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19 June 2008
Fund managers predict $700bn rise in RI assets by 2010
Source: www.responsible-investor.com
RI landscape report
98 fund managers running $19.4 trillion in assets predict responsible investment market will jump by 35% in next two years.
by Hugh Wheelan
Global asset managers predict that the level of assets they manage according to responsible investment criteria, such as themed sustainability funds, negative stock screening and activist engagement with companies, will rise by more than $700bn (€443bn) in the next two years.
Responding to the RI Landscape Asset Managers 2008 Survey, 98 fund managers, including the world’s largest houses, running assets of $19.4 trillion in assets, said current levels of responsible investment represented more than 10% of assets at $2.2 trillion. The managers predict that by 2010 this figure will have reached $2.94 trillion – a rise of $700bn or 35%.
The rise in RI assets is predicted to be sharper amongst fund managers who do not already run their assets on a 100% RI basis (19 of the 98 respondents stated this was already the case.), suggesting that fund managers are increasingly recognising responsible investment as a mainstream approach.
However, despite increasing evidence that ESG concerns can impact share prices, a majority of fund managers still don’t integrate these factors into mainstream investment decisions, the survey reveals.
The RI Landscape 2008 Asset Managers survey, run jointly by Responsible Investor and IPE magazine, is one of the widest ever direct global surveys of institutional investors that names the participating respondents. It is the sister to May’s Asset Owners report, which found that institutional asset owners, mostly pension funds and investment foundations, managing over $1.5 trillion in assets, plan to increase their commitment to responsible investment by $137bn before the end of 2010.
The Asset Managers’ survey shows that negative screening of portfolios is the largest product offering by fund managers with over 60 of the fund managers doing so. However, this historical approach to responsible investment is being caught up by more active investment strategies such as ‘focused assets’ investing in water and clean tech funds, the ‘integrated approach’ where ESG criteria are incorporated in investment research and decision making, and the ‘engaged approach’ where clients adopt an active policy on discussing governance and ESG themes with the companies they invest in. All three strategies are now offered by more than 40 of the responding managers.
Significantly, the report suggests that the UN Principles for Responsible Investment could become a market norm for fund managers in the coming years. The PRI gives investors six targets for integrating ESG issues into investment. Currently, just over 40 of the responding managers said they had not signed the PRI against just short of 40 signatories.
However, of those managers not signed up, more than ten said they would be doing so, indicating a tip towards the majority of fund managers signing up. The RI Landscape 2008 Asset Managers and Asset Owners headline findings have been issued in paper and PDF format. The underlying data from both surveys, including comparative numbers between the two can be bought from Responsible Investor and IPE. The data reveals where both asset owners and fund managers believe the responsible investment market is headed, including figures and breakdowns for prospective growth in thematic funds and investor engagement.
For more info and to access the report, go to: www.responsible-investor.com
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Sustainable Investment Research Platform
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