Impact Investment on the Rise

Heather Connon reports for Green Futures Magazine on the rise of socially responsible funds. (http://www.forumforthefuture.org/greenfutures/about-us)

There can rarely have been a better time for proponents of sustainable investment to make their case. This year started with the scandal of horsemeat being passed off as beef, exposing fraud and a lack of rigour in the (often tortuously complex) food supply chain; in the last two years, environmental catastrophes – including hurricanes Irene and Sandy, the prolonged US drought, and flooding in Australia and the Americas – have added to evidence of global warming; and the financial crash has exposed flaws in the banking system so substantial that they threaten the existence of the global economic system.

Awareness of the need for new ways of investing is growing, and there are some tentative signs that it is having some impact on investor behavior. EIRIS, the environmental consultancy, calculates that British investors had almost £11 billion invested in ethical funds in 2012, a 10-fold increase since June 1996, and a survey by the UK Sustainable Investment and Finance Association in 2011 found “early signs of a step change in the number of corporate pension funds that are responding to the case for responsible ownership and investment”. Across the world, investment institutions now have $13.6 trillion of assets incorporating environmental, social and governance concerns into their strategies, according to the latest report from the Global Sustainable Investment Alliance, accounting for more than a fifth of total assets under management. Investment managers responsible for $6.5 trillion of foreign capital investment have signed up to the United Nations-backed Principles for Responsible Investment, launched in 2006.