Investment is critical to achieving the United Nations Sustainable Development Goals for 2030—investment in people, economies, infrastructure, and technology. Sustainable investment refers to all areas related to sustainable, low-carbon development with the goal of improving risk-adjusted long-term investment returns. Sustainable investment grew out of a decades-old investment strategy and movement known as socially responsible investment (SRI), which gradually came to incorporate consideration of environmental protection, social responsibility, and corporate governance, also referred to as “ESG”. Sustainable investments seek not only competitive financial returns, but also aim to reduce ESG risks and provide solutions to social and environmental problems.
Europe has maintained its position as the world’s largest sustainable investment market for nearly a decade and the total investment in sustainable assets have grown at an average annual rate of 8% to US$ 14 trillion in 2018. At US$ 12 trillion in 2018, the sustainable investment market in the United States is approaching the size of the European market. The fastest-growing market is Japan, whose sustainable investment volume was only US$ 5.9 billion in 2012, rising to US$ 2.18 trillion by the end of 2018 and thereby becoming the world’s third-largest sustainable investment market, accounting for more than 7% of the total investment. In 2019, the Global Investor Study shows that 80% of Chinese investors will consider sustainable factors in their investments, and nearly 70% of Chinese investors believe that sustainable investment can make an important contribution to the world’s sustainable development.
Over the 6-year period, the market for “Green Debt Instruments” grew from US$ 2 billion annually in 2012 to US$ 250 billion per year in 2018, providing a wide range of financial products (green/ sustainable/social bonds, green loans). The total value of private sustainability-oriented bonds and funds is now estimated between US$ 1.2 trillion and US$ 1.3 trillion. Investor focus on sustainability issues is driving the growth of sustainable investment. Globally, more and more financial institutions and investors are embracing and practicing sustainable investment, which will become the mainstream form of investment in the future and will grow rapidly in the next decade.