Ethical investments in Europe - Statistics & Facts

Published by James Cherowbrier, May 20, 2019
Socially responsible, ethical investments (SRI) are those which combine investors' financial objectives with their concerns regarding environmental, social, and corporate governance (ESG) issues. Over time and in the context of international agreements, assets managed on the European SRI market nearly doubled in value, from 251 billion euros in 2010 to 476 billion euros in 2016. The number of SRI funds also grew to 2.4 thousand in 2016, with the majority domiciled in Luxembourg and France. The market also became significantly diversified in terms of strategies used whilst investing.

SRI investments frequently employ more than one strategy at a time. Looking at particular segments, the greatest increase in value was observed in the European exclusion-based SRI strategy, which grew exponentially from 184 billion euros in 2002 to 10 trillion euros invested that way in 2015. These strategies, also sometimes referred to as negative screening strategies, involve removing companies which engage in controversial activities (i.e. cluster munition production) from the investible portfolio.

Other strategies present on the European market included sustainability-themed and best-in-class investments. Sustainability-themed funds (i.e. renewable energy and climate change) invest into companies and organizations with the intention to generate measurable environmental impact for the preservation of the natural environment. The value of sustainability-themed investments in Europe grew from 6.9 billion euros in 2005 to 145.3 billion euros in 2015. In that year, French and Dutch investors led the ranking in that area, with approximately 43 billion euros invested on the French market and further 37 million in the Netherlands.

Best-in-class is another strategy, which noted growth on the European market, from 57.8 billion euros in 2005 to nearly 494 billion euros in 2015. Best-in-class investments, also called positive screening, target companies that are leaders on the market in meeting environmental, social and governance criteria. In 2015, France was again the leader in the best-in-class investments market among other European countries, with approximately 322 billion euros invested on the French market.

Impact investments are high-net-worth-individuals' investments of private wealth into companies that follow ESG principles. Over time, this distinct category grew to amount to over 98 billion euros in Europe in 2015. The most popular impact investment areas, according to global impact asset managers operating in Europe in 2014, were financing of small and medium enterprises, followed by sustainable agriculture, clean tech, microfinance and affordable housing.

An interesting avenue for impact investments was provided by venture philanthropy and social investments organizations. In 2015, their investees on the European market included social enterprises and NGOs, and the main beneficiaries were economic and social development organizations, focusing specifically on children, youth and people living in poverty.

A survey on SRI awareness was carried out in France in 2015. Among financial product holders in France, 67 percent have never heard of responsible investing, and only eight percent knew precisely what this fund category was. Furthermore, 51 percent of French investors, who were very familiar with the topic of responsible investing, confirmed that an introduction of a public body recognition label for SRI funds would further motivate them to choose SRI investments. In 2016, the survey showed that 60 percent of the British population believed the financial sector could make high returns, while investing ethically and responsibly.



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Socially responsible ethical investments (SRI) in Europe

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Socially responsible investment strategies in European countries

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