C-SocPhil issues new report on sustainability trends in US alternative investments
New C-SocPhil research documents 16% growth in sustainable alternative investments
WASHINGTON, DC – In late October, US SIF Foundation released Sustainability Trends in US Alternative Investments, an in-depth report on the market of US alternative investment funds that incorporate environmental, social or governance (ESG) criteria. The report measures the growth of the ESG alternative investment market from 2010 to 2011 and tracks emerging trends, including the most prevalent ESG themes and the role that investor networks and field-building organizations are playing in supporting the industry’s growth.
Based on data collected by a team of researchers at Tellus Institute’s Center for Social Philanthropy, led by principal investigator Joshua Humphreys and lead analyst Ann Solomon, $80.9 billion was identified in 375 ESG alternative funds at the outset of 2011. This represents a 15.9-percent growth in assets for the ESG alternative investment market since the beginning of 2010, when $69.8 billion was identified as invested through 346 funds.
The alternative investment funds tracked in Sustainability Trends span the asset classes of private equity and venture capital, property, and hedge funds. Private equity and venture capital funds led the field numerically with 233 distinct funds, while property funds dominated the field in asset-weighted terms, with a combined total of $44.3 billion under management. A list of individual fund names and fund managers are provided in appendices to the report.
“Sustainable and responsible investing – the incorporation of environmental, social and corporate governance (ESG) criteria into investment management activities – has become an increasingly important part of the capital markets,” said report lead author Joshua Humphreys, director of the Center for Social Philanthropy. “Within this growing investment field, now sized at more than $3 trillion in the United States alone, alternative investments are attracting unprecedented attention across asset classes, geographies and ESG themes.”
Investor demand was a major driver of the ESG alternative market’s recent growth. Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment (US SIF), commented: “Alternative investments in sustainable and responsible investing are attracting a wide range of investors – high-net-worth families and individual ‘angel’ investors, mission-driven institutional investors such as philanthropic foundations, hospitals and faith-based institutions, and some of the largest and most prominent pension funds and private equity firms.”
Funds’ approaches to ESG incorporation were highly varied, and included a wide diversity of ESG themes. US SIF Deputy Director and Research Director Meg Voorhes said: “The majority of the alternative fund managers we reviewed consider several ESG criteria simultaneously, but environmental factors predominate. In particular, we see interest in green building, climate change issues, clean technology, renewable energy and energy efficiency. These managers look to produce market rates of return for their clients while helping to foster businesses, generate jobs or introduce products that will yield social and environmental benefits.”
A free Executive Summary of the report is available here. Electronic and hard-copy versions of the full 35-page report is available here, free for US SIF members and fee-based to other accredited investors.
The report was made possible with the support of Lead Sponsor Azimuth Investment Management, LLC, and the following Supporting Sponsors: Arborview Capital, DBL Investors, Ecotrust Forest Management, Inc., The Lyme Timber Company, Mission Markets, SJF Ventures, TerraVerde Capital Partners, Trillium Asset Management, and Working Lands Investment Partners, LLC.
For more information, please contact lead author Joshua Humphreys, jh@socialphilanthropy.org or (617) 575-9660.
ABOUT THE CENTER FOR SOCIAL PHILANTHROPY
The Center for Social Philanthropy (C-SocPhil) is an innovative, nonprofit social enterprise working on the frontiers of philanthropy and finance. We provide data, research, resources and tools to help foundations, donors, and other mission-driven investors leverage their assets more fully for long-term, sustainable social and environmental impact. The Center is housed at Tellus Institute, a think tank in Boston pursuing a Great Transition to a more just, sustainable and equitable global civilization.
ABOUT US SIF AND US SIF FOUNDATION
US SIF Foundation, a nonprofit 501(c)(3) organization, supports the educational and research activities of US SIF: The Forum for Sustainable and Responsible Investment. US SIF (http://www.ussif.org) is the US membership association for professionals, firms, institutions and organizations engaged in sustainable and responsible investing. US SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners.
