Since the launch of the first UK ethical funds in the early 1980’s the expansion of this field has been transformational. It has grown from an idea in the minds of a few far-sighted, innovators to a dynamic, diverse, high profile investment market.
The sector has evolved from being largely about screened ethical funds to a diverse and rapidly growing range of options – where ‘ethics’ may or may not play a major role.
The last ten years has seen a major shift in the mindset of institutional investors, many of whom manage funds for retail investors. Major international initiatives have emerged to further the development and expansion of SRI – and to encourage business to be more sustainable and responsibly managed.
Some useful dates and facts include…
- 1971 – PAX fund launched in USA – because of opposition to the Vietnam War. The first ‘modern’ ethical fund.
- 1984 – First UK retail ethical funds – Friends Provident Stewardship range.
- 1985 – First specialist ethical IFA firm launched.
- 1987 – First environmental fund launched. Jupiter Ecology fund.
- 1991 – SRI membership organisation UKSIF launched.
- 1999 – First responsible engagement strategy marketed ‘reo®’.
- 2000 – SRI disclosure amendment to the 1995 Pensions Act – obligating UK trustees to disclose their position on SRI. This initiative has since spread to other countries.
- 2005 – Freshfields UNEP FI report (a legal framework for ESG)
- 2005 – International Interfaith Investment Group Launched
- 2005 – Financial advisers around the world encouraged to ask clients if they are interested in ethical, social or environmental issues as part of best practice standard ISO22222.
- 2005 – UN PRI (United Nations Principles of Responsible Investment) launched. The PRI is a set of responsible investment principles for institutional investors.
- 2007 – UNEP FI/ Mercers demistifying SRI performance report
- 2008 – UK Climate Change Act passed into law. The first of its kind.
- 2008 – First National Ethical Investment Week launched in the UK (Now known as Good Money Week). An UKSIF initiative to promote retail green and ethical investment.
- 2009 – Research provider EIRIS consumer website launched called YourEthicalMoney.org
- 2010 – UK retail SRI assets under management total £9.5 billion (source EIRIS). Up from £2.4 bn in 1999.
- 2010 – FRC Stewardship Code launched to encourage more responsible share ownership. All UK institutional investors must state whether or not they follow the code. FSA endorsed.
- 2010 – European SRI market size €5 trillion, as of December 31, 2009. An increase of 87% over two years. According to the Eurosif report this market is dominated by institutional investors (92%). SRI bond investment (at 53%) now exceeds investment in equities.
- 2011 – Fund EcoMarket database tool launched to help UK advisers identify relevant retail investment options
- 2012 – UN PRI Assets under management exceed $30 trillion as membership tops 1000
- 2012 – Eurosif SRI study published
- 2013 – EIRIS reported UK retail ethical funds under management of £12.2 billion
- 2014 – Investment Association shows net retail ethical fund sales at highest level since 2007 – at £460m
- 2014 – EIRIS estimate retail ethical fund market size £13.5 bn (published in June 2015)
- 2015 – Investment Association stats show UK Domiciles retail ethical funds (to end 2014) enjoyed best year since 2007
- 2015 – IIGCC letter to G7 Finance Ministers contributes to G7 progress
- 2015 – EIRS stats published in July show UK retail ethical funds exceed £15bn (at end 2014)
- 2015 – ‘Aiming for A’ shareholder coalition enjoyed 98% shareholder support at BP & Shell AGMs (re carbon asset risk mitigation)
- 2016 – Investment Association figures show net UK domicile retail ethical fund sales (to end 2015) are ‘highest ever’ at £715m (although % of total sales remains at 1.2%)
- 2017 – EIRIS Foundation market size estimate £16 Billion (IA figure remains 1.2% of fund inflows)