European SRI Study 2016 - Eurosif

European SRI Study
2016
Created with the support of

Candriam Investors Group (“Candriam”) is a lead-
ing pan-European multi-specialist asset manager
with a 20-year track record and a team of 500 expe-
rienced professionals. Managing about €96.6 billion AUM at the end of June
2016, Candriam has established management centres in Luxembourg, Paris,
Brussels and London, and has experienced client relationship managers cov-
ering Continental Europe, the UK, the Middle East, the USA and Australia. Its
investment solutions cover five key areas: fixed income, equities, alternatives,
sustainable investments and advanced asset allocation. Through convic-
tion-driven investment solutions, Candriam has earned a reputation for deliv-
ering innovation and strong performance to a long-standing, diversified client
base in over 20 countries.
Degroof Petercam Institutional Asset Management, DPAM, is a leading independ-
ent Brussels based asset management firm with a long-standing reputation. It is
wholly owned by the independent and renowned Degroof Petercam Group, whose
history dates back to 1871. The strong commitment of the historical family shareholdership has ensured
essential resources to make up for the stability of the Group. DPAM boasts a consistent and solid long term
track record. It was born out of the merger between Petercam Institutional Asset Management and Degroof
Fund Management Company, two investment firms with a solid reputation and combined expertise of over 140
years. DPAM manages funds and mandates on behalf of institutional end investors across Europe, and offers
its expertise through a network of over 400 distribution partners.
Mirova offers a global responsible investing approach involving Equities, Fixed Income,
General and Renewable Energy Infrastructure, Impact Investing, and Voting and
Engagement. It has €6 billion in assets under management and €40 billion in Voting and
Engagement. Its team of circa 60 multidisciplinary experts include specialists in thematic investment man-
agement, engineers, both financial and environmental, social and governance analysts, project financing spe-
cialists and experts in solidarity finance.
Northern Trust is a leading provider of asset servicing & asset management to
institutional clients worldwide. Our business is segmented by market, to ensure
deep client understanding and appropriate servicing. Our worldwide client base
includes superannuation funds, private pensions (corporations), public pensions (local governments), multi-
national pensions, investment managers, insurance companies, foundations, endowments, healthcare organ-
izations, monetary authorities/central banks, and supranational organizations. Based in Chicago, Northern
Trust has offices in 19 U.S. states, Washington D.C. and 25 international offices in Canada, Europe, the Middle
East, Australia and the Asia region. For more than 125 years, Northern Trust has earned distinctions as an
industry leader in combining exceptional service and expertise with innovative products and technology.
Northern Trust Asset Management has been a proud signatory of the UNPRI since 2009.
Incorporated in 1971, OFI AM is one of the most important French asset manage-
ment companies with almost €67 billion in assets under management at end of
June 2016. It also ranks 4th among French SRI managers. OFI Asset Management
is backed by two large institutional groups, Macif and Matmut, that provide a solid shareholder base and is
anchored in the social economy through partnerships with members of the French mutual insurance bodies.
Discretionary and mutual fund management make up the heart of its activity, around which complementary
services are provided. Investment management expertise covers all major asset classes, management styles
and geographical areas.
Platinum
Sponsors
Gold
Sponsors

Etica SGR is an Italian asset management company of
Banca Popolare Etica Group. Since 2003 the company
has been developing, promoting and managing exclu-
sively socially responsible investments with the goal of “representing ethical values
among the financial markets, making financial players aware of SRI and CSR values.”
(Art. 4 Etica Sgr articles of association). The Company promotes and manages five mutual
investment funds with different risk profiles, available for both retail and institutional
clients, and it offers consultancy services dedicated to institutional investors wishing
to improve the social and environmental impact of their portfolios. Through its share-
holder engagement activity, Etica Sgr actively exercises voting rights associated with
ownership of the securities in which the funds invest, voting and participating at share-
holders’ meetings with the aim of helping the company to achieve an increasingly sus-
tainable conduct. The processes of ESG analysis and shareholder engagement regard-
ing the funds and the consultancy service are certified in accordance with the EN ISO
9001:2008 Quality Management System. Etica Sgr is signatory of the UN Principles for
Responsible Investment (PRI) since 2009.
MEMBER SIF ORGANISATIONS
Silver
Sponsors

2
Foreword by Professor Bob Eccles 4
Foreword by Eurosif Executive Director and President 6
Executive Summary 7
Survey Definitions and Methodology 9
Sustainable and Responsible Investment: a definition 9
Categorisation of strategies 9
Aggregating SRI strategies 10
Data collection and analysis 10
Limitations of the Study 11
Structure of the Study 11
The Status of SRI in Europe 12
1. Best-in-Class 12
Specialist View – DG JUST 14
Candriam Strategy Case Study: Best-in-Class 14
2. Sustainability Themed 17
Specialist View – (European Systemic Risk Board)
ESRB - Limiting systemic risk by early and gradual action on climate change 16
Mirova Strategy Case Study: Sustainability Themed 18
3. Norms-based Screening 20
4. Engagement and Voting 22
Specialist View – UKSIF 23
Specialist View – European Parliament 24
5. Exclusions 25
Types of exclusions 26
Divestment 28
Update on European Legislation on Investments into Controversial Weapons 28
Northern Trust Strategy Case Study: ESG Exclusions 30
Eurosif Policy efforts overview 2015-2016 32
Capital Markets Union 32
Revision of the Shareholder Rights Directive 32
Revision of the Institutions for Occupational Retirement Provision Directive (IORPs) 33
Green Bonds Policy Seminar 33
European Commission (DG JUST) consultation on long-term and sustainable investment 33
European Commission (DG FISMA) consultation on non-financial reporting guidelines 34
Public CbCR: a much needed tool for investors 34
Task Force on Climate-Related Financial Disclosures (TCFD) Consultation 34
OFI AM Policy Case Study: Article 173 of
the TEE (Energy and Environmental Transition) Law: an opportunity for ESG 35

3
Table of Contents
6. Impact Investing 36
Green Bonds and Social bonds 39
Specialist View – The EIB 41
Interview at Etica SGR 47
7. Transparency in SRI through European Labels 48
8. Labels in Europe 49
9. ESG Integration: choosing the right approach 50
Degroof Petercam Strategy Case Study: ESG Integration 51
Key Features of the European Market 52
Characteristics of investors 52
Asset Allocation 53
Market drivers and future trends 54
Summary and Conclusions 56
European Data Table 57
Country Profiles 58
Austria 58
Belgium 61
Denmark 64
Finland 67
France 70
Germany 75
Italy 79
Netherlands 82
Poland 85
Spain 87
Sweden 90
Switzerland 94
The United Kingdom 97
Appendix 100
Methodological Approach 100
Credits 100
Sponsors 101
About Eurosif 101
- Joining Eurosif
- Benefits
Endnotes 102
Acknowledgments
We are most grateful to Bank Degroof Petercam, Candriam, Etica SGR, Mirova, Northern Trust and OFI Asset Management for their sponsorship of this seventh edition
of the Study of the European SRI market. We would also like to acknowledge the work of the National Sustainable Investment Fora (SIFs) and other contributors such
as Novethic in France, Ernst & Young in Poland and Forum Ethibel in Belgium, for providing valuable data and insight on their respective national markets. Finally,
Eurosif wishes to recognise the many investment and ESG professionals from asset management houses and institutional organisations whose responses make this
Study possible – your involvement in SRI and with Eurosif greatly supports our mission to promote SRI across Europe.
Disclaimer
The views in this document do not necessarily represent the views of all Eurosif members. This publication should not be taken as financial advice or seen as an
endorsement of any particular company, organisation or individual. While we have sought to ensure that this information is correct at time of print, Eurosif does not
accept liability for any inaccuracies.
 Eurosif
All rights reserved. It is not permitted to reproduce this content (electronic, photocopy or other means) without the explicit and written permission of Eurosif.

4
Foreword from Bob Eccles
Robert G. Eccles, Chairman Arabesque Partners
In this seventh highly useful EUROSIF study we see strong
and continuing growth in sustainable and responsible
investment (SRI). The Foreword by Flavia Micilotta and
Will Oulton provides an excellent overview of the results
of the latest survey. Notable findings include the shift
in SRI assets from equities to fixed income (driven by
the growth in the issuance of Green Bonds), the growing
interest of retail investors (although the growth in assets
is still largely driven by the institutional market), and
strong growth in Engagement and Voting which provides
evidence of the increasing relevance of stewardship.
And while Micilotta rightly notes that the belief that ESG
integration hurts financial performance has largely been
debunked, she also notes the difficulty of establishing
categories for ESG integration.
It is on this subject that I would like to focus my remarks.
While I think such a classification system would be
very useful, I’m doubtful that it will ever be achieved.
Reaching such a universal social consensus would be
virtually impossible. Consider the wide variation in
language and meaning that still exists in the corporate
world where “sustainability” has been a topic of general
interest for many more years than in the investment
community. “Sustainability” means different things to
different people. My position here is to say “I can only
say what it means to me.” I then go on to distinguish
between a “sustainable strategy,” defined as one which
enables a company to create value of the long term while
contributing to a sustainable society, and a “sustaina-
bility strategy”, which is a set of programs directed to
particular stakeholders. The former focuses on material
issues. The latter focuses on socially significant issues,
interests of civil society as represented by some group,
such as an NGO or set of NGOs. Some subset of socially
significant issues are material (which belong in an inte-
grated report), but not all of them (those belonging in a
sustainability report).
Similarly, some people use the terms “sustainability”
and “corporate social responsibility (also called corpo-
rate responsibility)” interchangeably while others see
them as different things. Variations exist across coun-
tries (e.g., CSR is still the preferred term in China). And
there are yet more terms, often associated with a par-
ticular report, like “corporate citizenship.” In corporate
citizenship, the lines are often blurred between sustain-
ability/CSR and philanthropy. Little wonder that no con-
sensus has emerged—or ever will—on the meanings of
these terms.
In the investor world, the general term of “Socially
Responsible Investing,” which has probably been around
as long as CSR/sustainability, has been subdivided into
concepts such as exclusions (basically the origins of SRI
based on values), impact investing (some people see
this as associated with sub-market returns but others
want both impact and performance to be considered),
Robert G. Eccles

5
sustainability-themed investments (relatively new),
norms-based screening (also relatively new), and ESG
quant (where sustainability performance is one part of
a quantitative model that includes many other factors).
The term “ESG integration” is gaining popularity but is
as much about upgrading the methodologies for “tra-
ditional investing” to include ESG factors as it is a new
term for SRI.
So what should be done? Should we simply throw up
our hands and just accept a certain “Tower of Babylon”
quality to the SRI world? No, I think this is too easy and
too lazy an answer. The core issue, at least for me, is
whether investors think ESG issues (the material ones,
not all of them) are important for investment decisions.
While there is mounting evidence that they are related
to performance, this is still a decision that ultimately
rests with fund fiduciaries. The trend, as Micilotta notes,
is clearly one of fiduciary duty being interpreted as
requiring ESG integration but, as yet, there are no hard
laws on this subject. The current state of the world is
more that it is allowed but not required.
Fund fiduciaries should publicly declare whether they
support ESG integration or not. This is similar to the idea
of a company board level. If they do not, the whole sub-
ject of SRI is irrelevant. But if they do support ESG inte-
gration, they then need to go further and explain exactly
what this means for them. Whether the strategy is one
of exclusions, impact investing, sustainability-themed
investments, norms-based screening, or whatever new
concepts emerge (as they are bound to do), the fund’s
fiduciaries should simply provide an explicit definition
of what each term means for them. In this context, they
should also explain how this determines their definition
of “stewardship” and what this means for their engage-
ment activities and voting policies.
This isn’t a lot to ask for. It is a simple request that fidu-
ciaries be clear in their own minds about the meaning
of the terms they and their fund manager are using. If
nothing else, this will establish fund-level clarity. But,
dare I hope, this might even eventually lead to a broad
social consensus, something I’ve declared impossible.
With explicit meanings being given, it will be possible
to see if a consensus is building for a particular term
and fiduciaries can judge their definitions in the light
of others.
This may or may not happen, but it is less important
than making ESG integration core to all investing. Doing
so will improve long-term returns for beneficiaries, act
as a powerful force for ESG integration by companies,
and enable the capital markets to contribute to a more
sustainable society.
Forewords

6
Foreword from Eurosif President and Executive Director
Welcome to the 7th edition of the Eurosif SRI Study. This
year, we invite our readers to once more explore the
trends and developments in sustainable and responsi-
ble investment (SRI) across Europe. In addition to cap-
turing the trends and factors driving change, this Study
also explores the fundamental issues behind these
dynamics in greater detail for the first time. The Study
provides evidence that SRI continues to develop as an
important part of the European financial landscape.
Reading this Study in 2016 seems particularly relevant,
considering the many strategic and meaningful events
that continue to build up and shape the world. These
events are part of the positive trends registered by SRI
in Europe throughout many EU member states. Last
December, COP 21 set in motion a series of events which
have continued to spur change and introduce an unde-
niably positive domino effect. The Green Bond market
breaking through a $150 billion barrier and with France
and Finland officially becoming the first States to issue
Green Bonds are just two examples of this.
Although it was certainly a catalyst for change, the Paris
Agreement was not the single most important event to
call for more sustainable finance and investments in
general. International decision-makers have joined the
long walk to sustainability inspired by the words of Mark
Carney about the financial stability risks derived from
climate change. Policy makers have already done much,
and continue to work to ensure sustainability, transpar-
ency and accountability become ingrained in our finan-
cial and social system. Over the course of the years, they
have recognized the extent to which sustainable finance
can help mold more sustainable economies.
As evidence of that, the European Commission has
launched some crucial consultations which have par-
ticularly marked our investor community. Let us focus
on two of the latest ones, specifically issued by DG Just
and DG Fisma on Long-term investment and on the
Non-binding guidelines relative to the Non-Financial
Disclosure Directive (2014/95/EU) respectively. Both
consultations are linked to the Capital Markets Union
Framework aimed at increasing market liquidity and
stimulate investments in Europe. Both underscore a
renewed role for investors and specifically SRI investors,
who continue to prove the relevance of transparency and
of incorporating Environmental Social and Governance
issues, in the evaluation of investment opportunities.
Transparency, long-term and sustainable investments
and accountability are only bywords for some key criteria
that determine the work of Eurosif and its members SIFs.
At the same time and under the Capital Markets Union,
they are also increasingly becoming the key parameters
European policy-makers use as basis to define their pol-
icy framework with a view to better connecting savings
to investment and to strengthen sources of financing for
retail as well as for institutional investors.
The current boom in Green Bonds highlights the consist-
ent growth in Impact Investing which we have witnessed
in the past few years or since the inception of this
approach. Pioneered by the European Investment Bank
(EIB) in 2007, the Green Bond market has now witnessed
significant levels of growth which have been instrumen-
tal in highlighting the limits of climate finance. Similarly,
this growth has underscored the need for a higher degree
of clarification and harmonisation, and green bond issu-
ance is creating a framework within which bond markets
can become the instrument of a wider collective action
to push further the accountability of environmental
finance. This is an excellent sign and it helps speed up
the process of transformation that our economy should
be moving towards, although there is still a long way to
go before it reaches the scale needed to address climate
change and the other pressing environmental issues.
Eurosif’s Executive Director, Eurosif ad-interim President,
Flavia Micilotta Will Oulton

European SRI Study 2016
7
Executive Summary
This 2016 European SRI Study bears out the sustained
growth in SRI across different approaches. The data
collected for this Study, at the end of 2015, allowed us
to cover institutional and retail assets from 13 differ-
ent European markets. The methodology was modified
for some minor aspects, as a few simplifications were
brought to the SRI questionnaire; but the taxonomy
remains unchanged from 2012.
Some of the main growth trends highlighted in this
edition have built up consistently over the past years.
However, it is worth noting a number of interesting
shifts. Exclusions remains the dominant strategy at over
€10 trillion, covering 48% of the total of European pro-
fessionally managed assets1
.
Meanwhile, Impact Investing is once again confirmed
as the fastest growing strategy with a growth of 385%.
Although the growth remains small in terms of assets,
it has made Impact Investing, once more, the most
dynamic and definitely the most promising approach
for investors. This year we featured a special focus sec-
tion on Green Bonds, which have characterized much of
the growth in the bond market in the last two years. In
2015, the total Green Bond issuance amounted to over
$40 billion2
. At the time this Study went into printing the
Green Bond issuance had already reached $44 billion,
with a potential to reach $100 billion3
, according to CBI
(Climate Bond Initiative) estimates.
Impact Investing is followed by Sustainability Themed
investments this year, with a remarkable growth of 146%.
France registers the most significant growth (+881% over
2013-2015), followed by Spain (with 264%). This marks a
significant change as this strategy registered the slowest
growth during last review, at 22.6%. Renewable Energy
and Energy Efficiency have been the top categories of
investment for this strategy, which have benefitted sig-
nificantly from an increasing awareness of the implica-
tions of climate change, as well as the impact that key
international events have had in the past two years.
Norms-based screening is the second biggest SRI
approach with over €5 trillion in AuM and a steady
growth rate of 40%, demonstrating a sustained growth
per annum of 31% since 2009. Typically this approach’s
main area of growth is the Nordics, but this year, France
leads the way with €2.6 trillion in AuM, confirming a
positive trend already reported in the previous Study.
Switzerland shows the biggest growth at 618% over the
last two years.
The increasing relevance in stewardship and the ever
more present debate around fiduciary duty, which con-
tinues at the European level, have given further impetus
to Engagement and Voting, which grew by 30%. The UK
continues to be the undisputed leader in this space with
a growth rate of 50% (2013-2015) and over €2.5 trillion in
total AuM. The significant policy drive for this strategy
is underscored by the debate around the Shareholders
Rights Directive (SRD), as part of the Commission’s action
plan to modernize corporate governance and increase
corporate transparency. The aim of the Directive is to
increase shareholders’ ability to demonstrate further
accountability and engagement - both characteristics
which underpin SRI.
In the 2014 Study, Eurosif attempted to devise ESG inte-
gration categories4
to refine the framework around this
strategy and categorise the different approaches used
by asset managers. However, due to the many variables
around the features that influence integration and the
risk of overlap, we decided to discontinue the previous
methodology and consider the approach as a whole and
not on a country level.
Although institutional investors still lead the market, we
noticed with interest in this year’s Study that the retail
sector is growing and going up from 3.40% to 22%, sig-
nalling an important shift in the industry and greater
focus on other categories of investors.
The asset allocation distribution registered a significant
decrease in equities, now at 30% of the total SRI assets
down from last year’s 50% and in favour of a sharp
increase in bonds, now at 64% from the 40% registered
in December 2013. This rise correlated with the surge in
Green Bonds, underlining the climate concerns that were
intensified by events such as the Paris COP21 Agreement.
Qualitative questions were also included to address the
factors influencing investors’ demand for SRI and their
SRI strategies, as well as their perspectives on the legal
requirements on ESG disclosure. This year, we also asked
our respondents to explain the main limitations for their
SRI strategy work. Fiduciary duty considerations have
been recognised as a main driver for SRI, sending a very
strong message to policy makers. In the fiduciary duty

