 employment security. The top issues related to governance were corruption,
ethical business practices and equitable remuneration.

Market drivers

The investment market in South Africa notably under the influenceof pan African players such as Old Mutual have driven sustainable
investment in the region, primarily through the use of ESG integration 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 environmental 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 overthe past four years, which can be partially attributed to the development 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 firstsovereign green bond on the continent in 2017. The Nigerian government has subsequently issued more sovereign bonds and, inthe process, galvanised broader market actors to participate in thegrowing green bond market.

Sustainable investment association in the region
At the time of this report, there is not a SIF in the Eastern, Southernor Western African Region. It should be noted that the University ofCape Town Graduate Business School has supported the collectionof the data in this report. This includes the development of the African Investing for Impact Barometer.

ADDITIONAL ASIA MARKET INSIGHTS
Policy & regulatory drivers
Regulatory and policy drivers have been critical to the strong growthin several Asia financial centres, influencing investor confidence
and driving new sustainable investment products in the region.
Examples of regulatory developments across the region during thereporting period include:▶ In South Korea, the National Pension Service (NPS)
adopted a Stewardship Code in 2018 and establisheda 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 theincorporation 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 toenhance resilience to environmental risk and support thefinancial sector’s role in supporting the transition to an
environmentally sustainable economy.

The central market drivers in the region are developments and activities to increase the use of green bonds and impact investing funds asvehicles to drive positive outcomes with SDGs as a reference point.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202025

▶ In Taiwan, the Corporate Governance Roadmap(2018~2020) encourages active participation ofcompanies 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 climaterelated risks and opportunities.
▶ In Hong Kong, the Cross-Agency Steering Grouplaunched a green and sustainable finance strategy in2020 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 andenvironmental risks. There have also been discussions
relating to the TCFD recommendations, with the HKMA
stating that TCFD reporting will be mandatory acrossrelevant 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 tointegrate sustainable investment strategies and corporates to address and integrate ESG issues. Within Asia, there are some examples 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 experience strong growth, with demand for environmental-related sustainable 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 relation to decarbonisation, renewable energy, green transport, andmore. 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 insustainable 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.

26

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Appendix 1 - Methodology and data

Each region covered by this report uses a different method to collect data for its respective report. The consolidation in this report ismade on a best effort basis based on best available data sourced inconjunction with the regional SIFs, however due to methodologicaldifferences across regions, and changes in methodologies by regions 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 forJapan which reports as of 31 March 2020. For figures which are notdisplayed in the region’s local currency, currencies have been converted to US dollars at the exchange rate prevailing on 31 December
2019, (or 31 March 2020, in the case of Japan) for comparability. All2018 assets are reported as of 31 December 2017, except for Japan
which reports as of 31 March 2018. For figures which are not displayed in the region’s local currency, currencies have been converted to US dollars at the exchange rate prevailing on 31 December
2017, (or 31 March 2018, in the case of Japan) for comparability. Historical 2016 data are reported as of 31 December 2015, except forJapan, which is reported as of 31 March 2016. Historical 2014 data
are reported as of 31 December 2013, except for Japan, which isreported as of 30 September 2014. Figures which compare trends
within a region have been kept in their local currencies to avoid introducing the effects of fluctuating currency exchange rates into thecalculations; 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 datacollection methods.

EUROPEThe European data for 2020 are drawn from publicly available
third-party data. Eurosif took an entity-level data of EFAMA9 andthen complemented with other sources to cover some of the countries 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, Slovenia, Sweden, Switzerland, and the United Kingdom. Together withthe other sources, the European data cover 18 European countries
including UK, Norway, Switzerland, Liechtenstein.
The data encompass several strategies previously covered by compiling the AUM of institutions that exercise ESG integration, exclusions and engagement but does not necessarily reflect in precise
detail the distribution of assets managed under each of the sustainable 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 conventional investments, must report how they consider sustainability
risks on an entity level.

Exchange rates used in this report

UNITED STATESCONVERSIONEXCHANGE RATEREPORTING DATEEUR/USD

1.11986

31/12/2019

CAD/USD

0.76524

31/12/2019

AUD/USD

0.69939

31/12/2019

NZD/AUD

0.960831/12/2019

NZD/USD

0.67209

31/12/2019

JPY/USD

0.00927

31/03/2020

SOURCE: OANDA Currency converter

9 EFAMA: Market Insights Issue #3 ESG strategies

28

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

With its research partner, the Croatan Institute, the US SIF Foundation 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 information request provided much of the data for this report. Supplementary 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 investment practices.
The research team also reviewed annual reports, financial statements, SEC Form ADV from money managers, IRS Form 990 filings by non-profit organisations and US Department of Labor Form
5500 filings by plan sponsors. In addition, the team gathered datafrom third-party service providers and trade associations of community investing institutions, investment companies and institutional 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 surveys to provide the data included in this report. The first survey took
place in September 2019 and received 41 responses from institutional 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 thetwo public pension funds.
JSIF solicited the cooperation of the PRI Japan Network to spreadawareness of the survey. The 47 institutions reported JPY754 trillion in total assets, of which 51.6% - JPY389 trillion – was managed
using sustainable investing strategies. To obtain the net sustainable investing assets amounting to JPY310 trillion in Figure 3, theassets that were managed by fund managers and which camefrom 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 professionally managed assets in Japan, using the most reliable andextensive data set of Japan’s Flow of Funds Accounts compiled by
the Bank of Japan.

