It was in the 18th century that John Wesley, a founder of Methodism, gave a definition of socially responsible investment – do not harm your neighbor through business practices, and avoid industries that can harm the health of workers.
More than 200 years later, and after suffering a dip during the financial crisis, investment flows into sustainable and ethical funds are on the rise.
The latest figures from the Investment Management Association, a UK trade body, show that net retail sales of ethical funds totalled £98m in the second quarter of this year – the highest figure since the final quarter of 2007. In the same period last year there were outflows of £8m. The IMA said total assets under management in ethical funds reached £5.6bn, up 22% on last year.
Demand for sustainable strategies – for socially responsible investing, SRI, and for consideration of environmental, social and governance or ESG issues – is expected to continue increasing. A European Sustainable Investment Forum, or Eurosif, study this year found that 89% of investment consultants anticipate an increase of client interest in ESG issues.
A report by asset manager Robeco and consulting firm Booz & Company, Responsible Investing: A Paradigm Shift, suggests that by 2015 responsible investing will reach 15% to 20% of global assets under management.
Matt Christensen, executive director of Eurosif, said: "The sustainable investment market has gone up despite the financial crisis. ESG risks are being incorporated now. SRI used to be about excluding certain sectors such as tobacco from your portfolio; now it's about monitoring how ESG issues are being incorporated into the risk management culture of companies."
