Capital allocated to sustainable, responsible and impact investing now accounts for around a quarter of total assets under professional management in the U.S., according to a new survey by the US SIF Foundation.

In 2018, that represented US$12 trillion, a 38 per cent increase on US$8.7 trillion in 2016, which has been largely driven by asset managers. For these managers, and their institutional investor clients, the current top three issues they’re keen to address are carbon, with relation to climate change; tobacco; and conflict risk.

“Money managers and institutions are utilizing [environmental, social and governance] criteria and shareholder engagement to address a plethora of issues including climate change, diversity, human rights, weapons and political spending,” said Lisa Woll, chief executive officer of the US SIF Foundation, in a press release.

Read: Inclusion of ESG in fixed income isn’t keeping up with investor demand: research

Money managers that participated in the survey cited demand from clients as their biggest motivation for incorporating ESG, while most institutional investors said fulfilling their missions and pursuing social benefit were their top reasons for doing so. Between 2016 and the middle of 2018, 165 institutional investors and 54 investment managers  filed or co-filed shareholder resolutions on ESG issues. 

The survey demonstrates that investors are truly beginning to understand the value of ESG considerations as an effective way of managing risk and improving investment performance, said Amy O’Brien, global head of responsible investing at Nuveen. “With an intensified focus on important issues such as climate change and corporate board gender diversity, we hope to see creative solutions that will help address these challenges and, in turn, drive shareholder value in the years ahead.”

Read: NAV Canada pension sees investment opportunities, risks in ESG

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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