The study by Swiss Sustainable Finance, led by Sabine Döbeli, confirms the growing importance of the concept of impact investing.
The sustainable investment market recorded further double-digit growth in 2020, although lower than in 2019. According to the “Report on sustainable investment in Switzerland 2021”, the amount of capital managed in Switzerland according to principles of sustainable investment amounted to CHF 1,520.1 billion, which represents a remarkable increase of 31% for the period concerned. Market data collected by Swiss Sustainable Finance (SSF) also confirms the growing importance of the concept of impact investing. For the sustainable investment market, this is a major development.
According to the SSF study published today and carried out in collaboration with the Center for Sustainable Finance and Private Wealth (CSP) at the University of Zurich, this new growth in the sustainable investment market is mainly due to two factors : the increased use of sustainable investment approaches for existing assets, on the one hand, and the positive performance of the market in 2020, which represents around a third of the observed growth, on the other. To this is added, but to a lesser extent, the net raising of capital by existing sustainable investment funds. The volumes of capital invested in sustainable investment funds increased by 48%, representing for the first time 52% – thus more than half – of the Swiss fund market (2019: 38%). “This success is also reflected in the increase in investment volumes from institutional investors (+ 15%) and sustainable management mandates (+ 29%)”, underlines Sabine Döbeli, Managing Director of SSF. At the same time, we are witnessing an increasing sophistication of investment practices: some 87% (2019: 83%) of the total volume of sustainable investments are subject to two or more combined sustainable investment approaches.
Impact investing is gaining ground
The sustainable investment market is at the dawn of a third era, dubbed “sustainable finance 3.0” by the financial sector. ESG criteria are now widely integrated in the financial markets: they now require professional investors to pay more attention to the effects of their investments. The study carried out this year shows that private investors, too, are placing more and more importance on the impact of their investments. Thus, the ESG engagement approach is progressing strongly (2nd growth rate) and now ranks second among investment approaches, and no longer third. The “Impact investing” category once again exhibits the highest growth rate (70%) of all sustainable investing approaches. The increasing importance that investors attach to the impact of their investments is also reflected in their reactions to possible violations of sustainable development standards by the companies in which they hold an interest. Until now, these were generally sanctioned by exclusion from the investment universe. In 2020, on the other hand, the most frequent measure taken by both asset managers and asset owners is to initiate a dialogue of influence with the company in question. According to Professor Timo Busch, Senior Fellow at the CSP and responsible for the scientific support of the project, “if we want to change behavior, the dialogue approach is much more effective than a simple exit strategy”.
Sustainability certificates and labels, guidance tools
Independent verification of investment processes is an important step towards greater transparency and trust. Certificates and sustainability labels are increasingly accepted, and that’s a good thing. While last year, barely 6% of sustainable investments benefited from independent certification, this proportion was quintupled at the end of 2020. Concretely, over the past year, 32% of sustainable investments benefited from certification issued by third parties (FNG label, GRESB, ISR label, Luxflag, etc.). However, we are still very far from a single and binding definition of the true meaning of the “sustainable” qualification; market players will still have to make a lot of efforts in this direction, especially as investors interested in the practice of sustainable investment are always demanding more clarity and transparency in this area. This is why SSF will publish in June recommendations on the transparency of sustainable investment portfolios, drawn up in collaboration with asset managers and institutional investors.
This study benefited from the support of the six main sponsors AXA, Kieger, Schroders, Swiss Life Asset Managers, UBS and Union Bancaire Privée (UBP), as well as the six sponsors Amundi Asset Management, Banque Cantonale Vaudoise, Basellandschaftliche Kantonalbank, GAM Investments, Graubündner Kantonalbank and swissQuant Group AG. SSF would like to thank all its sponsors here for their valuable support.