While offering the standard disclaimer that past performance is no guarantee of the future, I nevertheless offer some predictions for, and reflections about, the future of sustainable and impact investing.
The field has grown from $639 billion in assets in 1995 to $8.72 trillion in 2016. It will be very surprising if the next decade does not bring continued expansion in assets and in the types of investors who control those assets, as well as further growth in the products and services available.
High net worth individuals, on their own or as part of a family office or foundation, will increasingly drive their assets into this space. Foundations, historically slow movers in changing their investment process, will feel increasing pressure from the leadership shown by many smaller foundations and several large ones in connecting their mission to their endowments. Pension funds, including private sector funds that might be motivated by recent ERISA changes, will take their time, but more will offer sustainable investment options, especially if plan participants demand this.
Our sector should spend less energy debating terminology and whether one asset class is superior to another.
There is no winner in these debates. This field has been around for more than 30 years and firms will continue to use different terminology. It is more important to have a shared and compelling message on why we do what we do than identical vocabulary.
ESG integration will be the preferred strategy among many new entrants to the industry, but the field will remain rich in approaches.
Survey data from our biennial Report on US Sustainable, Responsible and Impact Investing Trends suggests that US money managers are applying ESG integration processes to assets that totaled $5.8 trillion at the beginning of 2016. At the same time, there are firms with decades of SRI experience as well as new entrants trying to address thorny issues like mass incarceration, income equality and clean energy through a multi-faceted investment approach, often including shareholder engagement.
Read more from Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment (www.ussif.org) and the US SIF Foundation and leads the organizations’ overall direction. Posted in the September 2017 issue of the GreenMoney Journal: http://greenmoneyjournal.com/reflections-from-a-field-builder-the-next-25-years-of-sustainable-responsible-and-impact-investing/