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July 20, 2011
UKSIF Reflects on Twenty Years of Growth in Sustainable Investment
    by Robert Kropp

A report issued by the organization celebrates the growth of sustainable investment in the UK to $1.5 trillion, while acknowledging that more needs to be done to meet national emissions reduction and renewable energy goals.

UK Sustainable Investment and Finance (UKSIF) used the 20th anniversary of its founding to produce a report entitled Taking Responsibility: Achieving Resilience, that looks back on the growth of sustainable investment in the UK while acknowledging that its "task is only just beginning."

"Over the next 20 years, sustainable investment and finance will move even further center stage as the world faces the challenges of moving to a resilient and resource-efficient society," the report states.

At the time of UKSIF's founding in 1991, an estimated $503.5 million was invested in what the organization describes as UK green and ethical funds. By 1996, the report states, investment in green and ethical funds exceeded $1.6 billion, while environmental, social, and corporate governance (ESG) factors were considered in at least $96.8 billion worth of investment by institutions.

Between 1996 and 2011, membership in UKSIF grew from 72 financial institutions, investment professionals, financial advisors, and pension funds and foundations to 240. During the same period, sustainable investment in the UK grew to $1.5 trillion. Factors in the substantial growth included a law passed in 2000 which required pension funds to report on whether they consider ESG issues in their investment strategies.

The UK has also become one of the leading countries in terms of membership in the United Nations' Principles for Responsible Investment (PRI), which was launched in 2006. With 118 signatories, the nation is second only to the United States.

However, as Penny Shepherd, UKSIF's Chief Executive, stated, "By 2031, we will be facing the 'perfect storm' of rising demand for food and resources while mitigating and adapting to climate change. The UK must grasp the nettle and show global leadership on sustainable investment and finance."

A recent development in the effort to further mainstream sustainable investment in the UK is an independent review into UK equity markets launched by the Department for Business, Innovation and Skills (BIS). The review will be conducted by Professor John Kay, who said, "Equity markets are a principal mechanism of control and accountability for Boards and senior managers, and a means by which individuals and households provide for retirement and other long term financial goals…I believe this is probably the most important issue in industrial policy today."

In addition to supporting the Kay Review and other public policy debates, UKSIF is a supporter of the Green Investment Bank, which is expected to become operational in 2012. "A Green Investment Bank will be an essential means of unlocking the enormous scale of private sector investment needed" to meet the country's legal commitments to reduce carbon emissions and increase its reliance on renewable energy, according to a report published in March.

The report was issued by Parliament's Environmental Audit Committee, whose Chair, Joan Walley, stated, "The UK desperately needs a game-changing injection of private sector investment if we are going to meet our climate change targets and move to a green economy."


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