Europe is the most active and dynamic responsible investment market in the world with many SRI funds and innovative investment approaches. Yet the European SRI market is not a homogeneous whole. Consequently, Environmental, Social and Governance practices differ from one country to the other. Novethic examines the key components of the European market, as well as develops a case by case study of the main European actors.
In November 2016, Eurosif, the European network for promoting SRI, published its 7th edition of its market study. In this section, Novethic publishes the key figures and trends of this study.
The Eurosif Market Study reveals double-digit growth for sustainable and responsible investment (SRI). The growth ranges from 30% for stewardship (Engagement & Voting) to 385% for Impact Investment. SRI is growing faster than the broad European investment market (25%) with retail investors returning to the market (up 549% since 2013).
Sustainability Themed investments more than double their growth
Sustainability Themed investments grew by 146%, with the most assets under management in France at €43 billion. An indicator that investors are increasingly looking at climate sensitive topics like energy efficiency and renewable energy.
Exclusions still dominate
Exclusions are still the most popular SRI approach with over €10 trillion of assets under management, showing a 48% increase. Leading countries are Switzerland, with €2.5 trillion and the UK and Germany with almost €1.8 trillion. This is in line with a wave of divestments that has been fueled by the climate change debate.
Norms-based screening remains a popular strategy
Norms-based screening has now become the second most significant SRI approach with over €5 trillion Assets under Management and a growth rate of 40%. France dominates with €2.6 trillion.
Impact Investing and Green Bonds continue their rapid growth
Impact Investing is the fastest growing SRI strategy up to 385% with €98 billion, from only €20 billion in 2013. The Netherlands leads with over €40 billion. This growth is supported by the significant rise in Green Bonds.
Across all the surveyed member states, there has been a positive response to the EU legislative agenda on enhanced transparency and corporate governance which aligns with long term sustainable investment. Examples include Spain and Italy where there have been policy developments which have driven a greater awareness of SRI across those markets. The pension fund disclosure requirements in Spain and the industry engagement with government in Italy on SRI have been important developments which have contributed to the growth in those countries.