Socially responsible investing (SRI) is an exciting, new area and is steadily gaining momentum with investors showing a growing interest in investment strategies that integrate Environmental, Social and corporate Governance (ESG) criteria into the investment process. SRI investment strategies include thematic investing such as clean water and clean energy, community investing such as microfinance which gives access to loans and other financial services to micro-businesses, shareholder activism and the screening (positive or negative) of companies based on ESG issues such as human rights and child labour.
The Eurosif (European Social Investment Forum) report in 2008 on European High Net Worth Individuals and Sustainable Investment that was sponsored by KPMG International, highlights a fast-growing segment where investors are seeking returns while engaging on sustainability issues. Eurosif estimates that sustainable investments represented approximately 8% of European HNWIs’ portfolios as of 31 December 2007 and predict that by 2012 the share will have increased to a significant 12%, surpassing €1 trillion.
Luxembourg provides an attractive range of structures for socially responsible investing and in particular the number of SRI regulated investment funds set up in Luxembourg is growing. In the area of microfinance 45% of the world’s microfinance funds have been established in Luxembourg.
We believe that sustainability factors will increasingly shape international capital markets and will open up significant opportunities for product innovation and development and broader service opportunities available to financial institutions and other key stakeholders as demand from both institutional, HNMI and retail clients increases.