8
debate, fund managers have come to see ESG considera-
tions as part of their investment obligations in line with
their fiduciary duty.
Concerning the top challenges for SRI for investors, we
find that the top reason is linked to a theory that can
now be considered largely disproved. The concern that
integrating ESG factors in the investment strategy could
negatively affect returns is, to some extent, the flip side
of the fiduciary duty considerations that we find on the
top of the list of our drivers. Increased awareness on top-
ics such as climate change, brought by landmark events
such as COP21 have once again reminded the whole
investor community of the gravity of these environmen-
tal risks. These risks are so serious and pervasive that
fiduciaries have a duty to specifically consider the asso-
ciated financial risks. As highlighted in the eye-opening
report of the Advisory Scientific Committee group of the
European Systemic Risk Board (ESRB), “Too late, too sud-
den: transition to a low-carbon economy and systemic
risk”, published in February 20165
, a late transition to a
low-carbon economy could have dire implications for
systemic risk.
At such interesting times, policy-makers have an oppor-
tunity to steer the international debate and send the
right messages to the investment community. The
Eurosif 2016 SRI Study reports on the development of
trends and dynamics and the direct correlation to the
ever changing European policy agenda, which continues
to shape the debate around finance and more sustaina-
ble economies. We have tried to capture the essence of
this change and provide a platform for discussion on the
most salient topics around SRI.

9
TABLE 1:
Growth of Sustainability Themed Investments by Country
Eurosif GSIA-equivalent PRI-equivalent EFAMA-equivalent
Exclusion of
holdings from investment
universe
Negative/
exclusionary screening
Negative/
exclusionary screening
Negative
screening or Exclusion
Norms-based screening Norms-based screening Norms-based screening Norms based approach
(type of screening)
Best-in-Class
investment selection
Positive/
best-in-class screening
Positive/
best-in-class screening
Best-in-Class
policy
(type of screening)
Sustainability themed
investment
Sustainability-themed
investing
Sustainability themed
investing
Thematic investment (type
of screening)
ESG integration ESG integration Integration of ESG issues -
Engagement and voting on
sustainability matters
Corporate engagement and
shareholder action
Active ownership and
engagement (three types):
Active ownership
Engagement
(Proxy) voting and
shareholder resolutions
Engagement (voting)
Impact investing Impact/community
investing
- -
Survey definitions and methodology
Sustainable and Responsible
Investment: a definition
Out of respect to the diverse cultural and historical
interpretations of the concept of SRI in the different
European member states, Eurosif and its constituency
have been working with more than just one set defini-
tion of SRI. However, in view of the many different policy
advancements at EU level, Eurosif’s Board has recently
reached a consensus on a working definition of SRI
which could fit two main purposes:
❍❍ Defining a high-level framework of what is meant by
SRI
❍❍ Enabling policy-makers to have a clearer view of the
stakes which are part of Sustainable and Responsible
Investing
“Sustainable and Responsible Investment (”SRI”) is a
long-term oriented investment approach, which inte-
grates ESG factors in the research, analysis and selec-
tion process of securities within an investment portfo-
lio. It combines fundamental analysis and engagement
with an evaluation of ESG factors in order to better cap-
ture long term returns for investors, and to benefit soci-
ety by influencing the behaviour of companies.”
This definition was coined in the first half of 2016 to
reflect the change in governance and renewed mission
and purpose of Eurosif. The definition was not imposed
to shape this year’s report but rather, it remains in line
with the original goal of the Study to cover any type of
investment process that combines the investors’ finan-
cial objectives with their concerns about Environmental,
Social and Governance (ESG) issues.
Even though a distinct lack of definitions still persists,
we have noticed a steady increase in SRI labels over
the years, signalling a pressing need to set definitions,
parameters and benchmarks. The aim is to bring trans-
parency, mainly to retail investors, by defining a set of
criteria which constitutes an SRI framework. An overview
of the various labels is available on page 49 of this Study.
As in past reviews, the 2016 Study tracks the metrics
relating to the applications of the different SRI strate-
gies as classified by Eurosif.
Categorisation of strategies
This review follows the classification of SRI approaches
introduced in 2012. The seven categories of strategies
identified in this Study are:

10
1. Sustainability themed investments;
2. Best-in-Class investment selection;
3. Exclusion of holdings from investment universe;
4. Norms-based screening;
5. Integration of ESG factors in financial analysis;
6. Engagement and voting on sustainability matters;
7. Impact investing.
Although Eurosif’s classification closely aligns with other
frameworks available to the industry, some underlying
details of each definition may display some variation6
.
Aggregating SRI strategies
As the definitions of the SRI strategies become increas-
ingly distinct and delineated, it is easier to note a ten-
dency in the past to aggregate figures and approaches7
.
In line with the methodological and definition evolution,
and in order to give a close representation of the legal
framework around SRI in the different European coun-
tries, the clear category split (as represented in table 1)
was set up. These SRI strategies can be applied simulta-
neously and in a growing number of possible combina-
tions. One should therefore be cautious about adding
up the SRI strategies presented as part of the European
Data Table, as this would yield an amount larger than the
actual size of the European SRI market due to multiple
counting. In order to measure the size of each market
while taking into account combined strategies, Eurosif
asked survey participants directly for sums of SRI strat-
egies without counting overlaps. This approach ensures
that, if a fund combines two or more SRI strategies (for
instance, Best-in-class, Exclusions, Engagement and
Voting), they will be accounted for in each strategy but
only once in the final sums, to avoid multiple counting.
As in previous years, the Study covers professionally
managed SRI assets which are subject to one or more
of the SRI strategies included in our classification. It
attempts to capture both retail and institutional SRI
assets:
❍❍ Managed by asset managers via pooled products,
both institutional or retail;
❍❍ Managed by asset managers via separate accounts on
behalf of their institutional clients;
❍❍ Managed internally by asset owners (self-managed
assets).
The European fund management and the financial sec-
tor in general, is a highly internationalised industry. SRI
funds can be domiciled in one country, managed in a
second and sold in a third, either within Europe or fur-
ther afield. As a result, defining national SRI markets is a
complex and challenging exercise. While fund managers
are rather easy to locate,8
the final investors are not. For
this reason, and to remain consistent with the method-
ology of our previous SRI studies, we define a national
market by the country where the SRI assets are being
managed, i.e. where the SRI asset management team is
located.9
This means that the SRI assets are allocated to
a country based on the set up and location of the SRI
management team, rather than according to the loca-
tion of the client. Therefore, it is important to note that
this Study attempts to measure the size of the SRI asset
management markets, rather than the investment mar-
kets themselves.
The Study covers 13 distinct markets10
: Austria, Belgium,
Denmark, Finland, France, Germany, Italy, Netherlands,
Poland, Spain, Sweden, Switzerland and the United
Kingdom.
Data collection and analysis
Data collection for this Study was conducted using an
Excel-based questionnaire including both quantitative
and qualitative questions, sent to key SRI market par-
ticipants including asset managers, banks and asset
owners (pension funds, universities, foundations, state-
owned players and insurance companies). Data was col-
lected from January to June 2016 from asset managers
and asset owners regarding their self-managed and
indirectly managed assets. The questionnaire was sent
out to market participants by the national SIFs or, where
relevant, by a partner at national level. For the Finnish
market and partly for the Belgian market11
, data collec-
tion was done directly by Eurosif with the support of
Forum Ethibel. Respondents were asked to report data
as of 31 December 2015. All financial figures are pre-
sented in millions of Euros (EUR m) unless otherwise
specified.
In total, 278 asset managers and asset owners with com-
bined assets under management (AuM) of € 15 trillion
participated in our survey, representing market cover-
age of 81%.12
In a limited number of cases where survey
responses from key industry players were not received,
Eurosif and the national SIFs were able to enhance the
data sample by using publicly available information.
Where this was not sufficient, a series of secondary
information was used13
. Overall, we are confident that
our data sample represents the vast majority of SRI in
Europe.

11
Limitations of the Study
As data collection is primarily based on our SRI market
participant survey, one important limitation of the Study
remains the fact that the figures are largely self-re-
ported. In the absence of an EU SRI framework, mar-
ket players in different countries might have different
understandings of SRI, its different shapes and forms,
as well as its application. In addition, as the SRI market
grows increasingly diversified and complex, often involv-
ing combinations of approaches, the risk of inconsist-
ency in measuring SRI across markets grows accordingly.
Therefore, before aggregating data from this survey,
Eurosif exercised due diligence on a best-effort basis to
ensure consistency within survey responses and across
countries. When inconsistencies or data gaps were iden-
tified, Eurosif, national SIFs and our research partners
followed up directly with the respondent in order to
clarify the reported data and to fill data gaps. On spe-
cific occasions, data reported by the respondents for
the 2014 edition of the Study was used to fill a specific
data gap when no other valid source of information was
available. Occasionally, Eurosif noticed that questions
were misinterpreted or that responses within the same
questionnaire were not consistent and in these cases,
direct follow-ups with respondents were conducted and
data was clarified. Eurosif, the SIFs and other survey
contributors also used secondary information sources
where relevant, and employed their best judgement in
order to ensure the accuracy and robustness of the data
at the core of this Study.
Another limitation is that each survey sample contains a
discretionary set of respondents, whereas market cover-
age and response rates in different countries may have
varied from one year to another.14
Sample overlaps have
slightly varied too. For most countries, the 2016 data
sample was larger than the 2014 one in terms of assets
under management (AuM) covered. And yet, in some
instances the sample was slightly smaller due to the
absence of some large players.15
These variations in our
data samples make direct comparisons between 2014
and 2016 figures suboptimal.
To mitigate the risk of error, misallocation of assets,
sample biases and insufficient market coverage, Eurosif
and its partners conducted double checks wherever
necessary, in order to maintain the highest possible
level of data quality and robustness. Consequently,
Eurosif is confident that the report provides a realistic
picture of the SRI market in Europe and its 2013-2015
developments.
Structure of the Report
Starting with Europe as a whole, the Eurosif 2016 SRI
Study is then organised by alphabetical order for the 13
covered markets. This is the seventh Eurosif SRI Study
and we invite readers to refer to our earlier studies
(2010, 2012, 2014) for further information on local SRI
backgrounds, drivers and methodologies employed.
Country profiles focus on key features of SRI in the given
country, market evolution since the end of 2013, and
market predictions. As much as possible, data is pre-
sented through consistent charts to facilitate compar-
ison. In the European section, Eurosif presents a view
across countries and highlights key 2013-2015 trends.
This edition features a section on policy developments
with the ambition to provide our readers with an over-
view of how the EU policy-making agenda influences the
SRI industry. In this respect, the information we provide
is intended to reflect any clear implications of policy
developments on the SRI market.

12
The Status of SRI in Europe
Today, several practitioners apply at least some form
of extra-financial evaluation in their portfolio - though
this is not sufficient to fall under an SRI denomination
or to meet the requirements of one specific strategy.
The different categories of SRI strategies can be applied
individually or in an aggregated fashion, as already
mentioned in this Study16
. The fact that there are no set
parameters indicating what constitutes an SRI product
leaves ample room for creating products which reflect
the specific needs of clients, legislative requirements at
country level, specific themes or trends. Regardless of
the fact that there is currently no specific regulation in
place, practitioners closely follow the developments on
the policy side at a national level. The recent Article 173
of the French Energy Transition Law17
clearly shows how
legislation, at a country level, can be a game-changer for
the industry. It makes clear quite how much this urgently
needed legislation at national level can positively influ-
ence European dynamics.
Such examples will likely lead to further growth of SRI
and to an increase in reporting standards which are
demanding enhanced transparency and accountabil-
ity. The figures on the evolution of SRI strategies this
year show continued growing, with rates between 14%
and 57% Compound Annual Growth Rate (CAGR)18
for the
main strategies, while Impact Investing - still the fastest
growing strategy - is at 120% CAGR.
58 961
145 249
20 269
98 329
493 375
353 555
5 087 774
3 633 794
2 646 346
1 900 040
3 275 930
4 270 045
6 853 954
10 150 595
Impact Investing
Sustainability Themed
Best-in-Class
ESG Integration
Engagement and Voting
Norms-based Screening
Exclusions
EUR in millions
+18%
CAGR
+57%
CAGR
+18%
CAGR
+18%
CAGR
+14%
CAGR
+22%
CAGR
+120%
CAGR
20152013
Figure 1: Overview of SRI Strategies in Europe
Best-in-Class
By choosing this strategy, investors have the opportu-
nity to pick those companies that have the best ESG19
score in a particular sector. Best-in-Class is one of
those ‘positive strategies’; other approaches that fall
under the same classification are Best-in-Universe20
and
Best-Effort21
. Unlike the Best-in-Universe approach, all
sectors or asset classes can be represented with Best-
in-Class. For example, an SRI fund may have a criteria
which enables it to invest in the oil and gas sector, but
only in those companies which are the ‘best in class’,
meaning the top of the investment universe, based on
a ESG screen.
In the last two years, Best-in-Class has grown by 40%,
with AuM reaching almost €493 billion. Let’s look at
how the strategy has been implemented across Europe.
France is once again the undisputed leader in the Best-
in-Class approach with a CAGR of 36% since 2013 and a
total of €322 billion. We can observe a positive trend
in all the other European countries, except for Sweden,
where we continue to register a reduction in the assets
under management allocated to this strategy, consistent
with the past reviews22
. Continued growth can also be
observed in the Netherlands with €56 billion AuM.

