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November 06, 2003
European Socially Responsible Investment Retail Funds Increase in Number, Decrease in Assets
    by William Baue

A recent study reports that the number of European SRI retail mutual funds increased since the end of 2001 while the amounts of assets held by them decreased.


There are more socially responsible investment (SRI) retail mutual funds in Europe than a year-and-a-half ago, according to a new report by the Sustainable Investment Research International (SiRi) Group and Avanzi SRI Research. Until today’s launching of the SiRi Company as a for-profit enterprise, the SiRi Group was a nonprofit global network of SRI research firms. Avanzi, an SRI research firm based in Italy, is one of the member-owners of SiRi, along with Switzerland-based Centre Info, Stock at Stake of Belgium-based Ethibel, and UK-based Pensions & Investment Research Consultants (PIRC).

The study, entitled Green, Social, and Ethical Funds in Europe, also reported that there is less money in retail SRI funds than there was at the end of 2001.

Between December 31, 2001 and June 30, 2003, the number of mutual funds (officially known as Understanding for Collective Investment in Transferable Securities, or UCITS) that practice SRI in Europe increased 12 percent, from 280 to 313.

“The growth rate has can be regarded as positive when considering the difficult context for asset management and financial investment activities all over Europe,” stated Matteo Bartolomeo, Teodosio Daga, and Giovanni Familiari of Avanzi SRI Research in the report they co-authored. Adeline Hinderer and Nicki Bennett of CSR Europe, a network of businesses and national partner organizations that advocate corporate social responsibility (CSR), vetted the report.

During that same time period, the total amount of retail SRI assets fell by 16 percent, from €14.4 billion at the end of 2001 to €12.2 billion, according to the report.

“SRI assets heavily suffered [from] bearish financial markets since performance reductions has direct effects on the assets under management, in particular for equity funds,” stated the authors in the report. “The relative higher proportion (around 83 percent of total assets) of equity and balanced funds in the SRI industry compared to the total equity and balanced funds at large (45 percent) have amplified this effect.”

The report did not include SRI assets held by institutional investors, which currently number 336 billion euros, according to a recent report from Eurosif, the European SRI industry organization.

The SiRi report, the fourth in a series dating back to 1999, based its calculations on information from SRI Funds Service, a European database of all existing SRI retail funds in Europe. The survey covered Austria, Belgium, Finland, France, Germany, Ireland, Italy, Norway, Poland, Spain, Sweden, Switzerland, the Netherlands, and the United Kingdom. Portugal and Greece were also covered but researchers did not identify any funds matching the strict definitions used in this report.

The United Kingdom, Sweden, France and Belgium make up 63 percent of the total funds available in Europe, representing a slight drop from 68 percent reported in the 2002 survey.

Comparing the overall number of European SRI funds to the broader market of all European mutual funds reveals that SRI is still a niche market.

“. . . SRI funds still make up a very limited portion of all funds in Europe, and the assets under management are just 0.36 percent of the total assets managed by UCITS funds (slightly decreasing from 0.4 percent in December 2001),” the report states.

A survey released today by CSR Europe mirrored these findings. The survey, entitled Investing in Responsible Business, found that 71 percent of the 388 European fund managers and analysts interviewed believe that SRI will remain a niche market. However, 69 percent of the fund managers and analysts surveyed believe that the SRI market will continue to grow over the next two years. The survey was co-sponsored by Euronext, the first cross-border exchange for European cash and derivatives markets, and Deloitte Touche Tohmatsu, a network of audit, tax, consulting, and financial advisory services firms.

"We are encouraged to see that the SRI market is continuing to grow and we believe that the factors behind SRI investment will inform mainstream investment decisions in the next three years,” said Preben Soerensen, partner at Deloitte. “We also anticipate more voluntary integration of better social and environmental practices in business operations.”

 

 
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