US SIF Foundation Releases Report on Impact of Sustainable Investment
New US SIF report details four broad areas of significant impact
WASHINGTON, DC – Sustainable, responsible and impact investors have influenced the investment industry, companies, governments and other actors to address environmental, social and governance (ESG) challenges in four major areas, according to The Impact of Sustainable and Responsible Investment, a report released today by the US SIF Foundation.
Drawing upon a range of data, surveys and examples, the report focuses on four significant impacts of sustainable, responsible and impact (SRI) investors over the past 25 years. SRI investors have:
- changed the investment industry, leading to more SRI products and greater access to expert practitioners;
- improved public companies by stepping up active shareholder ownership and engagement on ESG issues;
- aided communities and individuals via community investing and other initiatives; and
- influenced public policy and launched organizations to promote sustainable investment.
First issued in 2013, this updated report notes that in the United States, according to biennial surveys by the US SIF Foundation, the value of assets that take into account ESG factors in investment analysis or shareholder engagement grew 76 percent between 2012 and 2014 to reach $6.57 trillion—or one out of every six dollars under professional management.
With this growth has come new evidence of SRI investors' influence. For example:
- In 2016, in response to the growing demand for and appreciation of ESG factors in investment, MSCI and Morningstar each launched products to provide investors with assessments of how well the underlying companies in a wide swath of mutual funds perform on ESG issues.
- In response to resolutions from concerned investors, the percentage of S&P 500 companies that allowed shareholders a formal mechanism to propose candidates for board elections in the company's annual meeting materials increased from just 1 percent in 2013 to 20 percent in 2015. These developments raise the prospect of more competitive board elections and greater board accountability.
- Numerous companies have made improvements in their environmental practices. For example, several major US food companies agreed to obtain 100 percent of the palm oil for their products from responsibly produced sources that do not clear cut tropical forests.
- Community and place-based investing, both domestically and internationally, have gained new adherents among high net worth individuals and institutional investors interested in focusing on specific geographic regions.
- More than 1.2 million investors and their representatives have commented on a 2011 petition at the US Securities and Exchange Commission to require publicly-traded companies to report their political spending. The volume of comments—the vast majority in favor of the petition—is a record in SEC rule-making history.
- US SIF and sustainable investors helped persuade the US Department of Labor to rescind a 2008 bulletin that had discouraged fiduciaries for private sector retirement plans from considering environmental and social factors in their investments. In its place, Labor Secretary Thomas Perez issued guidance that fiduciaries may incorporate “ESG-related tools, metrics and analyses to evaluate an investment's risk or return or choose among otherwise equivalent investments.”
“We believe that this report is the broadest assessment to date of the many ways in which SRI investors have been a force for positive change,” said Lisa Woll, CEO of US SIF and the US SIF Foundation. “Since we released the first edition of this report in 2013, the interest in sustainable and impact investing has grown dramatically and its practice has become more widespread. With the recent Department of Labor guidance that makes clear that fiduciaries can consider ESG factors for retirement plans, we expect this trend to continue. That is good news for investors, companies and communities across the globe.”
The US SIF Foundation is a 501c3 organization that undertakes educational, research and programmatic activities to advance the mission of US SIF. The Foundation houses the Center for Sustainable Investment Education, which serves the growing need of investment professionals in the United States to gain expertise in the field of sustainable, responsible and impact investment. The Center provides education, research and thought leadership on sustainable investment to investors, investment advisors, consultants and analysts. Online and live versions are offered of the Fundamentals of Sustainable and Responsible Investment, a resource for investment advisors, financial planners and other financial professionals.
US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable, responsible, and impact investing across all asset classes. Our mission is to rapidly shift investment practices towards sustainability, focusing on long-term investment and the generation of positive social and environmental impacts.
US SIF members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, community investing organizations, nonprofit associations, and pension funds, foundations and other asset owners. Learn more at www.ussif.org.