A report back from the Global Sustainable Investment Alliance meeting London – March 2016
I am very fortunate to have just returned from a week in London participating in the annual two day summit of the Global Sustainable Investment Alliance.
This annual meeting of the CEO’s of the largest sustainable investment organisations globally is a great chance to:
- hear first hand the leading trends and developments in responsible investment across the globe,
- to share our experiences in building markets in our regions in order to be more effective organisations, and
- to plan for our joint work as the GSIA for the next year.
The GSIA is a coalition of membership based sustainable investment organisations (“SIF’s”) , currently including the USSIF, UKSIF, Eurosif and the VBDO (Dutch SIF) with further links to the SIF network across the world.
Our work as a coalition has included the leading global research on the size and growth of the responsible investment industry, the Global Sustainable Investment Review. This biennial report is the best source of information on the global market dynamics in responsible investment, which measured the industry at $US 21.4 trillion in AUM in 2014.
This year’s summit was hosted by the UKSIF in London, and included an enjoyable event with UKSIF members that allowed us to discuss the market dynamics and key trends across each of our markets. It was great to be able to reach out and meet a solid cross section of UK responsible investment organisations at that event.
Through this meeting, it was clear that some very consistent themes are emerging across all of our markets, notably:
- many of the markets are observing a significant surge in demand for responsible investment, across consumer / retail markets as well as institutional markets. In many regions, the private wealth markets are playing an increasingly large role in driving demand, coming from high net worth, family offices, charities and foundations in particular.
- There is an increasing focus on labeling of responsible investment (including ethical & SRI) funds in many markets, particularly in Europe. Similarly to our recently re-launched Certification Program, it is increasingly clear that with growing demand, there is a need for a verification process that provides a quality assurance around responsible investment products.
- There are strong moves by asset owners in many markets to step up their commitment to being active owners and stewards, with some interesting initiatives in play, including the Red Line Voting initiative put forward by the UK’s Association of Member Nominated Trustees and supported by the UKSIF. (see here)
- There are significant moves afoot to improve the sophistication by which ESG integration is put in to practice, including further defining what is leading practice in ESG integration, with recent reports put out by GSIA members including USSIF (see here), VBDO and our own work in last year’s Benchmark Report (see page 15-17 here)
- There is a data explosion underway in ESG, with more and more data available at more points along the value chain, most recently with ESG fund ratings being announced by Morningstar and MSCI. The question now is how do you use that proliferation of data for better investment outcomes for our beneficiaries?
- A significant shift globally is occurring with the acceptance that fiduciaries have a very clear duty to consider ESG issues. This is rapidly moving into law in many countries, with a big push underway by many of the SIFs in their regions. Notable was the recent update to ERISA guidance (see here) in the US that very clearly states trustees can consider ESG and impact investments. We anticipate a lot more such changes will follow, and in particular we are building momentum on this front as part of our policy work this year (see policy platform here).
This activity in responsible investment is at a significant point right now, and we in the GSIA will be working extensively and collaboratively to push this through to meaningful change in our financial markets. In the next year you can expect to see more activity from the GSIA including importantly the next version of the Global Sustainable Investment Review.