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By Guillaume Mascotto - March 2020
Interest in environmental, social and governance (ESG) issues and the U.N. Sustainable Development Goals became increasingly mainstream in 2019. Investors worldwide increased capital allocations to ESG-themed solutions designed to deliver measurable societal and/or environmental impacts and competitive risk-adjusted investment returns.
These products included mutual funds, separate accounts, offshore accounts and ETFs. Investors also more systematically incorporated ESG issues into investment processes, recognizing they could capture upside potential, reduce ESG-related risk and still meet their fiduciary responsibilities.
Sustainable investment assets are climbing globally and exceeded US$30 trillion at the start of 2019, up more than 30% from 2016.1 Some regions have demonstrated stronger growth than others within their local currencies. For example, as shown in Figure 1, sustainably managed assets in Japan grew more than 300% during 2016-2018. In the United States, growth from 2016-2018 was slightly higher than over the previous two years (38% versus 33%). Elsewhere, sustainable assets grew, but more slowly than 2014-2016.
Assets values are expressed in billions. All data in the table is as of 12/31/2017, except for Japan, whose assets are as of 3/31/2018. Source: 2018 Global Sustainable Investment Review, Global Sustainable Investment Alliance.
1 Global Sustainable Investment Alliance. 2018 Global Sustainable Investment Review.
To read more, please download the full ESG Outlook below.
Notes from the ESG Desk
Focusing on quality has historically led us to companies with strong financial and ESG characteristics.
Listen to our experts Bernard Chua, CFA and Jonathan Bauman, CFA discuss how American Century approaches Environmental, Social and Governance (ESG) investing and how it's incorporated into our new ETFs.
Learn how addressing certain trends may not only help mitigate downside ESG-related risk and increase the possibility of upside potential, but also help managers adapt to the prevailing shift in mindset toward sustainable investing.
We explore four key trends that are helping increase electric vehicle adoption globally and market implications for industries exposed to electric and internal combustion vehicles.
We discuss carbon emissions exposure at the sector and industry levels by considering electricity usage by data centers, a large and growing segment of the information technology sector.
A strategy or emphasis on environmental, social and governance factors ("ESG") may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG investment focus. A portfolio's ESG investment focus may also result in the portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than the market generally or compared to underlying holdings that are not screened for ESG standards.
For purposes of compliance with the Global Investment Performance Standards (GIPS®), the Firm is defined as American Century Investment Management, Inc. (ACIM). ACIM claims compliance with GIPS. To receive a complete list of composites and/or a GIPS compliant presentation, contact: American Century Investments | 4500 Main Street | Kansas City, MO 64111-7709 | 1-866-628-8826 | americancentury.com
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.