Variations of sustainable investing, impact investing and responsible investing have been on the rise in the last decade and have gained in global popularity.
- In 2007, the European Investment issued its first green bond, whose proceeds of approximately 600 million EUR were used to fund renewable energy and energy efficiency projects.
- In 2008, following suit, the World Bank issued its first green bond and, as of 2017, over $155 billion worth of public and corporate green bonds have been issued.
- In 2018, the Seychelles government issued the first blue bond whose $15 million worth of proceeds will fund marine protection and sustainable fisheries.
- In 2018, the $11.6 trillion of all professionally managed assets (approximately 25%) were under ESG strategies compared to $3 trillion in 2010 (HBR).
- Mutual funds and exchange-traded funds with a focus on sustainability raked in $20.6 billion of total new assets in 2019 (CNBC). This is approximately 4 times that of 2018, which raked in $5.5 billion of new assets.
The success of these financial instruments demonstrate the shifting mindset of investors. Investors are becoming more environmentally and socially aware, and can no longer ignore the consequences of their investment decisions. Climate change, plastic pollution, and clean water are becoming catastrophic issues that we can’t ignore. Both global awareness and increasing pressure from consumers are driving investments with stronger ESG criteria strategies.
The size of the sustainable investment market or impact investment market may be hard to measure because we have yet to formally adopt a globally accepted set of criteria, but the trend is clear. Investments In environmentally and socially conscious companies are becoming more than just a trend, but rather the norm.