13
EUR in millions
0
100 000
200 000
300 000
400 000
500 000
600 000
20152013201120092007
130 315 132 956
283 206
353 555
493 375
Growth
2013-2015
+40%
EUR in millions
Denmark not part of 2014 SRI study
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
20152013
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+33%
CAGR
+1%
CAGR +19%
CAGR
+36%
CAGR
+15%
CAGR +2%
CAGR
+93%
CAGR
+2894%
CAGR +14%
CAGR
-52%
CAGR
+16%
CAGR
+58%
CAGR
Figure 2: Growth of Best-in-Class Investments in Europe
Figure 3: Growth of Best-in-Class Investments by Country

14
Strategy Case Study: Best-in-Class
Sustainable and Responsible Investing is coming of
age:
Momentum is building in Sustainable and Respon
sible Investments (SRI) and many asset owners and
asset managers face a moment of truth about inte-
grating environmental, social and governance (ESG)
issues into their investment philosophy. Although
more than 1500 investors and managers represent-
ing more than $60 trillion in assets have signed
up for the UN-backed Principles for Responsible
Investment, many still struggle to put their commit-
ment into practice.
The concept of sustainability and the means by
which investors can integrate ESG considerations in
the investment process have greatly evolved over the
last two decades, making it increasingly challenging
to decide on the best method of achieving this. In
parallel with the abundant utilisation of acronyms,
there is a wide range of implementation approaches
that can serve different objectives, be they personal
(ethical or moral), economic or indeed both.
A wide selection of strategies to choose from:
Although the concept of SRI is not uniquely defined,
Eurosif identifies seven distinct strategies varying
from simple Exclusions and Norms-based Screen
ing to more advanced integration methodologies
like Engagement and Proxy Voting, Integration or
Best-in-Class.
❍❍ Exclusions & Norms-based Screening: have their
roots in values-based investing and utilise neg-
ative screening to restrict investments in certain
areas (e.g. Tobacco)
❍❍ Engagement and Proxy Voting: aim to bring about
improvement and change in company behaviour
with respect to ESG issues via active [shareholder]
dialogue
❍❍ Integration Approaches (e.g. Best-in-Class): select
the best performing companies from the universe
based on a given set of sustainability metrics
Depending on the approach followed, ESG investing
can have very different results, from both a personal
as well as financial perspective. Investors need to be
aware that, under some circumstances, certain strat-
CASE STUDY
>>>
SPECIALIST VIEW
DG Justice insight
“The subject of responsible investment is an issue that has been of interest to many organisations and regu-
lators for a long time. In the aftermath of the financial crisis, the European Commission proposed a number
of policy measures that aimed at fostering long-term investment. Some of these measures, such as the pend-
ing review of the Shareholders Rights directive, aim to encourage investors to be not only more long-term-
oriented, but also more engaged and responsible owners of companies. Under the leadership of Mrs. Věra
Jourová, Justice and Consumers Commissioner - and also responsible for corporate governance matters - a
consultation was launched in December 2015, dealing with barriers to environmental, social and governance
investment. One of the responses to this consultation is that apparently short-termism remains a prominent
feature in the world of investment despite many measures that have been taken in the past - and it is likely to
be one of the issues to be assessed further in the context of a review of the Capital Markets Union.
Eurosif should be congratulated for its 2016 SRI Study. This provides important further input to the debate
which will help policy-makers to address challenges in an intelligent and effective manner’’.
Jeroen Hooijer,
Head of unit for company law and corporate governance, DG JUST, EU Commission

15
egies may result in portfolio biases that could lead
to performance differences versus the benchmark or
universe in the short to medium term.
The unintended consequences:
Climate change offers an illustrative example of
the impact sustainability has on a portfolio. COP21
was without doubt the tipping point for the invest-
ment industry and the reason climate change rightly
became a global concern. The public, media and reg-
ulatory pressure on investors to take into account
the carbon footprint of business activities they
invest in is intense and still mounting. Most parties
concerned are still examining how to deal with this
new sustainability reality.
Divesting from polluting companies, especially those
that deal in or are highly exposed to fossil fuels, can
be accomplished by a basic exclusionary approach
that screens out industries with the highest CO2 emis-
sions (e.g. energy and metals & mining). At first glance,
this may serve the purpose of lowering the portfolio’s
carbon footprint. However, it fails to take into account
that companies operating in other industries may also
have large direct or indirect carbon exposure.
Furthermore, this approach might also result in
adverse return-risk implications for some inves-
tors as it can produce inadequate diversification.
Portfolios that exclude whole industries run the risk
of unintentional industry biases, concentration risk
and factor risk. An investor needs to be aware that a
portfolio free from carbon sensitive industries could
be painful in the short term if commodity prices
recover and might lack the natural inflation hedge
that such investments typically offer.
The benefits of Best-in-Class:
A Best-in-Class investment process is well positioned
to deal with this dilemma as the approach takes a
more pragmatic and balanced view that aims at pro-
moting the best practices of companies regardless
of the industry it operates in. By screening out the
worst carbon emitters in each industry, investors are
able to lower the carbon footprint of the portfolio
substantially and still hold a portfolio that largely
represents the original benchmark index.
Critically for investors, the Best-in-Class approach
can integrate many more dimensions than just cli-
mate change. Instead, positively identifying com-
panies that are leading the way against a variety
of global sustainability challenges that are not yet
on the radar of consumers, the media or regulatory
institutions but may soon become the future equiva-
lent of ‘climate change’.
We believe that Sustainable and Responsible Investment strategies make better informed investment decisions because they evaluate
companies on the intangible risks and opportunities to which they are exposed as well as those found in traditional financial analysis
and sector studies.
CASE STUDY
Micro analysis
Stakeholders
management
Macro analysis
Exposure to Global
Sustainability Trends
C
ontinuousDialogue
Engagement
Sector
Study
Company
Analysis
>>>
Isabelle Cabie
Global Head of Responsible Development
Wim Van Hyfte
Global Head of Responsible Investments
and Research

16
SPECIALIST VIEW
European Systemic Risk Board
“Limiting systemic risk by early and gradual action
on climate change”
Meeting the international target of limiting global
warming to less than 2°C will require substantial
reductions in carbon dioxide emissions at the global
level over the next few decades. This will require a
transition to a low-carbon economy. This, in turn, will
require a decisive shift away from fossil-fuel based
energy unless the cost of carbon capture and storage
technology can be reduced in a major way.
Most studies show that under a gradual adjustment
scenario, the adjustment costs (mitigation) would be
manageable and the concomitant re-pricing of car-
bon assets should not be so large in scale and so
abrupt to involve systemic risks.
In principle, the recent Paris agreements should lead
the world towards such a gradual adjustment path.
However, in reality the trends on the ground seem
unlikely to change as quickly as implied by the Paris
agreement. It thus seems increasingly likely that
global emissions will continue to increase as before.
Most ‘BAU’ (Business as Usual) scenarios foresee that
2030 would represent the last point at which deci-
sive action could still avoid temperature increases
beyond 2°C. Some time before then action will have
to be taken.
A key question for financial markets is what happens
if the transition away from fossil fuels is late and
abrupt. In this case (i.e. a belated and sudden aware-
ness about the importance of controlling emissions),
one has to face a rapid implementation of sharp
constraints on the use of carbon-intensive energy,
possible more through quantity limits, rather than
carbon prices. The later action is taken, the more
abrupt the change will have to be, with correspond-
ingly higher adjustment costs.
In this, we call it the adverse scenario, the economy
would be adversely affected via several channels:
First, there would be a negative effect on GDP when
carbon intensive energy would be reduced suddenly,
which would be equivalent to much higher energy
costs. Second, there would be a potentially sudden
repricing of carbon-intensive assets, which become
‘stranded’. If these assets had been financed by debt,
there might be large scale non-payment problems
and bankruptcies. These two channels would tend
to interact and reinforce each other: a weak econ-
omy would further reduce energy demand and also
weaken financial intermediaries which would have to
absorb the losses from stranded assets. This could
be exacerbated by a growing incidence of catastro-
phes related to climate change, carrying particular
implications for the insurance sector and emerging
markets.
One issue that deserves further investigation is thus
the financing patterns of carbon intensive sectors.
There might be important differences across sec-
tors and countries. The major oil and gas companies
based in OECD countries appear relatively well cap-
italized, but little is known about the financing pat-
terns in emerging markets.
We recommend that to better quantify the impor-
tance of these risks, policymakers all over the world
should identify carbon-intensive exposures through-
out the financial system and consider the develop-
ment of dedicated supervisory stress tests which
incorporate elements of the adverse scenario. In the
short-term, joint research efforts of energy experts
and macroeconomists, possibly conducted in collab-
oration with other institutions and countries (espe-
cially the big emitters of CO2), could help to better
quantify the risk for the economy at large and inform
the design of specific scenarios for stress testing.
Daniel Gros and Dirk Schoenmaker
Members of the Advisory Scientific Committee of the
ESRB (European Systemic Risk Board)

17
This strategy includes a variety of themes, which allows
investors to choose specific areas of investments, typ-
ically with a close link to sustainable developments.
There are a variety of themes that comprise this strat-
egy, mostly preferred by investors who are keen to focus
on one or more areas. We have seen how over the last
few years and thanks to events such as COP2123
, held in
Paris, investors have sought to highlight how finance can
redirect capital and help push forward the transition to
a low carbon economy. The emergence of new products
and focus on certain themes has definitely increased,
as we can see from the exponential growth of sustaina-
bility themed investment in the last five years. Different
investments policies at the EU member state level also
EUR in millions
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+82%
CAGR
-42%
CAGR
+73%
CAGR
+213%
CAGR
+41%
CAGR
+37%
CAGR
+36%
CAGR
+100%
CAGR
+91%
CAGR
+8%
CAGR
+29%
CAGR
+28%
CAGR
20152013EUR in millions
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+82%
CAGR
-42%
CAGR
+73%
CAGR
+213%
CAGR
+41%
CAGR
+37%
CAGR
+36%
CAGR
+100%
CAGR
+91%
CAGR
+8%
CAGR
+29%
CAGR
+28%
CAGR
20152013
EUR in millions
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
20152013201120092007
26 468 25 361
48 090
58 961
145 249
Growth
2013-2015
+146%
Figure 5: Growth of Sustainability Themed Investments by Country
Figure 4: Growth of Sustainability Themed Investments in Europe

18
strongly influence the growth of this investment strategy
and give it a clear sense of direction. The growth rate
registered since 2013 is already extremely significant,
as shown in the graph below. European Sustainability
themed assets have now grown to reach €145 billion.
Figures 4 and 5 look at how the strategy has evolved in
the last two years across the countries. By far the larg-
est increase was registered in France, with an explosive
growth of an astonishing (CAGR) 213%. In second posi-
tion, the Netherlands with €37 billion AuM, after only
registering 1% growth last year. The UK and Switzerland
are in joint third place with €21 billion.
Investors look favourably on climate sensitive topics,
echoing the trends in international policy. The result is
that energy efficiency (also linked to retrofitting) and
renewable energy are the most favoured themes for
their investments at EU level.
19.68%
10.66%
6.82%
23.72%
6.04%
13.3%
7.29%
12.49%
Renewable energy
Energy efﬁciency
Sustainable transport
Buildings sector
Land use/Forestry/Agriculture
Water management
Waste management
Other
Other includes: Multi-theme, Climate-related
opportunities, Healthcare, Education, Safety, Well-being
Strategy Case Study: Sustainability Themed
Mirova’s Europe Environment Investment Strategy
Mirova, Natixis Asset Management’s Responsible
Investing subsidiary, offers a range of solutions rec-
onciling financial performance and economic sustain-
ability. Based on European assets only, the Europe
Environment strategy centers on environmental
issuesandaimstogalvanizetheenergytransitionand,
more broadly speaking, the ecological transition. This
strategy is both driven by and founded on one idea:
that the innovative players developing new models of
managing the environment today will be the winners
of the energy transition tomorrow. They will be the
first to usher in this crucial transition. Sustainability,
however, must incorporate multiple elements: an
investment strategy for major environmental prob-
lems necessarily presupposes the exclusion of secu-
rities with poor management both for environmental
and social risks. An ambitious environmental invest-
ment strategy must also avoid the economic models
that are historically built on the extraction and use
of fossil fuels. Responding to the various challenges
of the energy transition constitutes in itself a step
towards investment diversification, which can range
from energy efficiency in pub-
lic transport and construc-
tion, low-carbon power gen-
eration, sustainable waste management, water and
power distribution infrastructures, food safety, etc.
Selecting the players who meet environmental chal-
lenges most effectively while also excluding players
with non-sustainable risk management is the most
robust approach to reconciling financial and environ-
mental value.
This investment strategy focuses on values which
best address sustainability issues and must there-
fore use quantitative assessments that measure
impact. How can we objectively evaluate how effi-
cient choices concerning the energy transition are?
How can various sustainability matters be synthe-
tized efficiently using a transparent, even a sin-
gle measure? Mirova has decided to evaluate its
investments by measuring their carbon impact since
this allows for a quantification of the efficiency of
its management choices. This method of impact
measurement is based on a life-cycle-oriented
CASE STUDY
>>>
Figure 6: Sustainability themed investments

19
understanding of carbon and evaluates the carbon
impact of products and services by assessing the
whole value chain, rather than only the companies
involved. This understanding of impact is crucial for
evaluating both emissions induced and avoided, i.e.
the emissions that would have been produced had
the company not made specific efforts to reduce
them. Thus players are brought to the fore who offer
more energy-efficient products and who contribute
to producing low-carbon forms of energy.
Tracking the carbon impact of products and services
illustrates how efficient a strategy oriented towards
addressing environmental issues can be. For emis-
sions induced, the carbon impact is significantly
lower than a traditional diversified European bench-
mark, especially for the emissions avoided due to
the absence of fossil fuels; for emissions avoided,
the carbon impact is even better compared to the
benchmark, reflecting the strong presence of energy
transition players.
This approach is both coherent and pioneering and
has seen its environmental efficacy confirmed by the
quantitative measurement of external impact. The
approach also forms part of the seven investment
strategies which have to date been granted the TEEC
Label (Transition Energétique et Ecologique pour le
Climat, “Energy and Ecological Transition for a Better
Climate”).
CASE STUDY>>>
Stoxx 600
Europe
Environment
Induced Scope 3 181 144
Induced scopes 1&2 49 32
Avoided scopes 1&2 -2 -1
Avoided scope 3 -12 -42
All in
tCO2e/year/M€
50
100
150
200
250
0
50
CarbonIntesnityintCO2e/year/M€
Figure 7: Carbon impact compared on STOXX 600 with an Environment Strategy
Hervé Guez
Responsable Recherche ISR

20
Norms-based screening allows investors to assess
the degree to which each company in their portfo-
lios respects issues that impact Environmental, Social
and Governance criteria by adhering to global norms
on environmental protection, human rights, labour
standards and anti-corruption. Global norms are set
out in international initiatives and guidelines such
as the OECD Guidelines for Multinational Enterprises,
the ILO Tripartite Declaration of Principles concern-
ing Multinational Enterprises and Social Policy, the
UN Global Compact and, most recently, the Guiding
Principles on Business and Human Rights: Implementing
the United Nations ‘Protect, Respect and Remedy’
Framework’. Norms-based screening can be used both
as a standalone strategy, or in combination with other
strategies, typically Engagement and Exclusion. When
companies that are in the portfolio are found to be in
breach of one of these standards, investors can engage
with them and decide what kind of action needs to be
taken, and whether exclusion ought to be considered.
In the last two years, Norms-based screening has grown
by 40%, standing at over €5 trillion.
Traditionally, this strategy has been very popular in the
Nordic region. This year, we are not reporting on Norway,
typically one of the countries with a distinct preference
for the strategy and thus, this year’s European outlook
is significantly different. France leads the way with €2.6
trillion in AuM, confirming a positive trend already
reported in the previous Study. The Netherlands also
remains very prominent with almost €1 trillion in AuM.
The most common Norms-based screen is the UN Global
Compact, with ILO Conventions coming second by a very
narrow margin. The third most used category remains
the OECD Guidelines. Although fragmented, a significant
number of respondents have indicated the use of vari-
ous other guidelines24
.

21
EUR in millions
0
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
2015201320112009
988 756
2 132 394
3 633 794
5 087 774Growth
2013-2015
+40%
Figure 8: Growth of Norm-based Screening in Europe
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+20%
CAGR
+58%
CAGR
+32%
CAGR
+54%
CAGR
+23%
CAGR
+27%
CAGR
+12%
CAGR
+89%
CAGR
+30%
CAGR
-5%
CAGR
+152%
CAGR
-67%
CAGR
20152013EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+20%
CAGR
+58%
CAGR
+32%
CAGR
+54%
CAGR
+23%
CAGR
+27%
CAGR
+12%
CAGR
+89%
CAGR
+30%
CAGR
-5%
CAGR
+152%
CAGR
-67%
CAGR
20152013
Figure 9: Growth of Norms-based Screening by Country

22
This is the third most popular strategy in terms of AuM
after Exclusions and Norms-based screening. It has a
very strong link with fiduciary duty, as it is driven in large
part by the view that shareholders are stewards of assets
who are accountable to their beneficiaries for how they
manage those assets. In the 2013 Eurosif Shareholder
Stewarship report, Eurosif stressed the many different
motivations behind ESG engagement: “these include
maximising risk-adjusted returns, improving business
conduct, advancing ethical or moral considerations, and
contributing to sustainable development. Many inves-
tors also see engagement as part of their fiduciary duty
to beneficiaries”25
. Regardless of the motivation of the
investor, industry experts note that one of the keys to
constructive company dialogue is developing a business
case for change and keeping up a good level of interac-
tion with companies.
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
20152013201120092007
1 351 303
1 668 473 1 762 687
3 275 930
4 270 045
Growth
2013-2015
+30%
Figure 10: Growth of Engagement & Voting in Europe
At the policy level, European regulators have discussed
the roles and responsibilities in the engagement of
shareholders through the Shareholders Rights Directive
(SRD), as part of the Commission’s action plan to mod-
ernize corporate governance and increase corporate
transparency. The aim of the Directive is to increase
shareholders’ ability to show more responsibility. When
this report was going to print, some controversial issues
relating to the SRD were still under discussion and no
formal agreement had been reached on the text.
The strategy has grown by 30% in the past two years with
a CAGR of 14%.
On a national level, the UK continues to lead with dra-
matic growth at €2.5 trillion and a CAGR of 22%. The
Netherlands follows with €726 billion. Switzerland reg-
isters a significant growth with a CAGR of 103%.

