The Global Sustainable Investment Alliance, or GSIA, was founded in 2010. It is a worldwide partnership of sustainable investment organizations consisting of seven members. Those members are:

• US SIF - The Forum for Sustainable & Responsible Investment (United States)
• Eurosif - The European Sustainable Investment Forum (Euro Zone)
• RIAA - Responsible Investment Association Australasia (Australia)
• RIA Canada - Responsible Investment Association Canada (Canada)
• UK SIF - UK Sustainable Investment & Finance Association (United Kingdom)
• VBDO - Dutch Association of Investors for Sustainable Development (Netherlands)
• JSIF - Japan Sustainable Investment Forum (Japan)

The GSIA's mission is "...to deepen the impact and visibility of sustainable investment organizations at the global level." The GSIA envisions a world in which every region has similar organizations that are focused on advancing the sustainable investment community. The hopeful goal is for its socially responsible concepts to become woven into the world's financial systems.

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Global Sustainable Investment Review - 2020

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GSIA published its fifth GSIR in July 2021. This report indicated a 15% increase in SRI (sustainable and responsible investment) over the last two years.

This increase brings the SRI total to $35.3 trillion in U.S. dollars, which means 36% of all professionally managed assets within its regions are covered!

From 2018 to 2020, growth has been continuous and extremely strong, with Canada representing the largest regional increase at 48% growth. During that same timeframe, the United States experienced growth of 42%, Japan 34% growth, and Australasia 25% growth.

These growth numbers are representative of a region's most recent demand for SRI and ESG investment products.

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An Overview of the Global Sustainable Investment Market

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The country with the highest proportion of sustainable investment assets is Canada. It stands at 62%. It is followed by:

• Europe (42%)
• United States (33%)
• Japan (24%)

Together, due to the size of their markets, Europe and the United States hold more than 80% of sustainable investing assets globally.

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Sustainable Investing Strategies

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The most typical sustainable investment strategy is ESG (environmental, social, and governance) integration. But negative screening, corporate engagement and shareholder action, norms-based screening, and sustainability themed investing are also common.

All of the above can be combined to produce even greater results, and due to the obvious growth over the last few years, the approach is intriguing to more and more investors.

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GSIA - Regional Sustainable Investment Forums

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There are different drivers used to develop the sustainable and responsible investment market in various regions.

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The European Sustainable Investment Forum

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The two primary drivers in Europe (and anywhere for that matter!) are industry collaboration, and policy and regulatory changes.

The European market is the most developed market in the world as it relates to Green and Sustainability-Linked Bonds - a specific financing vehicle that ties a company's interest rates to greater energy efficiency outcomes over the life of the bond. Though many sustainability experts question the usefulness of these types of debt instruments and speed at which they address global climate concerns, these financing vehicles without question represent a positive shift in the market. Many large asset managers maintain a strong commitment to ESG integration within Europe.

Europe is home to close to EUR 10.7 trillion in total sustainable investing assets.

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Responsible Investment in the U.S. and Canada

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In the United States, the total of sustainable investing assets is reportedly a whopping $17 trillion.

ESG integration and Sustainability-Themed Investing are among the most common advancements as of 2020. Since President Biden was elected, SRI has also gained a lot of attention in the United States. There are now more than 120 investors and organizations that endorse the Investor Statement of Solidarity to Address Systemic Racism and Call to Action.

Canada accounts for 7% of SRI assets globally, which equates to $3.1 trillion in Canadian dollars. The Canadian market is small in comparison to the US and Europe, but Canada has the highest percentage of sustainable-to-total assets (61.8%) in the world.

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Australia and New Zealand Sustainable Investments

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Australia and New Zealand have seen a 25% increase in sustainable investing assets since 2018. The value is AUD 1,295 bn, which is 3% of the world's total sustainable investing assets.

Regulatory and industry drivers are responsible for market growth in these countries. Australia has become more aligned with climate change initiatives where some leaders are adopting various strategies to move into a low carbon economy.

In New Zealand, The Climate Change Response (Zero Carbon) Amendment Act was passed in 2019. Since then, the country has been able to develop and implement climate change policies in accordance with the Paris Agreement.

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The Japan Sustainable Investment Forum

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The Japan Sustainable Investment Forum is in collaboration with local institutional investors with the goal of integrating sustainable investment practices into the country's financial systems.

The country experienced 34% growth from 2018 to 2020, which represents JPY ¥310,039 bn. Japan has 8% of the world's total sustainable investment assets, so slightly more than Canada.

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Africa's Responsible Investment Market

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Compared to the report released in 2018, Africa has shown remarkable growth in the responsible investment market in both Kenya and Nigeria. South Africa continues to be the financial focus in this region.

Because of policy and regulation changes, as well as the development of carbon markets in both East and West Africa, growth has been steadily increasing. Green Bond markets within the region are driving more sustainable investment opportunities.

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The Future of Responsible Investments

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The Global Sustainable Investment Alliance is predicting ESG assets to exceed $50 trillion in USD by the year, 2025.

New asset classes like sustainability linked bonds and loans are being developed, which should only contribute to the next wave of growth. Companies are starting to emerge to bring these themes to banking assets too, particularly in the US!

Supportive government policies and other commitments are sure to drive continued growth as every day, more people, companies and governments are realizing the importance of responsible investing.

This work can't happen fast enough as the threat of climate change needs to be more effectively addressed.

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