When companies pollute the environment, support corrupt governments, or allow executives to make drastic decisions with little oversight, they put their business at risk. That’s why institutional investors are now employing sustainable investing strategies in more than $3.7 trillion of investments -- a 22 percent increase in two years, a study found.
Hospitals, retirees, pensions, banks and religious institutions used sustainable and responsible investing (SRI) strategies for $1 out of every $9 invested in the U.S. at the end of 2011, according to the report, released yesterday by US SIF, a Washington-based nonprofit that tracks SRI investing on behalf of member investors. Total investments guided by such strategies increased six-fold since 1995.
Clients are raising their guard against hidden risks across environmental, social and corporate governance criteria (ESG), according to Lisa Woll, US SIF’s chief executive officer. It’s no longer a niche investment strategy. ``SRI is happening across asset classes, and that's been a big change,'' Woll said on a conference call.
Environmental factors were most cited by money managers. Climate change is taken into consideration by 23 percent of institutional asset owners who use ESG criteria. Institutional investor assets guided by environmental concerns increased 43 percent from 2010, to $636 billion.
US SIF identified the U.S.-based assets held by 443 institutional investors, 272 money managers and 1,043 community investment institutions that select portfolios or analyze investments using ESG criteria. The reach of sustainability-driven assets would be several times larger if it included non-U.S. investors or assets domiciled outside the U.S., according to the report.
Bloomberg LP, parent company of Bloomberg News, was a primary sponsor of the report, along with Wallace Global Fund and TIAA-CREFF.
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