23
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+36%
CAGR
+10%
CAGR
-4%
CAGR
-17%
CAGR
+65%
CAGR
-11%
CAGR
+6%
CAGR
-100%
CAGR
+7%
CAGR
+13%
CAGR
+103%
CAGR
+22%
CAGR
20152013
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+36%
CAGR
+10%
CAGR
-4%
CAGR
-17%
CAGR
+65%
CAGR
-11%
CAGR
+6%
CAGR
-100%
CAGR
+7%
CAGR
+13%
CAGR
+103%
CAGR
+22%
CAGR
20152013
Figure 11: Growth of Engagement & Voting by Country
SPECIALIST VIEW
Fiduciary duty: the UKSIF perspective
The 2014 Law Commission report into fiduci-
ary duties of pension fund trustees was clear:
Trustees should take all financially-material factors
into account and may consider non-financial factors –
which may cover some ethical factors – where scheme
members share the concern and where there is no risk
of significant financial detriment to the scheme26
. The
report recommended the UK investment regulations
were changed to clarify this distinction.
Despite the disappointing decision by the Government
in 2015 not to change the regulations, the UK’s
Pensions Regulator recently updated its code of
practice for defined-contribution pension schemes,
and the guidance on investment-governance is par-
ticularly welcome27
. It reflects the Law Commission’s
report and makes clear that trustees should take into
account financially material factors and may consider
non-financial factors. It also outlines the importance
of longer-term risks like climate change and poor
corporate governance and encourages trustees to
adopt good stewardship practices and be attentive
to the voting polices of their managers.
This is the first sign that the Law Commission’s work
is getting traction with UK regulators and a signif-
icant step in ensuring the legal duties and respon-
sibilities of trustees are understood. Nonetheless,
there is still more work to be done over the next few
years on clarifying rules for investment governance
for defined benefit schemes and on the contract side
of the market.
Simon Howard,
Executive Director UKSIF

24
SPECIALIST VIEW
European Parliament - Ongoing negotiations on the Shareholders’ Rights
Directive
The European Commission published its proposal
for a revision of the Shareholders’ Rights Directive
in April 2016. The revision of the shareholders’ rights
Directive is part of the initiatives foreseen in the
Commission’s Action Plan “European Company law
and corporate governance - a modern legal frame-
work for more engaged shareholders and sustaina-
ble companies”, which was launched after a series of
consultations on corporate governance issues.
The proposal for a revised Shareholders’ Rights
Directive aims at improving stability and fostering
long-term oriented decision-making, by encouraging
shareholder engagement and enhancing transpar-
ency for companies and investors. Amongst the main
instruments proposed: the possibility for listed com-
panies to identify their shareholders, transparency
provisions for institutional investors, asset managers
and proxy advisors and stronger controls over direc-
tors’ remuneration (including say on pay by share-
holders) and related party transaction.
After a long discussion, the European Parliament
approved a common position with a very large
majority in the Plenary session of July 2015. The EP
negotiating position confirmed the transparency
requirements proposed by the European Commission.
With regard to directors’ remuneration, the EP under-
lined the need to ensure that the evaluation criteria
for directors’ pay are comprehensive and take ade-
quately into consideration the financial and non-fi-
nancial performance of the companies in the long-
term. The Parliament proposed furthermore to insert
a Country-by-country reporting (CBCR) obligation for
large and listed companies on tax matter. According
to this proposal, multinationals would have to pub-
licly disclose the taxes paid in each country they
operate in (clarifying whether these companies pay
taxes where they have real economic activities).
Negotiations between the European Commission,
the Parliament and the Council started with the
Luxembourg Presidency and the first trilogue took
place in October 2015. The institutions have different
positions on several issues, in particular on CBCR, on
the engagement policy and investment strategy, on
the content of the remuneration policy and on the
procedures for the approval of related party trans-
actions. Negotiations with the Luxembourg and the
Dutch Presidencies were however very positive and
several steps forward were achieved, in particular in
the first Chapter of the piece of legislation.
We also look forward to working effectively with the
Slovak Presidency, in order to advance as much as
possible and, if possible, to finalise a comprehensive
agreement that would represent an important step
forward in enhancing corporate governance, ensur-
ing an adequate level of transparency for companies
and investors and promoting long-termism.
Sergio Cofferati,
Member of European Parliament

25
Exclusions
In compliance with the willingness to limit potential
reputational risks, investors may decide to negatively
screen companies or sectors, as part of their risk man-
agement or value-based approach. The term exclusions28
refers to the elimination of companies or of sectors from
the investment universe of the portfolio. Exclusions can
be based on ESG criteria or have a Norms-based dimen-
sion, when screening excludes companies that fail to
comply with international standards or conventions29
.
The exclusion process typically includes an evaluation
of how much company revenue, or other profit, is gener-
ated from the excluded product. This strategy has shown
exponentially consistent growth throughout the years.
EUR in millions
0
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
12 000 000
20152013201120092007
1 532 865 1 749 432
3 584 498
6 853 954
10 150 595Growth
2013-2015
+48%
EUR in millions
*Not included in 2014 study
**Growth rates calculated in CHF
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
UK
Switzerland**
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark*
Belgium
Austria
+26%
CAGR
+6%
CAGR +21%
CAGR
+19%
CAGR
+42%
CAGR
+7%
CAGR
+3%
CAGR
+62%
CAGR
+16%
CAGR
+5%
CAGR
+20%
CAGR
+99%
CAGR
20152013
Figure 13: Growth of Exclusions by Country
Figure 12: Growth of Exclusions in Europe

26
Types of exclusions
On a country level, Switzerland clearly leads at €2.5 tril-
lion, while Germany has overtaken the Netherlands30
after reaching €1.8 trillion in assets. The most remarka-
ble data comes from the UK, with a 99% CAGR. In the past
few years, rapid growth in this strategy has been attrib-
uted to the adoption of exclusions overlays, ie: deploy-
ing exclusion policies aimed at specific sectors or issues
on a wide range of assets.
The most common exclusions by type are linked to
weapons, following a trend related to the exclusions of
controversial weapons, tracked in the table below. It is
important to note that in this SRI Study we only cap-
ture assets subject to exclusions not mandated by law,
therefore the exclusion of Cluster Munitions and Anti-
Personnel Landmines (CM & APL) which are required by
law, are not considered SRI. The top exclusions remain
the most traditionally controversial sectors as shown in
the chart, confirming historical trends in Europe31
.
TABLE 2: Cluster Munitions and Anti-Personnel Landmines Exclusions32
Country (€ Mn) Exclusions without
CM&APL
Exclusions All
CM&APL
All Exclusions
Austria € 8 015 € 34 721 € 42 736
Belgium € 253 946 na € 253 946
Denmark - € 305 109 € 305 109
Finland € 41 381 € 97 041 € 138 422
France € 666 215 na € 666 215
Germany € 32 694 € 1 770 779 € 1 803 473
Italy € 3 764 € 565 964 € 569 728
Netherlands € 1 123 133 na € 1 123 133
Poland - € 2 769 € 2 769
Spain € 123 516 na € 123 516
Sweden € 30 000 € 684 638 € 714 638
Switzerland € 6 374 € 2 529 640 € 2 536 014
UK - € 1 870 896 € 1 870 896
Total EU-13 € 2 173 350 € 7 861 557 € 10 150 595
Animal Testing
Alcohol
Gambling
Other
Pornography
Nuclear Energy
Tobacco
Weapons
(Production and Trade)
Figure 14: Top exclusion criteria (EU-13 average)

27
Divestment
Divestments have been in the spotlight for the past 2 years,
becoming increasingly prominent among different actors
who use them to give more emphasis to their investment
strategies. Growing pressure on investors to divest from
fossil fuels has mainly come from two sources. The first
being a strong divestment33
movement that has emerged,
led by US college campuses, using the argument that it is
“morally wrong to profit by investing in companies that
are causing the climate crisis”. The second is the consider-
able pressure coming from leading divestment campaign
groups such as Go Fossil Free34
. This is an international
network of campaigns and campaigners working to elim-
inate fossil fuels, by asking institutions to freeze new
investments in fossil fuel companies, to divest from fossil
fuel public equities and corporate bonds within 5 years,
and to end their fossil fuels sponsorship.35
Successes of
this campaign include Stanford University’s commitment
to divest its €16.2bn endowment from coal companies,
and the Rockefeller Brothers Fund’s decision to divest
€763m from coal and tar sands.36
What’s more, the divestment debate has been influ-
enced by risk managers’ increasing concerns about
stranded assets and passive investors are looking for
solutions to reduce portfolio exposure to fossil fuels. As
shown by the Carbon Tracker Initiative, meeting inter-
nationally agreed climate targets and keeping average
temperature increase below 2°C requires up to 80% of
the existing coal, oil and gas reserves of publicly listed
companies to stay in the ground and become ‘unburn-
able’.37
The stranded assets argument has been gain-
ing increasing clout in recent years, with the fossil fuel
industry itself recognising the threat to its business and
the need to adapt.
However, investors also highlight the Important role of
engagement with companies and investments in clean
infrastructures, as preferred alternatives to divestment.
While full divestment may have negative effects, such as
increased volatility of returns and risk underperforming
in comparison with the benchmark, strategies such as
selective and partial investment are becoming increas-
ingly popular, as assets with the highest risk from cli-
mate action are targeted first – a prime example being
the coal sector.38
A parallel development is the increasing number of
investors who are starting to calculate the carbon foot-
print of their investment portfolios. While this practice
is not new (Henderson Global Investors first calculated
the carbon footprint of their SRI funds in 2006), it is
becoming increasingly common.39
It is also at the heart
of initiatives such as the PRI-backed Montreal Carbon
Pledge and the Portfolio Decarbonization Coalition.
Investors signing the Montreal Carbon Pledge, launched
in September 2014, commit to annually measuring and
disclosing the carbon footprint of their portfolios.40
There are arguments against divestment. For instance,
Professor Lord Nicholas Stern, speaking at a Bank of
England event, noted that divesting out of oil does
not incentivise companies to improve performance.
Instead, there are strategies - such as those used by the
Swedish AP4, underweighting high carbon assets - that
might prove more effective.41
In the UK, the National
Association of Pension Funds (NAPF), representing some
1,300 pension funds with assets totalling €1.2 trillion,
has warned that divestment from oil and gas may trigger
“severe losses of revenue likely over a sustained period
of time” and that it is “particularly problematic and
complex for UK pension funds” due to the composition
of the FTSE index.42
A UK union argued that low carbon investment oppor-
tunities in the UK are still limited in number and scale,
and therefore divestment from fossil fuels might trigger
“high fees and huge transaction costs” for investors.43
The UK’s Environment Agency Pension Fund (EAPF) and
Royal Bank of Scotland (RBS) also consider engage-
ment, decarbonisation and low carbon investments
more effective than divestment in tackling climate
change. Notably, EAPF prefers to approach the issue in
terms of decarbonisation, which means engaging with
fossil fuel-exposed companies to decrease emissions
rather than divesting.44
In a separate development, the
American Petroleum Institute (API), the main US oil and
gas trade body, considers divestment from fossil fuel
holdings as a breach of the investors’ fiduciary respon-
sibility, as divestment from energy stocks might reduce
return on investments. To back their claim, API members
cited research from Robert Shapiro, chairman of advi-
sory firm Sonecon, showing that “investments in U.S. oil
and natural gas stocks significantly out-performed the
other assets held by those funds.”45
The costs of fos-
sil fuel divestment were also cited by Lothian Pension
Fund in Scotland in July 2015 as a counter argument in
response to calls from the City of Edinburgh Council to
investigate divestment in terms of costs, benefits and
feasibility. Another argument used against divestment
was that it would remove access to company manage-
ment and fail to change the level of fossil fuels con-
sumed globally.46

28
2015 and 2016 divestment highlights include:
❍❍ The divestment by the Norwegian sovereign wealth
fund from 73 companies due to risk concerns linked
to environmental degradation, corruption and social
issues, arguing that companies with higher carbon
emissions, either due to direct operations or supply
chains, are facing greater regulatory risks.47
❍❍ In spring 2015, the California State Teachers’
Retirement System (CalSTRS) and the California
Public Employees Retirement System (CalPERS) were
targeted by a bill requiring them to engage with
their coal holdings and sell the shares (divest) if the
companies are not transitioning to a “clean energy”
strategy.48
❍❍ In May 2015, in response to students’ calls to divest
from the fossil fuel industry, Oxford University
announced measures to strengthen its fossil fuel
investment policy, rather than considering full
divestment.49
❍❍ In May 2015, at Climate Week Paris, French insurer
AXA pledged its willingness to sell €500 million of
coal assets before 2016 in favour of 3 billion worth of
investments in low carbon sectors by 2020. The com-
mitment, upheld by Henri de Castries, chairman and
chief executive of the French insurer, was in line with
its commitment to fight climate change50
.
❍❍ A London Assembly report focusing on the impact of
climate change on London’s economy found a trend
towards fossil fuel divestment, but also recognised
that “the value of assets held in stocks cannot all be
accommodated in renewable energy or green pro-
jects.“ The Assembly recommended that the London
Pensions Fund Authority (LPFA) divest from coal.51
❍❍ The FRC’s review of stewardship in the UK in 2015
highlighted the ‘Aiming for A’ initiative and the Kay-
inspired Investor Forum as examples of collaborative
engagement. ‘A number of asset owners have also
publicly collectively engaged very successfully in
2015. The ‘Aiming for A’ initiative involved the filing of
two shareholder resolutions, at BP and Shell. These
resolutions followed a period of engagement with
extractives and utilities companies on their man-
agement of the risks and opportunities presented
by climate change. The shareholder resolutions were
ultimately supported by the boards of each company,
and overwhelmingly approved by shareholders. The
resolutions direct the companies to feature addi-
tional information on climate strategy in their annual
reports, including emissions management, portfolio
resilience and key performance indicators’52
.
❍❍ In July 2015, Aviva created a list of 40 carbon intensive
companies with whom it engaged in 2015. Divestment
will be considered in cases where not enough pro-
gress is deemed to have been made by the compa-
nies in question. It also set an annual investment
target of £500 million (€706.8 million) in low carbon
infrastructure for the period 2015-2020.53
❍❍ In the Netherlands, Pensioenfonds Zorg & Welzijn
(PFZW), the €161 billion pension scheme covering the
Dutch health sector, announced in November 2015
before COP21 that it would reduce the CO2 emissions
of its portfolio by 50% by 2020 through divestments
from fossil fuels and engagement with companies in
their portfolio. In addition, it pledged to increase its
investments in sustainability solutions to 12% of total
assets by 2020.54
❍❍ In the run-up to COP21 in Paris, 350.org and Divest-
Invest announced that by 21 September 2015, 400
institutions representing €2.3 trillion in assets under
management had made a divestment commitment.
In December 2015, this number was over 500 insti-
tutions representing more than €3 trillion in assets.
The divestment movement spread to major cities in
France, Germany, Norway, Sweden and other coun-
tries, who committed to divest part or all of their fos-
sil fuel assets.55
Update on European Legislation on Investments into
Controversial Weapons
As elaborated in our 2014 Study, legislations banning
investments in cluster munitions are currently in place
in a number of European countries including Belgium,
France, Ireland, Italy, Luxemburg, Switzerland and the
Netherlands.
While Belgium, Italy, the Netherlands, Spain and
Switzerland have passed specific legislation banning
investments in cluster munitions, other countries such
as France, Norway and the UK, see investments in cluster
munitions producers as prohibited under the Convention
on Cluster Munitions, to which they adhere. This conven-
tion was opened for signature in December 2008 in Oslo,
and entered into force in August 2010 after being ratified
by 30 states. As of April 2016, 108 states have signed the
Convention, while 100 have ratified it or acceded to it.
In Italy, in addition to the Law on the Ratification and
Implementation of the Oslo Convention (Law No. 95)
passed in July 201156
, separate legislation is being pre-
pared following the Italian Campaign to Ban Landmines.
A legislative proposal prohibiting all Italian finan-
cial institutions from providing any form of support
to Italian and foreign companies involved in activities
related to antipersonnel mines and cluster munitions
was put to the Parliament in 2010, and approved by the

29
Chamber of Deputies’ legislative finance committee in
2012. However, the process stalled in 2013 after the early
dissolution of parliament. Since July 2015, the proposal
is once again being considered by relevant parliamen-
tary committees. Until it is adopted, Law No. 95 remains
the only Italian legislation governing investment in
cluster munitions.57
Several Italian financial institutions
have put in place divestment policies from companies
involved in cluster munitions production.58
In Spain, the government started a process to amend
its Mine Ban Treaty implementation legislation, Law 33,
enacted in October 1998, to incorporate a total ban of
antipersonnel mines and similar arms. The amendment
received royal assent and was published in July 2015.
The ban states that “(…) the financing or marketing of
this type of arms by any means, and of all related items
described in the previous paragraph, is prohibited.”59
However, the Parliament committee handling this file
rejected a broader proposal to introduce a provision
prohibiting “direct or indirect” financing of activities
related to cluster munitions.60
In the UK, a “Cluster Munition (Prohibition) Bill” received
royal assent in March 2010. As the text did not include an
explicit prohibition of financing of companies involved
in the production of cluster munitions, it was ini-
tially unclear whether such a prohibition was in place.
However, a Ministerial Statement61
issued in December
2009 confirmed that “under the current provisions of the
Bill, which have been modelled upon the definitions and
requirements of the convention, the direct financing of
cluster munitions would be prohibited. The provision of
funds directly contributing to the manufacture of these
weapons would therefore become illegal.” This leaves
out indirect financing of cluster munitions. However,
the government intends to work with the financial sec-
tor, NGOs and other stakeholders, in order to develop a
voluntary code of conduct preventing indirect financing,
and may also initiate legislation.62
In line with our research approach to go beyond leg-
islation, we present in the graph below the significant
difference between the countries that decided to apply
a more restrictive approach excluding all weapons
(France, Finland, Poland and Spain) as opposed to those
that preferred to exclude only controversial weapons
(the UK, Netherlands, Denmark, Germany, Belgium and
Switzerland).
in %
0 20 40 60 80 100
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
All Exclusions
Exclusion policy on controversial weapons (CM&APL)
Exclusion policy covering all weapons
Figure 15: Types of exclusions as % of total exclusions overlays

