The UK is well-positioned to maintain and strengthen its position as a global leader in Sustainable Finance. It has already demonstrated a number of ‘firsts’: the first country to adopt a climate change act (2008 Climate Change Act), embed Net Zero carbon emission targets in its legislature and most recently, to make climate change financial disclosures – TCFD as developed by the Financial Stability Board – mandatory across the economy.
The UK investment management industry is the second largest investment management centre in the world (£9.9 trillion assets under management or 14.7% of the £67 trillion global assets under management) after the US and is the largest centre in Europe. With a European market share of 37%, it is larger than the next three European centres (France, Germany and Switzerland) combined.
As of the end of 2019, 38% of assets under management incorporate ESG factors into their investment selection processes (up from 26% a year before). Exclusion policies are applied to 19% of total assets under management (AUM). Despite the growth in AUM and the investor interest reported by the investment association members, sustainability focused approaches and impact investing remain a relatively small proportion of the industry with 1.4% and 0.3% of assets respectively.
The objective of this working paper is to provide a bird’s eye view reference guide to the UK ESG Investing Ecosystem by summarising and explaining:
• Key relevant definitions
• Reporting frameworks
• Initiatives and organisations
Highly relevant for Asset Managers, Asset Owners and anyone else interested in the ESG investing topic, this report helps to bring clarity to a very crowded and confusing field that is ESG.