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: directly supplied by asset managers and asset owners; Morningstar
statistics which provided data for the average performance of mainstream 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 approaches from sources including company websites, annual reports and
PRI Responsible Investment Transparency Reports. Because many
asset managers apply several investment strategies to the same assets, the data collection survey required respondents to identify asingle primary responsible investment strategy.
For the Australian benchmark report a total of 165 investment
managers were targeted as respondents to this survey; 54 financial institutions responded by providing information directly while
111 were assessed through desktop analysis. For the New Zealandbenchmark 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 throughdesktop 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.

More information about the Sustainable Investment Surveys can befound on the JSIF website.

All New Zealand assets were converted to Australian dollars as of
31 December 2019, in order to combine assets for the region for thisreport. 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.

CANADA

More detail on the methodology is available in the Responsible
Investment Benchmark Report 2020 Australia and Responsible Investment Benchmark Report 2020 New Zealand.

The Responsible Investment Association (RIA) collected data from
104 asset managers and asset owners via electronic surveys andemails between July and October 2020. The RIA supplemented thesurvey data with secondary research, using dozens of publicly available sources such as annual reports, responsible investing reports,
website data, and PRI Transparency Reports. All figures shown inthis 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 indicates a conservative estimate of Canadian responsible investment
assets, since the cautious approach likely excluded some responsible 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 CanadianResponsible Investment Trends Report.

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202029

Appendix 2 - Data table

Assets in each sustainable investment strategy, per region and global

EUROPE(EUR)

UNITED STATES
(USD)

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$4,679Corporate engagement and shareholder action€4,858$1,763$1,497-¥140,755$9,835

Negative/exclusionary screening€9,464$7,921$878$226¥17,328$19,7712018 (BILLIONS)CANADA AUSTRALIA/NEW(CAD) ZEALAND (AUD)

ESG integration€4,240$9,503$1,890$768¥121,512$17,544TOTAL Sustainable Investing*€12,306$11,995$2,132$1,033¥231,952$30,6832020 (BILLIONS)EUROPE(EUR)

UNITED STATES(USD)CANADA AUSTRALIA/NEW(CAD) 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 2018-20

EUROPE(EUR)

UNITED STATES(USD)CANADA AUSTRALIA/NEW(CAD) ZEALAND (AUD)

JAPAN
(JPY)

GLOBAL
(USD)

-

-28%

38%

203%

-83%

-21%

Impact/community investing
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%

-13%

42%

48%

25%

34%

15%

TOTAL Sustainable Investing*

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 different 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 different subset of overall 2020
respondents. This is an optional question in each year’s survey, and therefore a different 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.

30

GLOBAL SUSTAINABLE INVESTMENT ALLIANCE

Acknowledgements

The Global Sustainable Investment Alliance thanks Ester Adler, Nina
Haysler and Alan Dayeh of Point Advisory for collating and analysing the data from the GSIA member organisations for the 2018 Global 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 thisedition 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 bysupport 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 possible by a generous contribution from NEI Investments, the sponsorof the 2020 Canadian Responsible Investment Trends Report. Canadian 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 Managers, 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 agrant from Wallace Global Fund and financial support from Parnassus Investments, Calvert Research and Management, Candriam
Investors Group, ClearBridge Investments, Federated Hermes, Carillion 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, Governance & 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 request 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 innature and does not constitute financial advice.
The services provided in connection with this engagement comprise an advisory engagement, which is not subject to Australian
Auditing Standards or Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions
intended to convey assurance have been expressed.
Point Advisory acts in a professional manner and exercises all reasonable 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 misinterpretation 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 information supplied to Point Advisory for its reports. We have indicated 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 Advisory’s responsibility to RIAA, neither Point Advisory nor any member or employee of Point Advisory undertakes responsibility arisingin 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.

PHOTO CREDITSElectric smart cars: Drazen on iStock
Warehouse: Portra on iStock
Windmills: chinaface on iStock
Medical check-up: Drazen Zigic on shutterstock
Cargo ship: Suriyapong Thongsawang on iStock

GLOBAL SUSTAINABLE INVESTMENT REVIEW 202031