30
Strategy Case Study: ESG Exclusions
ESG Exclusions case study
The Situation
In 2013 Northern Trust Asset Management conducted
a survey of key European asset owners to further
understand the challenges they faced. Our clients
concluded that corporate governance in emerging
markets was one of their biggest concerns, with
investors being particularly cautious in relation to
majority owned companies, with the below factors
being front of mind:
1. Companies with concentrated ownership can
be prone to hidden self-dealing and exposed to
asset stripping, particularly in times of economic
downturn
2. Even with independent oversight in place these
mechanisms may not be enough as control of
information flows and cash flows will still be in
the hands of a majority owner
3. Companies overly dependent on one shareholder,
i.e. its managerial and administrative resources
The Challenge
Emerging market countries are attractive partly
because their prospects for generating wealth are
higher relative to more mature economies, but in
closing the wealth gap, emerging markets companies
may prefer lower standards of ESG within their own
governance processes. Moreover, recent performance
of emerging markets has been lacklustre, tainted by
an increase of reported negative ESG issues in coun-
tries such as China, Russia and India. While financial
market forces have turned more favorable toward
emerging markets, the outlook for improving eco-
nomic momentum remains uneven and slow, we will
therefore see more scrutiny paid to emerging mar-
kets as the region tries to restore strong GDP growth.
Therefore the main challenges in emerging markets
for those investors needing to adhere to ESG criteria
are:
1. About 35% of constituents of the MSCI EM Index
are owned or controlled by governments, power-
ful families or industrial groups. This isn’t neces-
sarily a bad thing – but due diligence is required
when looking to invest in these companies.
2. Limited transparency - foreign investors in EM
should demand greater ESG analysis today –
either to ameliorate their investment strategy or
comply with their governance policy.
The Solution
The ‘NT Emerging Markets Custom ESG Equity Index
Fund’ (which uses the MSCI EM Custom ESG index
built by MSCI ESG research and GMI ratings on behalf,
and under the conceptual leadership of, Northern
Trust Asset Management) aims to address the above
challenges. Firstly, by undertaking the analysis for
investors, and secondly by screening out those com-
panies that lack sufficient executive independence
and scrutiny of management. The result is an index
that seeks to balance the need for tighter govern-
ance controls with investment return.
Digging deeper
The fund uses an index that incorporates traditional
environmental and social screening with a sequen-
tial three-step governance screen, unique in emerg-
ing markets. It addresses the issue of excessive
boardroom influence by one or more parties within
emerging market corporations, using a combination
of positive and negative screens.
So how is this done?
First Stage
The first stage removes companies from the MSCI
Emerging Markets index that fail to comply with the
10 UN Global Compact principles as well as compa-
nies that manufacture or supply controversial weap-
ons or tobacco.
CASE STUDY
>>>

31
Second Stage
The second stage consists of three steps; it isolates
and excludes those corporations that fail any of
these sequential checks:
❍❍ Ownership structure: The screening out of com-
panies with controlling shareholders that have
50% or more of the ownership interest.
❍❍ Board independence: Assessing the presence of
independent directors on the board. Such direc-
tors should be free from inappropriate links to
both the company and any controlling entity. The
test identifies and fails any director who has been
a recent employee or contractor of the company
or any current material supplier, contractor or
adviser to the company or associated entities.
❍❍ Independence of key committees: Applying the
same independence test to members of the audit
and remuneration committees of the company.
We believe that well-run companies will have in
place at least some, if not all, of the universally rec-
ognised mechanisms for good governance.
The result is an index that aims to balance the need
for tighter reputational and governance controls with
investment return.
Wider thoughts
Integrating Environmental Social and Governance
(ESG) into investments can be as different as any
investment strategy, starting from most basic
methods to more sophisticated and intellectually
demanding forms.
ESG exclusion screening may indeed be the most
basic type of ESG strategy, however at the same time,
it is the clearest, most transparent and objective
method. Despite some discrepancies in beliefs, it is
also one of the most universally appealing, as it very
clearly links investment strategy with specific invest-
ment values and principles. It also provides the
easiest entry point to ESG investing for mainstream
investors.
Issued by Northern Trust Global Investments Limited.
For institutional investors only; not for retail. Does
not constitute investment advice; subject to change
without notice.
CASE STUDY>>>
northerntrust.com | Emerging Markets ESG Investing | 6 of 12
for minority shareholders to be concerned about potential dilution of their voting rights.
We noted earlier that not all countries in the MSCI Emerging Markets Index have been
reluctant to introduce legislation on ESG criteria. The stock exchanges in Brazil and South
Africa have introduced listing requirements regarding disclosure on ESG far in advance of
most peers in developed world countries. Not only do Brazil and South Africa make up one-
fifth of the MSCI EM Index, they have been working with other national stock exchanges in
emerging markets, including China, to improve their ESG disclosure.
MethoDology croSS-checkS ownerShiP
These facts only go to prove the un-sated appetite for greater ESG disclosure. Prudent
investors want to be made aware of any potential risks – often idiosyncratic to each company
– that need on-going surveillance and evaluation. And so, in order to distinguish well-run
“national champions” from their weaker peers, the methodology of Northern Trust’s new
MSCI Emerging Markets Custom ESG Index cross-checks majority ownership with the
independence of board membership and functioning of various board committees. The
conviction is that well-run companies will have in place at least some, if not all, of these
universally recognised mechanisms for good governance.
The aim is to isolate and exclude only those corporations that fail all four sequential
checks implemented by MSCI ESG Research, shown in Chart 1. In so doing, the process does
not pejoratively pre-judge majority ownership.
northern truSt
eMerging MArketS cuStoM
eSg inDeX funD
Managed to MSCI Emerging Markets
Custom ESG Index (735 securities)
Governance screening northern trust final product
Independence of
Board members
Audit & Remuneration
committee’s
Majority owned companies
Controversial/
Indiscriminate weapons
Tobacco suppliers/producers
Labor & Supply Chain
Human Rights
Governance ^
Environment
MSci
eMerging
MArketS
inDeX
818 Securities
MSCI ESG research screening
83 SecuritieS reMoveD
Source: Northern Trust, MSCI ESG Research
CHART 1
Julia Kochetygova,
Senior ESG Research Analyst

32
Policy overview 2015-2016
Since our last SRI Study, Eurosif has continued its advo-
cacy efforts and further consolidated its visibility within
the EU policy arena by representing the European SRI
industry in Brussels with the European institutions. Our
key policy wins in 2014-2015 included:
❍❍ the adoption by the European Commission of a CMU
Action Plan drawing much on Eurosif’s position on
long-termism and consideration of ESG issues in
investment decisions; and
❍❍ the European Parliament’s position on the
Shareholder Rights Directive, largely in line with our
demands on active, long-term oriented share owner-
ship and scrutiny on environmental, social and gov-
ernance (ESG) issues.
Capital Markets Union
The European Commission’s Capital Markets Union
(CMU) Initiative is a key pillar of the Juncker Investment
Plan and the main political priority of DG FISMA for now
and many years to come. The aim is to build an EU single
market for capital and enable European companies to
access capital markets in a more integrated and effec-
tive manner, in order to drive economic growth, create
jobs and meet EU investment needs. The mobilised cap-
ital will be channelled into companies, including SMEs,
and long-term infrastructure projects. On 18 February
2015, the Commission published a Green Paper and
launched a public consultation on Building a Capital
Markets Union. On 16 March 2015, Eurosif hosted a CMU
webinar and gathered input from its CMU Working Group
on its response to the Commission’s consultation. In May
2015, Eurosif responded to the consultation through its
Sustainable Capital Markets Union Manifesto. Five prior-
ity areas and 23 specific policy recommendations were
made in order to ensure that the CMU Initiative delivers
sustainable, long-term growth that serves the real econ-
omy and current and future generations of EU citizens.
Key policy demands of our CMU Manifesto included:
❍❍ Incorporating a strong and comprehensive corporate
disclosure package;
❍❍ Ensuring that environmental, social and governance
considerations transcend all investment practices
and asset classes;
❍❍ Aligning incentives to reward practices reinforcing
the long-term dimension of capital markets;
❍❍ Scaling up financial innovation and instruments serv-
ing sustainable growth.
The document was sent out to over 400 policy-makers
and Brussels-based stakeholders. From September to
December 2015, Eurosif joined Aviva and E3G in specific
advocacy activities with the EU institutions and other
key players involved in the CMU Initiative.
On 30 September 2015, the Commission launched the
CMU Action Plan defining the building blocks of an
effective and integrated CMU to be put in place by 2019.
Following that, Eurosif renewed its message on CMU
by issuing a specific position paper on the CMU Action
Plan in December 2015, advocating for further action to
support sustainable long-term investment on four key
pillars:
❍❍ Greater transparency via mandatory ESG disclosure;
❍❍ A clear definition of fiduciary duty as including ESG
issues;
❍❍ Further legislative coherence in promoting sustaina-
ble long-term investment;
❍❍ Enhanced long-term infrastructure investment.
Revision of the Shareholder Rights
Directive
EurosifhasbeeninvolvedintherevisionoftheShareholder
Rights Directive (SRD) (2007/36/EC), which dates back to
April 2014, and has engaged in informal roundtables on
several occasions. The European Council published its
mandate on 25 March 2015 and the Parliament (Legal
Affairs Committee - JURI) adopted a draft report on the
proposal on 7 May, which was voted at the plenary ses-
sion of the European Parliament on 8 July. Ahead of the
Parliament’s vote, Eurosif and Eumedion addressed a joint
letter to EPP63
and ALDE64
members of the JURI Committee
urging them to ensure that the compromise text regard-
ing the European Commission’s proposal remains both
ambitious and strong as it makes its way through the final
stages of the European legislative process. In line with
our initial position, we advocated for a revised SRD that
encourages institutional investors and asset managers to
adopt proactive and long-term share ownership policies
and practices (engagement, voting) where ESG consider-
ations play a central role. In particular, we supported the
amendments voted by the JURI Committee linking engage-
ment and remuneration policies to ESG criteria. The text
voted for by the European Parliament in July 2015 rein-
forced the importance of the ESG dimensions in these
areas, which Eurosif considered a very positive outcome.

33
Revision of the Institutions for
Occupational Retirement Provision
Directive (IORPs)
The Institutions for Occupational Retirement Provision
(IORPs) Directive (2003/41/EC) covers all occupational
pension schemes in Europe, which hold assets worth
€2.5 trillion on behalf of 75 million beneficiaries. In
March 2014, the European Commission adopted a leg-
islative proposal to revise IORPs. Aims of this proposal
included improving governance and transparency of
pension funds, promoting long-term investment, and
supporting the financing of sustainable growth in the
real economy. However, after the file was assigned to
the European Parliament’s Economic and Monetary
Affairs (ECON) Committee, the Rapporteur’s text weak-
ened IORPs’ risk management criteria by removing the
requirements initially proposed by the Commission
focused on taking into account risks related to climate
change, resource use and the environment.
In November 2015, Eurosif joined a coalition of stake-
holders led by ShareAction in an effort to improve
transparency and management of environmental, social
and governance (ESG) risks in the revision of the IORPs
Directive. Through a joint letter sent ahead of the ECON
Committee vote initially scheduled for 1 December 2015,
the coalition urged Members of the European Parliament
(MEPs) to vote in favour of several amendments which
would ensure that ESG risks are analysed, disclosed and
properly considered in pension funds’ risk assessment
and investment decisions, to the benefit of current and
future generations of IORPs beneficiaries. This effort
turned out to be a success when on 25 January 2016, the
ECON Committee voted for a compromise text largely in
line with our demands, indicating that the MEPs have
acknowledged the materiality of ESG risks for the long-
term financial performance of pension funds.
After a series of interinstitutional negotiation ‘trilogue’
meetings65
which lasted from January to June 2016, and
continued efforts by the ShareAction-led coalition, an
IORPs II compromise text was adopted at the end of June
2016. A major policy win for Eurosif and the other organi-
sations involved, was that the compromise text included
requirements for IORPs to consider ESG risks and risks
relating to stranded assets, and to explain how they
manage these risks in their statement of investment
principles.66
The text is due to be discussed and voted
upon in the European Parliament plenary in October
2016.
Green Bonds Policy Seminar
On 15 September 2015, Eurosif with the sponsorship of
Vigeo, held a policy seminar on “How can the European
Capital Markets Union harness the potential of Green
Bonds”. The seminar was a great success as we managed
to have an interesting and thought-provoking debate
on the role of Green Bonds in the current sustainable
investment arena. The event brought together a select
mix of participants from EU policy-makers, green bond
issuers and investors. Mr Aldo Romani, Deputy Head
of Funding at the European Investment Bank (EIB) in
his keynote speech highlighted that the growth of the
green bond market increased external scrutiny (in par-
ticular from investors), and thus issuer accountability.
The first panel analysed the current trends affecting
the European Green Bond market, whereas the second
one focused on the role of EU policy-makers and pro-
vided proposals as regards standards and metrics that
they can build policies upon, such as the Green Bond
Principles (GBP). Key take-aways from the seminar can
be accessed on our website at:
http://www.eurosif.org/wp-content/uploads/2015/10/
Green-Bond-summary-note-6.10.pdf
European Commission (DG JUST)
consultation on long-term and
sustainable investment
In December 2015, the European Commission launched
a public consultation on long-term and sustainable
investment, seeking to gather information on how insti-
tutional investors, asset managers and other service
providers in the investment chain factor sustainability
(ESG) information and performance of companies or
assets into investment decisions. After a thorough con-
sultation process with its constituency, Eurosif gave its
input on the consultation, stressing the importance of
key strategic points, such as:
❍❍ Integrating ESG criteria in investment decisions guar-
antees a holistic view of companies’ performance,
helping to mitigate risks and identify investment
opportunities, very much in line with the concept of
fiduciary duty;
❍❍ The increasing need for investors to rely on material
ESG data based on reliable and harmonised reporting
guidelines which take investors’ needs into account;
❍❍ More transparency is needed for and from the players
in the industry in order to make the right connections
between investors’ needs and issuers’ interests.

34
European Commission (DG FISMA)
consultation on non-financial reporting
guidelines
In January 2016, the European Commission, seeking to
collect views on non-binding guidance on methodol-
ogy for reporting of non-financial information by large
companies, launched a public consultation, so as to be
able to provide further guidance and help companies
implement provisions laid out in several EU, OECD and
UN-based frameworks. Again, Eurosif provided its valua-
ble feedback to the EU regulator stressing in particular:
❍❍ Non-financial information should focus on the mate-
rial aspects for a company, representing a true and
fair account of the way it does business and interacts
with different stakeholders.
❍❍ The guidelines should determine the main issues
that are material for companies and investors, and
set specific minimum reporting requirements based
on reporting standards that companies are already
using.
❍❍ Company KPIs and other reporting requirements
should be accompanied by disclosure of metrics, tar-
gets and objectives both quantitative and qualitative
and they should be directly correlated to the triple
bottom line.
In addition to responding to this consultation, Eurosif
issued a joint statement together with the Global
Reporting Initiative (GRI) highlighting our support for
the Commission’s initiative to develop non-binding
guidelines on methodology for reporting under the Non-
financial and Diversity Disclosure Directive. Our main
policy asks related to the respective guidelines were:
❍❍ The guidelines should explain how sustainability
information is relevant for data users, especially
investors.
❍❍ The guidelines should set out general principles and
key ideas, focusing on current practices by companies
❍❍ The guidelines should clearly refer to already existing
and widely used corporate sustainability frameworks.
In September 2016, Eurosif was invited to a round of spe-
cialist interviews and a working group session, both held
by DG Fisma, in order to give further input on the guide-
lines expected at the end of the year.
Public CbCR: a much needed tool for
investors
Ahead of the launch of the European Commission’s pro-
posal on disclosure of income tax information by multi-
national corporations on 12 April 2016, Eurosif issued a
statement endorsing the Commission’s aims. Although
not immediately obvious, the issue of corporate taxa-
tion features high on the agenda of the investors’ com-
munity, particularly for long-term focused investors, as
represented by Eurosif.
As highlighted in our position on CbCR, issued in July
2015, Eurosif and its constituency understand the extent
to which a transparent tax system plays an invaluable
role in the promotion of economic growth, by support-
ing governments in achieving their missions, and mak-
ing the much needed infrastructure investments neces-
sary to ensure the right premises for stable growth and
advancement.
Task Force on Climate-Related Financial
Disclosures (TCFD) Consultation
Seeking to facilitate a discussion on the development
of a set of voluntary, consistent climate-related finan-
cial disclosures for use by companies across industries,
the TCFD launched its Phase I public consultation on
the subject at the start of April 2016. The survey aims to
gather input to guide the taskforce’s thinking through-
out the year as it develops recommendations to sup-
port the industry and enhance transparency. On 2 May
2016, Eurosif published its response to this consulta-
tion, available at: http://www.eurosif.org/wp-content/
uploads/2016/05/Final-response-31.04.16.pdf

