The Swiss Sustainable Finance association (SSF) has reported sustainable investments assets in Switzerland amounted to CHF390.6bn as of 31 December 2017, up 82% year-on-year, according to a survey that gathered 66 respondents (against 41 last year).
The study has found out assets managed by asset owners have risen by 128% in comparison to 2017 while sustainable investment funds and mandates have faced 47% and 25% increases respectively.
“With a volume of CHF238.2bn, sustainable assets managed by the asset owners now account for 61% of the total sustainable investment market in Switzerland,” highlighted SSF.
New asset owners taking part to SSF’s survey have brought some CHF126.9bn to the overall AUM recorded in Swiss sustainable investments in 2017 whereas some CHF7.3bn in assets (CHF4.2bn in funds, CHF3.1bn in mandates) were fuelled by new asset managers surveyed.
“The growth attributed to existing participants is equivalent to approximately 19% of the 82% total growth. The remaining 63% growth stemming from new participants partly represents real growth, as these new respondents have for the first time implemented SI strategies, and in some cases extended market coverage,” outlined SSF.
Sustainable funds form 8.7% of the Swiss fund market
Sustainable funds (CHF94.4bn) represent 24% of the total sustainable investment market in Switzerland and around 8.7% of the whole Swiss fund market.
Some 19% of the growth recorded in sustainable funds recorded come from net inflows of existing participants.
“Another significant portion is generated by funds of new study participants – accounting for 14% of the growth. For new fund launches (4%), as well as conversions of conventional funds into sustainable funds (3%), only minor volumes were reported. For a large share of the growth (60%) no further information was supplied by respondents.”
SSF argued that presuming sustainable investments grew similar to global indices in 2017, it can be estimated that fund growth due to performance was around CHF6.4bn (21% of growth in total fund volume).
As for sustainable mandates, forming 15% (CHF57.9bn) of the Swiss sustainable investment market, asset managers who participated in the survey for the first time generated 25% of the growth (CHF3.1bn) in total mandate volume (CHF 12.3bn).
SSF said some 9% can be attributed to conversions of conventional mandates into sustainable mandates, while new mandate launches contributed 6% to the increase in mandate volume.
“Applying the same growth rate as for funds, an estimated CHF5.7bn of unspecified growth can be attributed to performance gains (46% of growth in total mandate volume).”
Norm-based screening tops SI approaches in Switzerland
SSF’s survey noted that norms-based screening has taken over exclusion as the most used approach for sustainable investments in 2017, some CHF217.8bn of assets were managed under this strategy.
ESG integration ranks second with CHF188.9bn of assets managed following this approach while exclusion comes third. ESG voting has recorded the highest growth rate of 140% (CHF117.8bn of AUM as of end 2017).
The Swiss association pinpointed the best-in-class approach as well as sustainable thematic investments also grew but remained at modest levels, followed by impact investing with the lowest volume.
Top 10 Swiss players hold 88% of local sustainable assets
Demand from institutional investors and private investors in addition to international initiatives have been quoted as the three main drivers for sustainable investment demand in Switzerland in the next three years by asset managers.
Key drivers identified for further adoption of sustainable investments by Swiss asset owners included pressure from the board, political pressure, demand from beneficiaries.
Top 10 Swiss market players for sustainable investments by AUM last year managed around CHF133.3bn in sustainable funds and mandates, handling 88% of the total amount covered by the SSF survey.
It included UBS Group AG (23.1% market share), Credit Suisse AG (14%), J. Safra Sarasin (11.4%), Vontobel (8.9%), Pictet Group (8.1%), Partners Group (8.1%), Zürcher Kantonalbank/Swisscanto Invest by Zürcher Kantonalbank (6.7%), LGT Capital Partners AG (3.2%), RobecoSAM (2.7%), OLZ AG (1.8%).
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