- The amount of money investment funds pour into socially and environmentally conscious companies grew even while total money invested dropped, research by Thinking Ahead Institute found.
- The organization’s Global 500 research, released Monday, found assets managed consistent with environmental, social and governance (ESG) mandates by the 500 largest asset managers rose by 23.3% in 2018, while overall assets under management declined 3% from the previous year.
- "Sustainability has now become an unavoidable issue, and talk on sustainability is becoming action," said Bob Collie, head of research at the Thinking Ahead Institute. "There is obviously a saying-doing gap in a lot of places, but perhaps more important right now is the doing-impact gap: Our ability to create a more sustainable economy lags behind the desire."
Under socially and environmentally conscious investing, fund managers look for companies that try to match their drive for profitability with a mission to be sensitive to environmental, social, and good-governance issues.
The movement to increase ESG principles in business got a big boost in August when the CEOs of 185 major corporations — including Apple, JPMorgan Chase, and Amazon — signed a statement pledging to prioritize broader interests than just shareholder return as part of their mission. Among those interests are employees and communities.
Nancy Koehn, a historian at Harvard Business School, said the statement was written out of a perception that "business as usual is no longer acceptable."
Under the research findings, discretionary assets under management by the 500 largest global money managers totaled $91.5 trillion at the end of 2018, down 3% from the end of 2017. Median assets under management was $45.6 billion, up from $44 billion.
BlackRock, with almost $6 trillion under management, was the largest asset manager in the world. Vanguard, with $4.9 trillion, and State Street, with $2.5 trillion, round out the top three.
Two other findings:
- The amount managers invested in companies adhering to ESG principles increased to $8.919 trillion in 2018, up from $7.571 trillion in 2017.
- The amount invested in companies with ESG mandates increased to $1.459 trillion, up from $1.193 trillion.
"Good culture does not appear by accident," said Collie. "Our ability to assess and adapt it is developing. There’s room for improvement here."