35
Policy Case Study: ESG Disclosure
Article 173 of the TEE (Energy and Environmental
Transition) Law: an opportunity for ESG
Following in the footsteps of COP21, the decree imple-
menting Article 173 of the Energy and Environmental
Transition Law was hailed by the SRI community as
the first example of the organisation of a direct link
between climate policy and its financing by the pub-
lic authorities.
This law differs from the multiple investor initiatives
prior to COP21 in two respects. The first is its bind-
ing character: it renders mandatory an obligation
that was often implemented on a voluntary basis.
The second aspect is its scope, which goes beyond
the single issue of climate change. This article offers
investors an approach to the issue of climate change
that is integrated into an ESG whole. This law pur-
sues a number of objectives. The first of these is pro-
moting ESG development to investors.
By requiring institutional investors to disclose their
SRI policy and to describe their methods and means
of analysis, it fosters ownership of such issues. A
number of medium-sized companies are going to
have to find out what ESG is.
But Article 173 goes further: by holding companies
to account for the impact of their SRI policies on
their investment strategy, it prevents any attempt at
making mere proclamations that will not be adhered
to once announced. Furthermore, it contributes to
raising awareness and disseminating the concept
of ESG risk. The notion that managing ESG issues is
a component of risk management has been making
headway for quite some time within industrial com-
panies and is already a part of daily operations for
the SRI community. It is particularly central to the
analysis methodology of asset management compa-
nies that are major SRI players (the OFI group being
one of them). On the other hand, for many institu-
tional investors this is an innovation and, regarding
this aspect, the law opens new avenues for the anal-
ysis of risks that the selection of particular securities
might pose to a portfolio. Furthermore, it is this risk
awareness that is initially included in climate change
considerations (the question of opportunities is also
incorporated into the law in connection with financ-
ing energy transition).
The second objective is to encourage the safeguard-
ing of assets against climate change risks. This
objective corresponds exactly to that set out in 2014
by the Governor of the Bank of England in an e-mail
distributed to the insurance world. The law and its
implementing decree refer to physical risks and the
risks associated with energy transition.
The notion of physical risk is a relatively simple one
that is very familiar to insurers and re-insurers. The
physical risks resulting from climate change are pri-
marily those linked to rising temperatures leading to
the loss of crop-growing resources, extreme weather
events and higher ocean levels severely impacting
human life, which is 50% concentrated in coastal areas.
The notion of transition risk, which is new for many
institutional investors, is particularly interesting. It
refers to the fact that citizen pressure against the
use of energy derived from fossil fuels poses a sig-
nificant risk to those companies with business mod-
els that rely on this type of energy. The scenarios
laid out by the International Energy Agency describe
an energy mix by 2050 that is considerably differ-
ent from that of today, with a majority weighting of
renewable energy. This risk has deep political roots
and it could translate into regulatory changes (taxes
and prohibitions), or a redirection of fossil-energy
subsidies, as recently highlighted in a report by the
IMF.
The third objective is to get institutional investors to
participate in efforts promoting energy transition.
Investors are urged to identify investments hav-
ing a positive impact on the climate and to calcu-
late the percentage of their assets contributing to
energy transition. To the investor, this section of
the law provides a map of opportunities specifi-
cally offered by climate change, and, more broadly,
sustainable development. The objective is to stim-
ulate investment in energy transition. The IEA sce-
narios mentioned above involve a radical shift in
energy financing. Transition is impossible unless it
can be financed. This rests on the assumption that
the financial sector will begin moving toward a low
carbon economy.
CASE STUDY
>>>

36
Impact Investing
Impact investing continues to play a key role in the
SRI market, notably after the 21st UN Climate Change
Conference of the Parties (COP21) which concluded
with a landmark agreement, which set the framework
for further investment in low-carbon technologies and
infrastructure.
Eurosif has been tracking the developments of Impact
investing since 2012, expanding the scope in the last two
studies to include specialized niche investors. While the
core philosophy - to have a positive impact on sustain-
able developments - remains the number one motivator
for investors, the financial opportunity in returns that
this strategy represents is clearly highlighted in our find-
ings. This is a positive trend and very much in line with
the key characteristic of this strategy – Return expecta-
tions67
. In the 2014 Study, we provided a table with the
definitions and key characteristics of Impact Investing68
.
As with other SRI strategies, Impact Investment is influ-
enced by local financial market characteristics includ-
ing the mix of public and private capital. As in previous
editions of the SRI Study, the Eurosif survey does not
account for philanthropic and public money, but only for
actual investments made by professional private inves-
tors. Therefore, the figures presented here may be below
the real market rate.
Although the Impact Investing market is becoming ever
more innovative and sophisticated, challenges remain.
As revealed by the 2016 Annual Impact Investor Survey69
,
the most significant challenges identified by market
players worldwide are related to the following issues:
❍❍ appropriate capital across the risk/return spectrum;
❍❍ high-quality investment opportunities (fund or
direct) with track record;
❍❍ suitable exit options, innovative deal/fund structures
to accommodate investors’ or investees’ needs;
❍❍ common understanding of definition and segmenta-
tion of the impact investing market70
.
In this year’s review, we have continued to track the main
factors that drive investors to choose impact investing,
while also looking at the barriers to this strategy. When
looking at the hurdles for investors, we continue to see
(as we have been tracking it since 2011) the lack of via-
ble products and options. Investors are looking for pos-
sibilities to scale and match the institutional minimum
investment sizes, while having a track record and invest-
For those who are unfamiliar with SRI, this law intro-
duces a large number of innovations. Lawmakers
considered that a two-year period of time might
be necessary. Compliance is voluntary: comply or
explain is the rule. Provision is made for an evalu-
ation to be drawn up in 2018 and best practices will
then be identified. Until that time, much work must
be done by investors and asset managers since all
asset classes are concerned. So far, only two asset
classes would appear to have adequate coverage:
equities and real estate.
With this law, a first step – that of transparency – has
been completed on the investor side. As to the obli-
gations of companies, Chapter 4 of the Law requires
them to provide “disclosure on the manner in which
the company takes account of the social and envi-
ronmental impacts of its activity, including the
impacts of its activity on the climate and the use of
goods and services that it produces”. We very much
look forward to the issuance of the decree, which will
make it possible to evaluate the carbon impact of
activities from design right through to recycling.
CASE STUDY>>>
Eric Van Labeck
Head of SRI Research and Development

37
ment characteristics that match their asset allocation
constraints71
. The risk concerns are very much linked to
the lack of metrics, which can hamper comparability with
repercussions on the investors’ due diligence process. In
this sense, the role played by policy makers is key. In
line with the Commission’s Single Market Act, the pol-
icy makers are exploring how private investment funds
might help investors and social businesses better reap
the benefits of the single market72
. This involves a spe-
cific focus on removing any unintended barriers within
EU fund rules to the efficient channelling of investments
into social businesses. As part of the Capital Markets
Union, the Commission has focused its attention on
speeding up and scaling up such investments.
After launching a Public Consultation on the review
of the European Venture Capital Funds (EuVECA) and
European Social Entrepreneurship Funds (EuSEF) reg-
Risk
management
Looking for
stable long-term
return
Contribute to
sustainable
development
Financial
opportunity
Responsibility
to client/
Fiduciary duty
Mistrust/concern
about
greenwashing
Performance
concerns
Lack of viable
products/options
Risk
concerns
Lack of qualiﬁed
advice/expertise
Figure 16: Incentives for impact investing
Figure 17: Impediments to demanding more impact investments

38
ulations in September 2015, the European Commission
issued a Proposal for amending the existing Regulation.
This would extend the range of managers eligible to mar-
ket and manage EuVECA and EuSEF funds, increase the
range of companies that can be invested in by EuVECA
funds, and thus make the registration and cross border
marketing of these funds easier and cheaper73
.
The impressive growth in impact investing, that was
already commented on in the previous Study and which
has been on-going for the last four years, continues to
evolve at an equally rapid pace. With a growth of 385%
in the last two years, and a CAGR of 120%, it is clear that
impact investing is here to stay. In fact, it’s set to expo-
nentially gain traction as part of the more established
SRI strategies.
EUR in millions
0
20 000
40 000
60 000
80 000
100 000
120 000
201520132011
8 750
20 269
98 329
Growth
2013-2015
+385%
EUR in millions
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
+22%
CAGR
+100%
CAGR
+100%
CAGR
+6%
CAGR
+87%
CAGR +21%
CAGR
+115%
CAGR
+100%
CAGR
+75%
CAGR
+16%
CAGR
+43%
CAGR
+81%
CAGR
20152013
Figure 19: Growth of Impact Investments by Country
Figure 18: Growth of Impact Investments in Europe

39
At a country level, the Netherlands remains the big-
gest market with €40 billion, very closely followed
by Denmark with over €31 billion. At €4.5 billion, the
UK also registers a very significant growth, despite
this year’s poor response rate from the key players.
Furthermore, it is worth mentioning that philanthropic
and public money - which are key sources of funding
to the UK social enterprise market - are not tracked, in
accordance with the Eurosif methodology.
Green Bonds
According to the International Capital Market
Association74
(ICMA)’s definition, Green Bonds are ‘any
type of bond instrument where the proceeds will be
exclusively applied to finance or re-finance in part or
in full new and/or existing eligible Green Projects and
which are aligned with the four core components75
of
the Green Bond Principles’76
(GBP). They are investment
vehicles, which fall under a main set of categories:
Asset backed Tied to a specific green projects,
e.g. infrastructure project
Corporate bonds Issued by a green company
Bonds issued by Development, international, other
financial institution
Sovereign or
Municipal bonds
EIB, KfW
Because of their environmental focus, Green Bonds can
also feature as part of sustainability themed funds and
they are considered as such by some investors in dif-
ferent European member states. However in the Eurosif
Study, and in view of the methodological approach that
falls under the definition of GBP, they are considered
part of Impact Investing.
While Green Bonds are so far mostly governed by volun-
tary guidelines, market expectations for information on
the use of proceeds are high. Issuers must be very clear
on what the outcome of the green project concerned
will be and how they will measure the impact. In order
for Green Bonds to really take off, the corporate sector
has to feel confident it can endorse it. Investors need to
have a clear set of recognised standards and rules that
determine what Green Bonds are to add credibility and
avoid ‘green washing’.
Today, there are two important market-led self-regula-
tory initiatives on the green bond market, i.e. the GBP77
and CBI78
. Stakeholders consider these two initiatives
as complementary, rather than mutually exclusive. GBP
have around 200 different market participants and, since
their first edition in 2014, have undergone reviews. The
most recent 2016 update focused on the transparency
challenges, increased the online resources for issuers
Figure 20: Green Bonds Value Chain

40
Norway = $4.9bn
Sweden = $6.1bn
Iceland = $1bn
UK = $61.8bn
Ireland = $7.8bn Denmark = $1.4bn
Germany = $14.3bn
Switzerland = $4.4bn
Italy = $5bn
Spain = $1.3bn
Portugal = $6.7bn
Netherlands = $10.4bn
France = $63.9bn
and external reviewers, set up new categories for use
of proceeds, and clarified issuer reporting requirements
and external reviews. Clarity around the reporting is the
most sensitive for investors, who need to be able to have
tools in place to measure the impact and validate the
credentials of the bond.
The green bond value chain entails a very complex eco-
system which involves several players. A second party
opinion market has rapidly emerged for the assessment
of the greenness of a project or the provision of labelling
services and monitoring of the use of proceeds. This con-
sideration also comes on top of the fact that investors
are going to be looking at the overall wider ESG consider-
ations of the issuers. In this respect, investors can do a lot
to further engage companies to keep on improving their
ESG performance, by focusing on the issues most rele-
vant to them. A report issued last year by Euromoney79
,
asking investors about what they really need from Green
Bonds, said the most useful tool to analyse Green Bonds
credentials has indeed been the screening carried out
by internal CSR research teams. As expectations on the
quality of the reports provided by the second party opin-
ions continue to increase, it is important for the qual-
ity of these reports to be perceived as generally good
and to be respecting a robust methodology, able to meet
at least the basic requirements of most investors. This
issue is consistent with the general demand for a defi-
nition of what is green. Although not all investors would
advocate for asset definition, preferring to let the market
develop, instead of imposing set parameters. However
it is important for the market to develop in a sustaina-
ble way, to ensure a level playing field that clearly out-
lines the boundaries for all the players. So far, investors
seem to be content with the flexibility provided by the
Green Bond Principles (GBP). Another important element
is the divergence between the supply and demand for
Green Bonds and identification of blocking factors in this
respect. Investors are also still in need of further clarity
when it comes to asset classes.
As predicted by analysts, the total Green Bond issuance
in 2015 amounted to over $40 billion80
and volumes
issued by corporates exceeded the volumes of the SSA
(supranational, sub-sovereign and agency) sector for
the first time.81
What’s more, 2016 Green Bond issuance
has already reached $44 billion (as of 9 August 2016) and
the CBI estimates that it could reach $100 billion.82
36%
16%9%
9%
6%
4%
3%
2%
2%
2%
11%
China
United States
France
UK
Supranationals
Canada
South Korea
India
Russia
Germany
Rest of the World
Figure 21: Top 10 countries for Climate-Aligned Bonds
Size of the market and Corporate Green Bonds:
Bonds and Climate Change: the state of the market in 2016 – pages14 and 15
https://www.climatebonds.net/files/files/CBI%20State%20of%20the%20Market%202016%20A4.pdf

41
Until 2012, the Green Bond market was dominated by
Multilateral Development Banks (MDBs), but now the
market is characterised by a wide variety of new issuers.
As a matter of fact, the last four years saw a more active
participation from private sectors issuers, including
corporates and banks. However, despite its rapid and
substantial growth, the Green Bond market still repre-
sents only a small percentage (less than 1%) of the total
bond market, estimated at $100 trillion83
. There’s a long
way to go before it reaches the scale needed to address
climate change and the other pressing environmental
issues.
Initially driven by issuers, in particular Multilateral
Development Banks (MDBs), the Green Bond market
has reached a new level of maturity. Now, both inves-
tors and policy-makers have a key role to play – inves-
tors by driving further improvements in the quality and
accountability of green bond issuance via scrutiny and
active engagement, and policy-makers by adopting pol-
icies that acknowledge the value of Green Bonds and
further promoting this market segment. The European
Investment Bank (EIB), the EU Bank, pioneered the Green
Bond market in 2007 by issuing the first bond with a
transparent allocation of proceeds to climate action.
The EIB and Green Bonds
The EIB’s Climate Awareness Bonds (CABs) have their
proceeds earmarked for allocation to eligible renewa-
ble energy and energy efficiency disbursements. The
project evaluation and selection involves a thorough
process of environmental and social due diligence,
an audited tracking, allocation and reporting system
ensuring the delivery of relevant and reliable infor-
mation on the flow of eligible disbursements, as well
as the expected impact of the recipient projects. EIB’s
activity in the area of Green Bonds has been linked to
key policy developments like the EIB’s first green bond
issue, which came in response to the EU’s Energy Action
Plan. Other important pieces of EU guidance and legis-
lation historically influencing EIB’s green bond issuance
include the Financial Services Action Plan 2005-2010,
the Prospectus Directive (the first CAB tested the pass-
porting mechanism in the whole EU for the first time)
and the Luxembourg Law on Dematerialised Securities;
In response to investors’ demand for liquidity in the
Green Bond market, in 2013 EIB adopted a benchmarking
approach, which helped to raise the profile of the mar-
ket. In 2014, Green Bonds gain traction: the Green Bond
Principles emerge as voluntary guidelines and backbone
of governance structure for the Green Bond market; sev-
eral MDBs commit to promoting the sustainable growth
of the green bond market through a joint statement on
climate finance, and the role of ‘climate bonds’ is explic-
itly recognised at the 2014 UN Climate Summit. In March
2015, EIB publishes its 2014 Climate Awareness Bond
(CAB) Newsletter in concomitance with the presentation
of the 2015 Green Bond Principles (GBPs) and the pro-
posal of a harmonised framework for green bond impact
reporting initially developed by AfDB, EIB, IBRD and
IFC. The Newsletter discloses the details of EIB’s Green
Bond practice, outlining its alignment with the Green
Bond Principles, and includes detailed impact reporting,
applying the proposed harmonised framework for the
first time. The three documents together highlight the
motors of progress in the Green Bond market: minimum
requirements, open market discussion on best practice,
and leadership by example. In October 2015, the EIB CAB
Newsletter becomes semiannual and links for the first
time project allocations to individual bonds. This is an
important development in Green Bond best practice by
the EIB, as transparency and accountability are key top-
ics in the run-up to COP21. In April 2016, the EIB pub-
lished its 2015 CAB Newsletter.

