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The Growth of Sustainable Investing

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05.09.2021

There has been tremendous growth in the amount of investment capital directed towards climate change, environmental issues and sustainable investing. Annual cash flow into sustainable funds more than doubled from 2019 to 2020 and has increased tenfold since 2018. What has caused this rapid growth, and what can be expected for the future growth of sustainable investing?

It’s no secret that sustainable investing has continually garnered more attention over time. Since 1995, total assets held in sustainable investments have increased 25-fold. This growth has been incredibly consistent over time, as 31 of the last 32 quarters have resulted in positive quarterly cash inflows into sustainable funds. Since the third quarter of 2015, more cash has flowed into, rather than out, of sustainable investment opportunities.

A 2020 Trends Report by the United States Forum for Sustainable and Responsible Investment noted total sustainable investment assets under management reached $17.1 trillion — a 42% increase since 2018. Alternative investment vehicles for sustainable investing have grown across the board, as the number of property funds, REITS, hedge fund assets and total investment vehicles have all increased over the past five years. Today, it’s estimated that 33% of all U.S assets under professional management are tied to sustainable investing or related to ESG practices.

Let’s investigate a few of the reasons why ESG investments have been so popular.

One of the main catalysts for growth in sustainable investing is that investments in ESG have outperformed their........

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