Coherent signs

Financial markets have hit an air pocket, shares are dropping, and world financial operators follow the imperative “sell, sell, sell…”. While the current financial turmoil is raising serious concerns regarding the stability of Western economies, one sector is not following the downward trend. These are: sustainable and responsible investments. A few days ago, in Paris, EUROSIF, that stands for European Social Investment Forum, held the third edition of the European survey on sustainable and responsible investments. Accordingly, Sustainable and Responsible Investment – Sri – represents 2,665 billion euro turnover in the European market. Researchers claim that this corresponds to a 102% SRI increase. England and The Netherlands rank first. In general terms, the British and the Dutch markets are the most vibrant. Germany, France and Switzerland have the fastest growth rate. While in Belgium and The Netherlands SRI represent the highest percentage of total investments. Unfortunately the Italian market is on the margins, with small capitals invested in this field. At European level, SRI is primarily run by institutional investors that represent 95% of all investors. This is true especially in larger markets such as The Netherlands and England. Another consistent group of investors is present in Scandinavia and France, and according to EUROSIF forecasts, also Spain. The main institutional players investing in SRI in Europe are religious institutions, non-profit bodies or pension funds. “The expansion of SRI in Europe is such that those who believed it would be a market niche were proved wrong”, said Davide Dal Maso, Segretary General of the Forum for Sustainable Finance. “It’s not a trend. Also the more traditional financial operators have realized that we’re facing a dramatic change in the perception of economy”. SRI prefer Europe. According to EUROSIF estimates, “some 60% of SRI stocks are invested in European securities (21% of which in domestic markets). This is evident especially in Spain (95%) and in England (88%, 64% of which in the English market). North America is at 25%, with a large part of its investments from Belgium (50%), The Netherlands (35%) and Norway (34%). In Asia it represents 9% while developing markets receive 7% of European SRI investments, especially from Northern Countries and The Netherlands”.Thematic stocks are the most popular. Another relevant figure, the real newness revealed by the 2008 research, are the so-called “thematic” stocks. These identify the changes determined by environmental and/or social changes. The typical case is that of renewable energies. “The new generation of thematic stocks in on the increase and is determined by the investors’ interest in specific issues pertaining to market sustainability that they deem as having the potentials for strong development”. EUROSIF representatives explained: “Technological innovation, the establishment of new markets through government regulations that promote sustainable activities (as in the market of CO2 emissions), along with the increase of health expenditure by the government and by consumers, represent new investment opportunities”. SRI thematic stocks are most developed in Switzerland and Germany. Giuseppe Zadra, ABI General Manager, remarked: “there’s an increasing growth margin for SRI. This is one of the many coherent signs that societies are placing before us”. Transparency: SRI added value. Product transparency is considered crucial. In fact, three quarters of operators in this field publish information on SRI processes on their websites, while 67% have adopted an SRI guideline such as the European Guidelines for Transparency. However, according to EUROSIF, “it’s important to detect emerging opportunities. The current financial market turmoil, initially due to the subprime crisis, has gradually expanded. In such a negative and volatile situation, investors tend to be conservative and SRI stocks will certainly be addressed if the downward trend continues, as was the case in 2001”. In conclusion, despite financial market crisis, EUROSIF envisages a further increase of European SRI. For further information, the entire survey was posted on the website: www.eurosif.org.