42
The European Investment Bank (EIB)
Green Bonds should be seen more as a process than
as a product. Originally intended to serve mainly
capital market objectives, in 2015, green bond issu-
ance became an autonomous strategic goal of the
EIB’s Corporate Operational Plan 2015-2017. Lack of
commonly accepted climate finance tracking defi-
nitions, project assessment methodologies and
reporting formats still limits comparability and com-
patibility of climate action data from different issu-
ers even when transparent tracking and allocation
procedures exist.
The growth of the Green Bond market has increased
external scrutiny (in particular from investors), and
thus issuer accountability, fostering the public dis-
cussion on common metrics and the transparency of
accounting and reporting frameworks. More engage-
ment by external stakeholders is incentivising better
and more comparable reporting, which in turn creates
peer pressure on issuers to improve practices, contrib-
uting to the establishment of assessment standards
and the convergence of assessment rules. All these
developments have increased the public visibility of
the green bond market, and should help its recogni-
tion in the policy arena. Inter alia, the official recogni-
tion by policy-makers would help to develop this mar-
ket by increasing the opportunity costs for non-issuers
(i.e. the cost linked to the negative public perception
associated with not issuing Green Bonds).
Recent governance improvements (GBP) have
increased investors’ trust in the value of Green
Bonds and helped the development of ad hoc invest-
ment policies which are increasingly driving the
market; corporates and municipalities have become
key market players; there is increasing attention to
sustainable transport and infrastructure, increas-
ing issuance in emerging markets (China, India), an
increasing number of standard proposals (e.g. CBI),
increasing diversity of market players and products
(e.g. covered bonds, green project bonds, munici-
pality bonds), and a lot of room for growth. EU pol-
icy-makers need to create incentive mechanisms to
facilitate scale in the Green Bond market with a view
to helping to bridge the current gap in sustainability
financing.
Green Bonds: ongoing engagement for more
credibility in environmental finance
The idea of Green Bonds is simple: the proceeds are
allocated exclusively to projects with environmen-
tal benefits, based on clear eligibility criteria whose
application can be monitored by investors. They thus
promote reporting by policy objective and live up to
both increasing demand for impact investment and
increasingly demanding regulatory requirements
with regard to transparency, accountability and com-
pliance in the context of the Paris agreement.
European Investment Bank Page 1
*Volumi in USD m
Fonte: JP Morgan al 22 agosto 2016
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
SSA Corporate Muni
808 419
862 3,351 1,585 2,728
9,960
36,604
41,833
42,000
ytd
Forecast BNEF
Graph 1: growing volumes of issuance
Issuance in USD millions
Source: JPM per 22 August 2016
Figure 22: Growing volumes of issuance
SPECIALIST VIEW
>>>

43
In the most popular format, ‘green use of proceeds
bonds’, the use of funds is not ‘back-to-back’ – the
investor’s risk lies with the issuer, and cash flows
do not differ from those associated with the issu-
er’s conventional bonds. The link between the bond
proceeds and the environmental projects is estab-
lished by the issuer via, on the one hand, ad-hoc
administration, which enables reliable allocations
to actual eligible disbursements using a trustwor-
thy record keeping to match in- and outflows; and,
on the other hand, ad-hoc reporting, which enables
external monitoring of the allocations as well as of
the expected impact from the recipient projects.
Higher volumes of issuance (see figure 22), fostered
by increasing investor demand and facilitated by
inclusive guidelines (the Green Bond Principles,
“GBP”) elaborated by the market at large under
coordination of the International Capital Markets
Association (ICMA), enable greater transparency,
which in turn motivates issuers to improve the qual-
ity of their assessment, allocation and reporting
practice incrementally.
In this virtuous circle, public monitoring and peer
pressure play an important role. Comparability, relia-
bility and standardization of Green Bond information
for the relative assessment of issuers and projects
are thus essential for both the sustainable growth of
the Green Bond market and its use for environmental
policy purposes.
A due diligence has made capital markets aware of
the deficiencies that affect environmental finance in
these areas, notably: the lack of a single set of envi-
ronmental finance tracking definitions; the absence
of common impact assessment methodologies (nota-
bly with regard to GHG-emission calculations), often
exacerbated by the absence of joint data sets; the
unavailability of shared impact reporting principles.
“Second party opinions” have provided an interim
response to the quest for trustworthiness, but are
themselves affected by the lack of reference stand-
ards. An exhaustive, standard description of the core
features of a Green Bond is still far from customary.
EIB’s contributions (see figure 23) are part of an active
and constructive dialogue among capital market and
projects experts on how to improve the status quo.
The challenge (see figure 24) lies, first, in the itemi-
zation of shared holistic taxonomies for each of the
GBP-pillars (use of funds, project selection process,
management of proceeds, reporting) and, second,
in the selection by each market participant (issuer,
investor, public authority, stock exchange, external
reviewer, NGO, etc.) of the subsets reflecting his pref-
erences (evaluation standards). Easier comparisons
lead to easier choices.
27/03/2015:
Ø  2015 edition of Green Bond
Principles (minimum
requirements)
Ø  Harmonised framework
proposal for Green Bond
impact Reporting by AfDB,
EIB, IBRD and IFC, then
circulated to the GBP-
members and observers by
ICMA on 18/5/2015
Ø  2014 CAB Newsletter: Full
disclosure of EIB’s practice
Impact Reporting – first use
of MDBs’ proposed impact
reporting template
2/10/2015:
Ø  First semiannual CAB
Newsletter: First report on
individual CAB allocations to
individual CAB-projects
2/12/2015:
Revised
Proposal for
GB impact
reporting-
harm. (11 IFIs)
Financial Services Action Plan
2005-2010
Prospectus Directive –
EU passporting mechanism
DRIVER:
ISSUERS
EUR inaugural CAB –
first ever Green Bond
First CAB benchmark
due 11/2019
Ø  9/09/2014: Joint MDB
Statement on climate
finance, including
commitment “to foster
the sustainable
development of the
green bond market”
Ø  20/9/15: UN SG Climate
Summit in NY, explicit
mention of “climate
bonds”
UNFCCC COP
21 in Paris
Law on Dematerialised
Securities in Luxembourg
13/01/14:
First edition of Green Bond Principles (GBP)
DRIVER: INTERMEDIARIES/
INVESTORS
DRIVER:
POLICY
2007
2013
2014
EIBEURGreenBondissuanceMarketandpolicyframework
6.5bn EUR CABs issued in “ECoop-minibenchmark” format
EU Energy Action Plan
Market push towards
benchmarking
Due diligence on CAB-eligibility criteria/administration and
Implementation of new first-class CAB-administration
Second CAB benchmark
due 11/2026
CAB Issuance becomes
autonomous strategic goal
on EIB’s issuance side
RE lending target 2007:
EUR 800m
RE lending in 2013:
EUR 6.5bn
24/10/15: EU 2030
Climate and Energy
Package
First European Public Offering of
Securities in all EU-Countries
First EIB-issue via LuxCSD and
dematerialised , first capital
settlement in CB-money
IFIs-
Global Capital
SRI-Awards
Pillar:
„Transparency,
accountability,
compliance“
GBP-OBS.
- Policy
makers/re-
gulators
- Exernal
reviewers
(consultants,
certifiers,
verifiers, au
rating
agencies
-Stock
exchanges
-NGOs
GBP-MEM:
Investors
Banks
Issuers
Sharedtaxonomies/multipleassesmentstandards
Graph 2: Green Bonds as processFigure 23: Green Bonds as process
SPECIALIST VIEW
>>>
>>>

44
Importantprogresshasbeenachievedinthe2016GBP,
which reference the IFI-Framework for RE/EE-impact
reporting harmonization (“IFI-Framework”) and an
External Review Form. Further work is ongoing within
the GBP in the following areas: centralization of
issuer information in ICMA’s online resource center;
harmonization of use of proceeds taxonomies; col-
lection of project selection standards; adaptation
of the IFI-Framework to the needs of non-IFI issu-
ers; extension of the IFI-Framework to other climate
action areas; joint development of a synergic opera-
tional framework by markets and official authorities
(in primis: European Commission, who is establishing
an Expert Group on Green Finance, PRC and Germany,
who hold the G20 Presidency in 2016 and 2017, and
France, who has recently announced the intention to
issue the first sovereign Green Bond in 2017).
Aldo M. Romani
is Deputy Head of Funding – Euro at EIB and
Dominika Rosolowska
is Capital Markets Officer – Americas, Asia, Pacific at EIB
SPECIALIST VIEW
Graph 3. The challenge of standardization
TAXONOMIES
•  The inclusive item lists
detailing the GBP-pillars
from which individual
stakeholders can select
the items reflecting their
preferences
•  Currently under discussion in
the GBP-WG
ESSENTIAL
FEATURES
•  The features that the
market at large
requires in a Green
Bond
•  Already established via
the GBPs (GBP-Pillars:
use of proceeds, project
selection process,
management of
proceeds, reporting)
EVALUATION-
STANDARDS
•  The exclusive item lists
detailing the sole
features which
individual stakeholders
require in a GB
•  Currently under
clarification to reflect with
precision stakeholders‘
different preferences
GBP-Taxonomies (or processes to achieve them)
GBP-Standard GB-description form
Figure 24: The challenge of standardization
>>>

45
EIB’s contributions to the development of the Green
Bond market
❍❍ 07/2007: EIB’s Climate Awareness Bond is the first
ever Green Bond, which remains a niche funding
instrument until 2012;
❍❍ 2014: extensive due diligence of EIB’s Green Bond
administration involving all relevant services –
project assessment, back-office, treasury, legal,
accounting, risk management, capital markets, etc.;
❍❍ Q1/2015: upgrade of Green Bond administration;
❍❍ 27/3/2015 (upon announcement of the 2015 GBPs):
a) disclosure of new GB-administration; b) pub-
lication of a first proposal for Green Bond impact
reporting harmonisation, a joint initiative of AfDB,
EIB, IBRD and IFC, initially drafted and coordinated
by IBRD; c) publication of EIB’s first impact report in
accordance with such proposal;
❍❍ 04-11/2015: EIB involves seven additional IFIs (ADB,
AFD, EBRD, FMO, IDB, KFW, NIB), collects their views
and drafts a revised proposal for Green Bond impact
reporting harmonisation;
❍❍ 2/12/2015: publication of the revised proposal (the
“IFI-Framework”) with the support of all institutions
involved; http://www.eib.org/attachments/fi/infor-
mationonimpactreporting.pdf
❍❍ 2-4/2016: EIB coordinates the GBP working groups
on:
- impact reporting, launching a consultation
among the GBP-issuer members, which confirms
the IFI-Framework’s adaptability to the needs of
all issuer categories;
- external review, clarifying the scope of differ-
ent forms of external review as well as adopting
the first External Review Form (ERF) itemizing
GB-core features;
❍❍ 16/6/2016: explicit reference in the GBP to the IFI-
Framework and to the ERF;
❍❍ 27/9/2016 EIB publishes a “CAB statement” describ-
ing in detail its GB-activities in 2015 (manage-
ment responsibilities, operational criteria, allo-
cation/impact reports) and accompanied by an
Independent Reasonable Assurance Report (IRAR)
by KPMG Luxembourg including a standard ERF,
thereby establishing a new best practice. On the
same date, a dedicated Green Bond platform is
announced at the Luxembourg Stock Exchange and
the IRAR is uploaded onto its improved security
cards.
http://www.eib.org/attachments/fi/
cab-statement-2015.pdf
❍❍ 5/10/2016 ICMA posts EIB’s IRAR on its online
resource center.
http://www.icmagroup.org/Regulatory-Policy-and-
Market-Practice/green-bonds/
gbp-resource-centre/

46
Social Bonds
As we analysed the rapid development of the Green
Bond market, another bond market aimed at projects
with a social objective or, so far, with a combination of
both social and environmental goals, also started to
emerge. Because of a certain degree of similarity when it
comes to denomination, investors still need some guid-
ance. Due to the fact that issuers may still intend for the
proceeds to be applied to both social and green pro-
jects, it is all the more important for investors to receive
proper guidance and information in order for them to
fully understand the implications84
.
Under its Green Bond Principles, the International
Capital Markets Association has set out guidelines for
and a definition of Social Bonds: “Social Bonds are any
type of bond instruments where the proceeds will be
exclusively applied to finance or re-finance in part, or
in full, new and/or existing Social Projects as defined in
this document, and which follow the four core compo-
nents of the GBP (use of proceeds, process for project
evaluation and selection, management of proceeds, and
reporting), as well as its recommendations on the use of
external reviews”85
.
At the time this report was being written, the Social
Projects categories had been presented in a non-ex-
haustive list: affordable basic infrastructure, access to
essential services, affordable housing, food security,
employment generation, socio-economic advancement
and empowerment.
The Social Impact Bonds are designed to address sys-
temic issues that make services ineffective for the most
vulnerable and marginalised communities. A Social
Impact Bond is essentially a public-private partner-
ship, funding effective social services through a per-
formance-based contract. The partnership is based on
a private investment which is used to develop, coor-
dinate, or expand effective service programs. In case
the program does not reach its expected outcomes,
no payments have to be made for unmet metrics and
outcomes.88
Since the world’s first Social Impact Bond was issued
in the UK (Peterborough) in September 2010, the Social
Impact Bond market has evolved considerably. Notably,
almost 60 projects linked to Social Impact Bonds have
been launched in 15 countries (as of June 2016) which
raised over 200 million USD in capital. From these pro-
jects, 22 have reported performance data, 21 have indi-
cated positive social outcomes, 12 have made outcome
payments and 4 have fully repaid investor capital.89
In parallel with the Green and Social Bond market,
another distinct but interconnected type of bonds has
emerged – the sustainability bonds. Sustainability bonds
are seen as an overlap between Social and Green Bonds,
including either type of transaction or a combination of
both. As a hybrid, sustainability bonds can raise capital
for both green and social objectives. For instance, pro-
ceeds from sustainability bonds issued so far have been
used to finance energy efficient buildings for disadvan-
taged people, clean public transport, social housing,
or education, youth and employment projects.86
HSBC
estimates that social and sustainability bonds reached
almost $15.6 billion in issuance in the first four years of
their existence.87
Under current market conditions, Social and Green
Bonds provide investors with environmental and social
benefits without sacrificing on financial returns. For issu-
ers, they impose higher reporting costs but no reduc-
tions in the cost of capital. While issuers seek reduced
financing costs for their Social and Green Bonds, inves-
tors look for high returns on investment, comparable to
those of conventional bonds. Therefore, some players
have argued that green and social bonds should receive
a more favourable prudential treatment (e.g. through
the EU Solvency Directive). By aligning the interests of
issuers, investors and society, regulators would help the
Green and Social Bonds market to develop and reach the
scale required to affect significant change.90

47
Interview with Paolo Capelli, Head of Risk Management
at Etica SGR.
ESG analysis: a tool for controlling and reducing
portfolio risk
Can ESG analysis make a tangible and measurable
contribution to controlling the financial risks of port-
folios? To what extent and in what way?
We interviewed Paolo Capelli, Head of Risk
Management at Etica SGR, the asset management
company of Banca Popolare Etica Group, the leading
Italian player in the SRI sector.
1) At Etica SGR, you have developed a model to
measure ESG risk. What does this term mean?
ESG risk means risk arising from factors associated
with ESG issues, i.e. related to environmental, social
and governance issues, which have an impact on the
performance of securities held in fund portfolios.
2) How does this model work?
Our method breaks down into four key points.
The first involves our Research Area, that is to say our
team of analysts, which selects companies within the
investment universe of our funds and assigns them
an ESG score. This initial aspect does not identify a
strictly financial risk, but is definitely a valuable part
of identifying and avoiding reputational threats. This
is important, given that in some cases, reputational
damage to a company can reduce the value of its
equities and bonds, a correlation that is particularly
clear in the case of small and mid-caps.
The second aspect regards ESG scores assigned to
the various companies. These scores are used to
calculate the weighted average score of each fund,
representing a judgement on the ESG quality of the
portfolios and not a risk measurement in its strictest
sense.
The third aspect relates to the estimated financial
loss of the equity portfolio, under stress and via
Value at Risk (VaR), due to ESG risk factors alone.
Using our model, we estimate that the risk of the
ESG component alone amounts to around 5-10% of
the overall risk. We regard this as a very significant
result.
The final point relates to the creation of a purely sta-
tistical proprietary metric that is closely correlated
to financial risk. In other words, starting with the
concept that a measure of the disorder of a system
is an estimate of its risk, we use a function based on
the level of the ESG scores and their distribution in
the fund portfolios. The result is very interesting: at
sector level (not for each individual security), there
is a strong statistical correspondence between the
ESG risk thus expressed and the financial risk, first
broken down into undiversified VaR.
3) So there is a correlation between good ESG
selection and reduced financial risk?
Precisely. The results of our analysis seem to sup-
port the view that, for the funds of Etica SGR, the
traditional assumption of moderate financial risk
goes hand-in-hand with the decision to allocate in
an investment universe of companies with high ethi-
cal value, that is to say with high ESG ratings.
INTERVIEW
Paolo Capelli,
Head of Risk Management at Etica SGR.

48
Transparency in SRI through European
Labels
The Eurosif Transparency Code
Tracing its roots back to the European Transparency
Guidelines unveiled in 2004, the Eurosif Transparency
Code was first launched in May 2008 by Eurosif and its
national member SIFs to increase the accountability and
transparency of SRI products to users.
Its driving principle is that asset manager signatories
should be open and honest, disclosing accurate, ade-
quate and timely information to enable stakeholders -
in particular retail investors - to understand the policies
and practices of a given socially responsible investment
(SRI) fund.
The Code focuses on SRI funds distributed publicly in
Europe and has been designed to cover a range of asset
classes, such as equity and fixed income.
GUIDING PRINCIPLE
Signatories to the Code should be open, honest and
disclose accurate, adequate and timely information to
enable stakeholders, in particular consumers, to under-
stand the ESG policies and practices of the fund. In the
updated version, the objectives remain:
1. To clarify the SRI approach of publicly-available
funds for investors in an easily accessible and com-
parable format.
2. To strengthen a self-regulation that contributes to
the development and promotion of SRI funds by set-
ting up a common framework for transparency best
practices.
To better reflect industry developments, the new ver-
sion includes a more compact and investor-friendly
document with fewer sections and fewer questions.
Better comparability of answers through sub-questions,
drawn from the previous Guidance Manual, is designed
to enhance the standardisation and the precision of the
answers.
Over time, the Code has had an exponential growth,
peaking in 2015. This growth confirms a rising interest in
the Code, linked to Eurosif’s brand and the recognition
of the guidelines’ value in terms of promoting the sus-
tainability of SRI products.
Figure 25: Evolution of signatories over the last three years up until September 2016
0
100
200
300
400
500
600
700
800
201620152014
569
738 711

49
Labels in Europe
The rise in SRI products over the last decade has been
matched by a growth in the development of labels, espe-
cially in the past two years and in the wake of Article
17391
and COP21. Their aim has primarily been to inform
investors of the characteristics of the products they were
buying but the labels also foster a better understanding
of what is meant by SRI and what the products are actu-
ally able to deliver. In Europe, the labels can even exist
on a governmental level. In that respect, some coun-
tries, like France, are experimenting with SRI labels at
a governmental level. Meanwhile Austria has examples
of products that were established over 10 years ago92
.
Finding their origins in the Eurosif Transparency Code,
many of these labels have been transposing its criteria
as part of their methodology. In this Study, we describe
the relevance of a clear reference in allowing the indus-
try to thrive in a transparent way.
The following list gives a partial overview of the vari-
ous labels and awards that are currently available for
investing:
CODE DE TRANSPARENCE EUROSIF
Source: Candriam Investors Group – SRI Labels in Europe: What to choose
Last Novethic ISR and Green labels attributed in 2015 can be used by some fund until the end of 2016.

