MIRA study shows unprecedented growth of sustainability in the financial world

A new report on the importance of sustainable investment shows unprecedented growth. Sustainability is still gaining importance in the financial world and is reflected in the number of sustainable financial products and their volume. The current growth is impressive.

A collaboration between the Environmental Reporting Department (MIRA) of the Flemish Environment Agency, the University of Antwerp and Forum Ethibel is monitoring changes and trends in sustainable investment and saving.

The figures for the year 2019 show the largest annual growth in sustainable investments and private banking since 1992, the beginning of the measurements. Sustainable savings are still declining slightly, but seem to be stabilizing in the meantime.

Sustainable investment in Belgium

In the previous edition of the study, a remarkable increase in sustainably invested assets was highlighted. In 2019, the increase will continue in an impressive manner. The growth to a record volume of 48.6 billion euros and the strongest increase (since 1992) in the ratio of sustainable investment products to total investment funds - from 14.94% in 2018 to 22.14% in 2019 - indicate more than ever the importance of sustainability in the financial world.

The increase in sustainability is striking among pension funds, among others, which made a noticeable catch-up compared to 2018, with a volume of almost 10 billion euros.

The strong growth can initially be explained by the strong stock market year in 2019, with a large increase in share prices and, consequently, in higher volumes. Moreover, the trend of private investors opting for sustainable investments continues. Finally, the Towards Sustainability label (launched at the end of 2019) led to the "sustainability" of a large number of investment products on the Belgian market, resulting in a larger number of products included in this study.

With 107 new products in 2019, the number of sustainable investment products also continues to grow. This is again the largest annual increase (in number) since 1992. Investors now have a choice of 514 sustainable investment products.

Private banking in Belgium

Sustainable investment is on the rise and this trend is also reflected in private banking services. The market segment is growing at a rapid pace, with growth of 46% in 2019. With a volume of just under 28 billion euros, private bankers seem to be stimulating the interest of wealthy people in sustainable and standardized sustainable investment products.

Sustainable savings in Belgium

Where sustainable investments grow strongly, the volume of sustainable savings will continue to decline in 2019. However, the decline is limited to 0.4% and the trend seems to stabilize at 0.77% of the Belgian savings volume. This represents the lowest point since its peak in 2014. The decline is due, among other things, to more accurate data for this study (compared to last year) as well as players who are shifting their focus and seem to be focusing more on sustainable investments than on sustainable savings.

Developments and trends related to sustainable investments

Each year, the report highlights some recent developments in sustainable investment.

Sustainability is becoming a common concept for many people. However, the definition is not unambiguous and every investor attaches varying degrees of importance to sustainable investments as well as to sustainable themes such as good governance, social inclusion, climate and a sustainable economy. The diversity of investors and their interest is reflected in the results of a sustainability scan developed by Forum Ethibel and Van Lanschot Bankiers.

However, in order to be able to delve deeper into sustainability, information about it is necessary. Nevertheless, it is often still very difficult for private individuals to assess the sustainability of companies and this knowledge seems to be reserved for data suppliers. Two major players are now making the sustainability profiles of large international companies publicly available, in order to increase transparency.

Moreover, increased transparency is confirmed by the growing importance of sustainability labels, such as the Towards Sustainability label. The study compares the different labels and the themes and strategies they focus on.  

The market is moving and new products and players are appearing that profile themselves as sustainable. With a recently obtained banking license, NewB is the youngest 'player' in line.

Moreover, there is more and more attention for sustainability on an international level. For example, Europe is working on a green taxonomy; a frame of reference to interpret ecological economic activities, strengthen transparency and combat greenwashing. At the end of 2019, the European Commission positioned itself as a pioneer in the fight against global warming by communicating its ambitious Green Deal. The proposal places climate at the center in an inclusive manner and aims for a climate-neutral continent in 2050.

Finally, all recent developments take place in unprecedented times of corona. The COVID-19 pandemic dominates daily life and should not be absent from this study. Financial markets are affected by it, investors are adapting and sustainability also plays a role in this story.

Find the full study here

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