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European SRI Study 2012
Aggregating SRI Strategies In previous studies Eurosif has added several strategies to produce aggregate figures, labelling them Core SRI and Broad SRI. During the development of the new classification of RI strategies in the context of this Study, the question of what SRI is and which strategies should be aggregated to produce a figure for SRI was discussed. During these debates, it became clear that the decision of whether something is ‘SRI’ is very much coloured by the cultural and historical diversity of Europe and that the notions of Core and Broad were not relevant any more to reflect the increasing sophistication of the market and the increasing simultaneous use of multiple strategies. In addition, some countries and organisations have or are in the process of developing local legal frameworks for the use of ‘SRI’ or ‘Eco’ in relation to asset management and investment funds. At this stage, no consensus on a unified definition of SRI exists within Europe, regardless of whether that definition focuses on processes used (referred to as strategies in this Study), the societal outcomes sought or the depth and quality of ESG analysis applied. For some, the focus of SRI is on investment strategies that select investments based on their sustainability credentials. The motivation is to choose to fund companies and projects for their positive effect on society or expected outperformance of other assets as the world’s consumption shifts to more sustainable products. The strategies aggregated according to this view would typically be Sustainability themed and Best-in-Class. For others, SRI is the process of selecting or deselecting investments based on a screen or analysis incorporating environmental, social and governance issues. The motivation is not only to select the best companies as above, but also to apply a screen to avoid companies that have bad business practices as defined by certain norms or standards. The strategies aggregates according to this view would typically be Sustainability themed, Best-in-Class and Norms-based screening, as they follow a structured, comparable and externally measurable process and incorporate a screening process covering the three ESG criteria. Further, there are some who believe that any investment strategy that includes a focus on environmental, social and/ or governance issues should be counted as SRI. The motivation is that one responsible investment strategy is not inherently better than another, and therefore they should be treated as equals. According to this view, all strategies would be included in the aggregate. The question of producing aggregate figures is relevant because, to give an example, one cannot take the figure for
Best-in-Class and add it to the figure for Exclusions because a significant portion of assets will be subject to both strategies. Adding the two figures thus leads to double counting of assets, which is especially pertinent considering that most of the assets in the Study are subjected to more than one RI strategy. If a fund with €3 million in assets reports both Best-in-Class and Exclusions, €3 million will be reported in each individual strategy. However, if Best-in-Class and Exclusions are added together, only €3 million should be reported in this aggregate not €6 million. In this report, Eurosif takes the pragmatic approach by acknowledging that there is no universal definition of SRI. Responsible investment strategies are therefore presented individually in the European and all the country sections. Readers who wish to group certain strategies together may refer to the Appendix for selected aggregate data removing double counting.
Survey Methodology The methodology is consistent with previous studies; the main change is the adoption of amended classifications and definitions for Sustainable and Responsible Investment strategies. For reporting purposes, previous data has been recalculated using the new methodology where possible. The European fund management industry is highly internationalised. Therefore, SRI funds can be domiciled in one country, managed in a second and sold in a third, either within Europe or overseas. As a result, defining national SRI markets is not straightforward. While fund managers are rather easy to locate, ultimate investors are not. For this reason, and to remain consistent with the methodology of previous studies, in the country sections Eurosif generally defines a national market by the country where the SRI assets are being managed (i.e. where the SRI asset management team is located).14 As a consequence, the Study measures the size of the SRI asset management markets, rather than the SRI markets (supply not demand). The survey covers asset managers and asset owners based in Europe or managing European assets, and covers both institutional and retail SRI assets. Respondents respond to a questionnaire developed by Eurosif in collaboration with national SIFs. While responses have been verified to ensure their accuracy, the survey is based on self-reporting. The Study covers 14 distinct markets in detail: Austria (AT), Belgium (BE), Denmark (DK), Finland (FI), France (FR), Germany (DE), Italy (IT), Netherlands (NL), Norway
For example, if a Swiss asset manager with an SRI team based in Switzerland is managing assets for a French asset owner, this is counted in the Swiss market. If the SRI team is located in London, it is counted in the UK market.
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