Sustainable investment assets grew to US$35.3 trillion globally last year amid mounting concerns about societal inequities and climate change. That’s about $1 of every $3 managed globally seeking out a profit from environmental, social and governance concerns, according to Global Sustainable Investment Alliance’s report last month.
It’s an impressive number. But the bulk of that money—some US$25 trillion—is in a strategy called “ESG integration,” also known as “ESG consideration.” In theory, this means that managers are including ESG data in their financial models, according to GSIA.
In practice, money managers may be “aware of” and “take into account” ESG factors when making investment decisions, said Rob Du Boff, an analyst at Bloomberg Intelligence. But they’re not necessarily compelled to act on that information, he said.