August 10, 2009
Responsible Investing Poised to Become Mainstream
by Robert Kropp
Report by Robeco Investment Management and Booz & Company expects responsible investing to grow to
as much as 20% of total assets under management by 2015.
Citing the reduction of carbon emissions and the growth of clean technologies as primary drivers, a
recently published white paper by Robeco
Investment Management and Booz & Company
estimates that the Responsible Investment (RI) market will "become mainstream within asset
management by 2015, reaching between 15%-20% of total global Assets Under Management ($26.5
trillion) and a total revenue of approximately $53 billion."
increasing awareness among companies of their Corporate Social Responsibility (CSR), increasing
prices of energy and raw materials, growing media attention to environmental, social, and
governance (ESG) issues, and ongoing changes in legislation, the report estimates that "RI is
expected to grow by 25% per annum over the next few years and become mainstream by 2015 at the
latest. The RI penetration is expected to reach between 15 to 20% of total assets under management
or around $26.5 trillion. Should the RI market enter proliferation phase, global RI growth rates
could grow to 30% per year."
The report notes that at present, pension funds and
institutional investors are the primary clients for RI investments. However, it anticipates a
significant growth among retail investors, who will be drawn to RI by their concerns regarding
clean energy, climate change, and water. According to the report, "Today, the RI market is
characterized by various niche players. By 2015, niche players are likely to be taken over by
global players or grow themselves to become sizeable specialists."
The report defines RI
as an investment strategy utilizing a broad range of criteria, including negative screening, ESG
criteria, and publication of CSR reports by companies. While many of the criteria of sustainable
investing are included, the practice by sustainable investors of investing in the Best in Class
among companies engaged in such activities as alcohol, tobacco, and weaponry, is not.