The last couple of years have clearly been times of great opportunity for the promotion of responsible investment in general, and the Eurosif 2010 survey figures show a significant uptick in European SRI assets under management, now at €5 trilllion
The survey, presented at a joint event hosted by CA Cheuvreux and UKSIF, also shows the high level of diversity in SRI investment across Europe, as well as between Europe and the US. In terms of the main drivers for SRI investing, institutional investors are still largely driving demand, though retail is growing rapidly, especially at the top end amongst High Net Worth individuals. Equally, in terms of asset allocation, whilst equities have traditionally been the core focus in the UK, continental Europe is now more characterised by bonds than equities.
The age-old challenge of ensuring a clear definiton of an SRI investment becomes ever-more important as the industry grows. Future debate will focus on whether the traditional notions of ‘Core’ (values-based screening approaches) and ‘Broad’ (SRI factors integrated into a non-SRI specific investment discipline) SRI investment strategies will remain appropriate as this fast growing market continues to develop. There is still a need for asset owners to be clearer about what SRI means to them, and for that understanding to be applied more universally in manager selection and monitoring.
Greater investment manager accountability through the UK Stewardship Code and the intention of the European Commission to promote a similar EU-level initiative will also place closer focus upon transparency and quality of process.
If nothing else, it’s clear that SRI investing is no longer on the side-lines. It is a healthy, growing, core feature of investment strategy. The challenge now is to translate the fact that SRI is a mainstream concept into a well-managed and accountable mainstream practice.