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European SRI Study 2012
Foreword from Eurosif In 2011, Eurosif celebrated its tenth anniversary. In 2012, Eurosif celebrates its first year of operations out of Brussels, the Capital of Europe. But 2012 is also the tenth anniversary of the present biannual Study whose 5th edition Eurosif is pleased to present, together with the national SIFs who were instrumental in contributing to the research. Over these years, the SRI industry has witnessed significant changes and our European Sustainable and Responsible Investment Study has constantly evolved to reflect these adjustments and stay current with the industry developments. While finding a consensus around a single definition of SRI across Europe remains challenging, this Study aims to further inspire the debate and help the general public, as well as industry practitioners, policy makers and other commentators to gain insight to an increasingly sophisticated market. This is why this 5th European SRI Study brings with it a few changes as it, for instance, focuses on trends affecting individual responsible investment strategies and includes for the first time a brief review of the European impact investing market. The European SRI industry and more broadly, the European economy, are faced with its biggest challenges for decades. Yet, as this new edition shows, most responsible investment strategies have proven to be resilient, if not demonstrating exemplary growth rates since the last Study of this kind was undertaken. As in every crisis there is an opportunity, this one is no exception. We strongly believe that current environment is providing numerous opportunities for SRI. First, as the economy continues to struggle, as inflation lurks, as market volatility leads to higher risk premium requirements, cost of and access to capital will worsen. This will impact both companies and investors. Investors, whatever their motivation is, are bound to pay more and more
François Passant Executive Director
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attention to factors affecting capital risks, including Environmental, Social and Governance factors, when assessing an investment in a particular company. Companies will subsequently need to carefully manage their cost of capital and address the growing concerns of investors around their sustainability, which entails a forward-looking view about how they manage ESG aspects. The background for this is an important body of academic research suggesting that a company’s strong ESG performance is positively correlated with lower cost of capital.1 Second, at a time when regulators are seeking ways to reconcile financial markets with “the real economy” and unlock the potential for long term investment and “smart, sustainable and inclusive growth”2, SRI should be seen as a complementary resource to realize that potential. In fact, it is interesting to note that respondents to the 2012 Study saw regulatory drivers as the second most important driver for the industry, after institutional investors. Finally, Eurosif would like to especially thank the four sponsors who made this research again possible this year. Amundi, Axa Investment Managers, Nordea and Pictet have generously funded this undertaking and provided valuable comments and insights to the research. This research would not have been possible without their support. And once again, Eurosif would like to reiterate its recognition to the contribution of its Member Affiliate network and national SIF partners for their ongoing support and involvement in the Association’s development and mission to promote sustainability through financial markets. We hope that this Study will help you better understand the state of the European SRI market and where it is heading. Happy reading,
Giuseppe van der Helm President
See for example the meta-study by DB Climate Change Advisors, Sustainable Investing: Establishing Long-Term Value and Performance, 2012. European Commission, COM(2010) 2020 final