The European SRI Market is undergoing a transformative period, having significantly grown since 2008. Eurosif's 2010 European SRI Study estimates the total European SRI Market at €5 trillion AuM. The ongoing financial crisis combined with disasters such as the Deepwater Horizon environmental disaster in the Gulf of Mexico have acted as a wake-up call for many investors, making them more aware of the need to integrate Environmental, Social and Governance (ESG) issues into investment decisions. With the accelerated growth in both the Core and Broad SRI segments, institutional investor demand is playing a key role in the mainstreaming of European SRI.
Created with the support of Amundi, BNP Paribas Investment Partners, Crédit Agricole Cheuvreux and Edmond de Rothschild Asset Management, the 2010 European SRI Study highlights the scale of the European SRI Market as well as European and National trends across nineteen countries, including for the first time the Baltic States, Poland, Greece and Cyprus.
Based on the self-reporting of asset managers and self-managed asset owners, the study reveals that the total SRI assets under management (AuM) have increased from €2.7 trillion to €5 trillion, as of December 31, 2009. This represents a spectacular growth of about 87% since the data was previously collected two years before.
In order to help investors, policy makers and the public simplify what is inherently a complicated topic due to the many SRI strategies available, Eurosif utilises Core SRI (estimated at €1.2 trillion) and Broad SRI (estimated at €3.8 trillion) as a means to segment the SRI market. Core SRI consists of norms- and values- based exclusions and different types of positive screens while Broad SRI encompasses simple exclusion, engagement and integration approaches.
The share of retail investors is also on the rise, according to the Eurosif study. While the SRI market remains driven by institutional investors (representing 66% of the total AuM), the share of retail investors has increased in almost all the countries covered in the study, with Austria, Belgium, France and Germany leading the way.
Another important finding of the study is that bonds are now the favoured asset class among SRI investors, representing 53% of total SRI assets, while equities have dropped down to 33%. Microfinance funds are also beginning to generate interest from SRI investors and Eurosif predicts the alternative asset class to grow quickly as investors demand integration of ESG criteria into more diverse areas.
The study makes it clear that European SRI is in a remarkable place today when even compared to the bull market prior to the financial crisis. The Eurosif Executive Director, Matt Christensen, concludes:
The previous questions about ‘financial performance' of SRI funds are now being replaced by queries about how to best measure the ESG impacts in order to meet the rising expectations of investors. These newer questions about how to best tackle and measure ESG factors in fund management will remain an evolving process with many unforeseen and interesting innovations in the coming years.
The European SRI Study is available for download from Eurosif's website at www.eurosif.org.
Eurosif (the European Sustainable Investment Forum) is a pan-European network and think-tank of national Sustainable Investment Forums whose mission is to Develop Sustainability through European Financial Markets. Current affiliate members of Eurosif include institutional investors, financial service providers, academic institutes, research associations and NGOs. The association is not-for-profit entity that represents assets totaling over €1 trillion through its Member Affiliates.