50
ESG Integration: choosing the right
approach
Integration is the explicit inclusion of ESG factors by
asset managers into traditional financial analysis. The
strategy has become one of the most readily adopted
SRI strategies and at least for the past five years, over
80% of the respondents to the Eurosif questionnaire
have indicated that they have a formal integration pol-
icy document. Due to the significant lack of clarity in
the perimeter of the integration of ESG factors, it still
remains very difficult to assess the extent to which one
can actually compare strategies that fall under the same
denomination. In the 2014 Study, Eurosif attempted
to devise categories93
that could be used to ‘frame’
the Integration approach applied by asset managers.
However from this year’s findings, we were able to esti-
mate that there are still too many unknown variables
that play a role and significantly influence the practices
of integration. We therefore concluded that the concept
of integration remains a challenge to determine and its
understanding varies from one country or asset man-
ager to the next. A big part of the equation, of course,
remains the asset owners. They can exert influence on
their asset managers in determining and monitoring the
ESG quality of their portfolio by requesting reports from,
or making ex-post assessments of, their ESG character-
61%
39%
Ex-post ESG Assessment of
Portfolios/Funds
No Ex-post ESG Assessment of
Portfolios/Funds
istics. It is encouraging to note that there is a good ratio
of ex-post ESG assessments (see figure 26) and this is in
line with the rising trend also tracked by the Novethic
2015 review of responsible investors in Europe, which
refers to an increase by 3% between 2014 and 201594
.
Figure 26: integration Practices

51
Strategy Case Study: ESG Integration
The integration of environmental, social and gov-
ernance criteria (ESG integration) is an investment
process gaining momentum, not only in Europe, but
across the globe.
This is based on the conviction that it is impera-
tive to reconsider traditional financial analysis and
look at companies from a holistic point of view. The
objective is to take into account all stakeholders that
may be impacted by a company’s economic activity.
ESG integration is about more than just gaining a
clear conscience, it is about unlocking long term
economic and social value. As Marc Carney, the
Governor of the Bank of England, has mentioned
“Alongside major technological, demographic and
political shifts, our very world is changing. Shifts in
our climate bring potentially profound implications
for insurers, financial stability and the economy.”
The financial industry has come to realise the impor-
tance of tackling ESG issues as part of the financial
valuation of a company.
However, there are still some hurdles to integrating
extra-financial criteria into an investment process.
These include access to information, materiality of
criteria, forward looking data and reliability of data.
Nevertheless, the progress that has been made
over the past three years in improving knowledge
and expertise is impressive. It has resulted in an
enhanced ESG integration methodology.
ESG integration is also a pragmatic answer to some
biases of traditional restrictive SRI approaches.
Although access to information has improved sub-
stantially – thanks notably to stricter regulation –
the bias towards larger market capitalisations tends
to persist. After all, the latter are better placed to
perform well in terms of extra-financial criteria than
their smaller peers.
Materiality
Materiality is a major challenge as analyses primarily
focus on criteria which are the most likely to have
repercussions on a company’s performance in the
mid to long term.
Therefore, the challenge consists of reconciling two
time horizons: investors’ short-term quest for per-
formance on the one hand; and on the other, the
materiality of ESG challenges, which are more geared
towards the mid to long term.
Added value
The media are constantly reminding us that we live in
a global and interconnected economy. Therefore, it is
no longer possible to single out one specific element
which would then be autonomous and independent
of any other external influence. Putting a company
in a global context makes sense when establishing
a qualitative and fundamental analysis of its value
and future potential. All economic stakeholders, no
matter what level they are at, need to address mac-
ro-economic challenges such as demographics, cli-
mate change and resource scarcity.
France’s recent willingness to implement a CO2 floor
mechanism and its impact on CO2 price is a relevant
example of how investors have reconsidered tradi-
tional financial analysis. Companies’ fundamentals
should be reviewed within a global long-term frame-
work in order to guarantee the sustainability of this
‘new finance’, which will eventually be characterized
by greater stability, not only on the micro level, but
also on the macroeconomic level.
CASE STUDY
Ophélie Mortier
Responsible Investment Strategist

52
Key Features of
the European Market
Characteristics of investors
In the past two years, the registered growth of SRI has
witnessed a variety of interesting and changing patterns
across Europe, in terms of the players and the types of
investments. For instance, looking at the split between
retail and institutional assets, we note a significant
increase in favour of retail investors who seem to be
taking the lead – at least in some countries.
The country breakdown clearly illustrates the extent of
this changed scenario. Belgium shows the most impres-
sive increase in the retail market, which has clearly over-
taken the institutional side. In fact, throughout Europe
the retail side has witnessed an interesting growth
mainly due to the launch of new products by asset man-
agers and growing trend to focus on private clients, like
High Net Worth Individuals (HNWI) in the last two years.
EUR in millions
201520132011
94.10%
5.90%
96.60%
3.40%
77.93%
22.07%
RetailInstitutional
in %
0 20 40 60 80 100
Total EU-13
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
Institutional Retail
Figure 27: SRI asset breakdown by type of investor 2011-2015
Figure 28: Retail/Institutional breakdown by country

53
Asset Allocation
Figure 29 shows the SRI asset allocations by country
and provides an asset-weighted European average. At a
European level, equities represent over 30% of the SRI
assets in December 2015, a significant decrease from last
year’s 50%, and bring us back to the 2011 and 2009 lev-
els. Of note, there is a sharp increase in bonds, at 64%
from the 40% registered in December 2013. Looking in
more detail at the bond allocation, we notice that cor-
porate bonds increased significantly by over 142%95
to
this year’s 51%.
Similarly, sovereign bonds went from 16.6% to a remark-
able 41.26%. This staggering growth is a reflection of the
more prominent role played by Green Bonds. As many
private sector banks joined the ranks of green bond
issuers, they have made a significant impact on growth -
together with other corporate issuers, they contributed
an additional €10 billion of new issues out of a total
market of €39 billion in 201596
.
in %
0 20 40 60 80 100
Other
Monetary/ Deposit
Bonds
Equity
Total EU-13
UK
Switzerland
Sweden
Spain
Poland
Netherlands
Italy
Germany
France
Finland
Denmark
Belgium
Austria
51.17%
0.40%
41.26%
7.16%
Corporate Bonds
Supranational Bonds
Sovereign Bonds
Local / municipal Bonds
Figure 29: SRI asset allocation by country
Figure 30: Breakdown of European SRI bond assets

54
Market drivers and future trends
As part of our survey, we asked our respondents to list
what elements they believed held more potential to
stimulate the industry growing further. This exchange
fostered a debate around the present and future needs
of the different players and which of the main drivers
were key ones. It is interesting to note how the strong
pull from institutional investors has virtually doubled
since 2012, showing the extent to which this investors’
class retains the power to shape the industry. The slight
decrease in the degree to which external parties (NGOs,
media,…) can influence the debate just proves that the
industry is becoming increasingly mature and that the
endogenous drivers are the strongest ones. Materiality
consistently remains a key aspect for investors. We are
hoping that the regulators, today so involved in direc-
tives that carry key value in this sense, will do much to
respond to their needs.
This year we asked our respondents to explain the main
drivers and deterrents to their SRI strategy work. What
follows is a compilation of answers that gathers the
main sentiment among SRI professionals.
The leading role played by fiduciary duty as a main driver
for SRI sends a very strong message for policy makers.
In the fiduciary duty debate, fund managers have come
to see fiduciary duty as a deterrent to ESG criteria incor-
poration into their investment process. A critical piece
of evidence for this argument is the lack of consistency
in the correlation between non-financial indicators and
fiduciary duty. In December 2015, Eurosif issued its pol-
icy position for regulators on the Capital Markets Union
Action Plan, as a follow-up to the Manifesto published in
May of the same year. One of the main recommendations
made was in favour of a clear definition of fiduciary duty
as including ESG issues. As climate and wider ESG risks
are material to business, we believe that acting in the
beneficiaries’ best interest means having a long-term
approach to business and fully factoring in ESG issues in
investment decisions97
.
Concerning the top deterrents to SRI for investors, we
find that the top reason is linked to a theory that can
now be considered largely disproved: the concern that
integrating ESG factors in the investment strategy could
negatively affect returns. In second place, we find the
lack of viable products. This is potentially linked to a
bigger concern for the industry regarding the future of
the European retail demand for SRI, which as we argue in
this report, offered interesting pockets of growth across
EU members states over the past two years.
External pressure
(NGOs, media,
trade unions)
International intiatives
(PRI etc.)
Demand from
retail investors
Notion of ﬁduciary
duty
Demand from
institutional investors
Materiality
Legislative
0%
2016 2014 2012
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Figure 31: Drivers of SRI demand

55
Figure 33: Drivers to SRI strategies
Mistrust/concern
about greenwashing
Risk concerns
Lack of qualiﬁed
advice/expertise
Lack of viable
products/options
Performance concerns
Contribute to local
community development
Address climate change and
other environmental issues
Financial opportunity
Generational transfer
of wealth
Looking for stable
long-term return
Risk management
Responsibility to client/
Fiduciary duty
Figure 32: Deterrents to SRI strategies

56
TABLE 3: Market Growth by Strategy
In € million
(EU 13)
Impact
Investing
Sustainability
Themed
Exclusions Norms-based
Screening
Best-in-Class ESG
Integration
Engagement
and Voting
EU Industry
(EFAMA est.)
2013 20 269 58 961 6 853 954 3 633 794 353 555 1 900 040 3 275 930 16 800 000
2015 98 329 145 249 10 150 595 5 087 774 493 375 2 646 346 4 270 045 21 000 000
CAGR 120% 57% 22% 18% 18% 18% 14% NA
Growth 385% 146% 48% 40% 40% 39% 30% 25%
Summary and Conclusions
Some of the main growth trends highlighted in the pre-
vious SRI Study have been reaffirmed in this edition, but
there have also been some interesting shifts. Growth is
consistent across all strategies at the European level,
with rates ranging from 30% for Engagement and Voting,
up to 385% for Impact Investing - still confirmed as the
fastest growing SRI strategy this year and at €20 million
in 2013.
Perhaps the most interesting shift is linked to
Sustainability Themed, which this year registers the
spectacular growth of 146%, after being the slowest
last year with a growth rate at 22.6%. A series of high
level events and international agreements have pushed
sustainability themed investments to feature heavily in
investors’ strategies. The preferred themes relate mostly
to energy efficiency and renewable energy, very much in
accordance with the Global Climate Conference (COP21).
Exclusions98
is still the dominant SRI strategy with
over €10 trillion, demonstrating strong growth at 48%.
Switzerland continues to definitively lead the way with
€2.5 trillion, while the UK registered the highest growth at
296%. If one only considers voluntary exclusions related
to investments in cluster munitions and anti-personnel
landmines (CM&APL), this makes up about 80% of total
exclusions, whilst other types of exclusions make up
over 21% of the total exclusion figure.
Norms-based screening is the second most significant
SRI strategy with over €5 trillion AuM and a growth rate
of 40%. This strategy’s growth is noticeable beyond the
borders of the Nordic region, where it has been popular
for a long time, with peaks in France and the Netherlands.
Engagement and Voting follows quite closely in terms
of popularity with AuM at over €4 trillion and a steady
growth of 30%.
In terms of the characteristics of the players, although
institutional investors still lead the market, this year
we registered an interesting growth in the retail sector,
which went from 3.40% to 22%, signalling an important
shift mainly in countries like Belgium where private
investors and the developments of new financial prod-
ucts are making a change.
The asset allocation distribution registered a signifi-
cant decrease in equities, now at 30% of the total SRI
assets down from last year’s 50% and back to the 2011
and 2009 levels. There was a sharp increase in bonds,
which was worth noting at 64% from the 40% registered
in December 2013. This rise correlated with the surge
in Green Bonds, underlining the climate concerns that
were intensified by events such as the Paris Agreement.

57
European Data Table
The table below presents a total sum of each individual strategy per country and the total of all strategies
grouped together without overlap.
Countries Best-in-Class Sustainability
Themed
Norms-based
Screening
ESG
Integration
Engagement
and Voting
Exclusions (All) Impact
Investing
All strategies
combined
Austria 8 153 271 7 920 1 363 3 791 42 736 323 52 184
Belgium 17 542 275 50 426 90 384 45 645 253 946 340 315 900
Denmark 15 5 232 261 776 63 149 227 651 305 109 31 500 118 376
Finland 439 656 111 868 44 210 46 711 138 422 444 67 978
France 321 984 43 065 2 650 582 338 170 38 500 666 215 1 138 3 121 081
Germany 21 088 8 157 15 379 27 733 31 880 1 803 473 4 763 1 786 398
Italy 4 058 2 064 565 607 45 008 43 303 569 728 2 927 616 155
Netherlands 56 645 37 114 936 399 440 695 726 314 1 123 133 40 791 991 427
Poland 2 717 3 762 2 769 - - 2 769 34 5 998
Spain 2 535 300 24 003 8 283 10 455 123 516 267 95 334
Sweden 10 967 2 315 378 189 358 520 444 719 714 638 1 421 791 739
Switzerland 38 866 21 017 75 051 92 876 77 345 2 536 014 9 818 1 527 582
UK 8 368 21 022 7 806 1 135 955 2 573 731 1 870 896 4 564 1 555 328
Europe (13)
in € million
493 375 145 249 5 087 774 2 646 346 4 270 045 10 150 595 98 329 11 045 479

58
Country Profiles
Austria
Financial industry overview
The Austrian banking and asset management industry is
both strongly diversified and well established, with pub-
lic and cooperative banks playing a particularly impor-
tant role. The cooperative ‘Sparkassen’ is organised
collaboratively and operates under the serving of the
principle of common public interest. Other cooperative
banks are the ‘Volksbanken’ and the ‘Raiffeisenbanken’.
Austria possesses one of the most dense bank nets in
Europe.
In Austria, there are around 24 investment companies,
offering 2.067 Funds with a volume of €162.7 billion. Of
these, 1.235 are funds and 832 are discretionary man-
dates. The largest group are mixed funds (1.095), fol-
lowed by bond funds (528) and equity funds (343).99
Characteristics of SRI market
The Austrian SRI market continued to grow sustainably
over the last two years as the overall market share grew
by 6.3 %, but it has to be noted that asset overlays are
not counted100
.
The main drivers for the growth of SRI are demand from
institutional investors, external pressure (NGOs, media),
and fiduciary duty. The main institutional investors are
the severance pay funds (betriebliche Vorsorgekassen).
SRI Market and strategy overview
In this year’s review, the total figure for Exclusions
is €10 billion. This figure includes criteria especially
applied to funds and segregated mandates (prod-
uct specific). These represent the majority and total
82
271
217
323
8 153
4 575
7 920
5 467
2 060
3 791
6 580
10 189
Impact Investing
Exclusions
(Product-speciﬁc)
Best-in-Class
EUR in millions 20152013
Figure 34: Overview of SRI strategies in Austria

59
€10 billion101
. In Austria, investment in cluster munitions
and anti-personnel mines and speculation involving
foodstuffs are criteria used as asset overlays Exclusion.
TOP 5 Exclusion Criteria in Austria
1 Weapons (Production & Trade)
2 Nuclear energy
3 Pornography
4 Violation on Human Rights
5 Tobacco
EUR in millions
0
10 000
20 000
30 000
40 000
50 000
60 000
20152013
26 983
6 580
96.60%
3.40%
42 736
10 189
Exclusions (Product-speciﬁc) Exclusions (All)
23%
77%
Retail
Institutional
The main sustainable investment approach in Austria
is Exclusion. Nearly 100 % of all funds, mandates and
self-managed assets in Austria apply Exclusion crite-
ria. There is an almost equal level of preference for the
Exclusion criteria with no real favourite, which is a rather
unusual trend.
Best-in-Class and Norms-based screening, follow with
a CAGR of 33% and 20% respectively, very much in line
with the previous year, with AuM at €7,92 billion for the
latter. Austrian asset managers most commonly use: ILO
conventions and UN Global Compact principles.
In the case of Engagement and Voting, this year we have
a compound annual growth rate (CAGR) of 36%, making
this strategy the fourth most popular in the country.
Asset managers in Austria normally combine different
strategies.
The Austrian Ecolabel (österreichische Umweltzeichen),
which is granted by the Austrian Ministry of Environment,
was established in 2004 and is the oldest Label for
SRI-Funds in Europe. The Austrian “Umweltzeichen”
is a state-run quality label for thematic funds and SRI
funds as well as certificates. Over the years, demand
has increased and there are around 70 funds certified
at present.
The launch of the new quality Label in 2015, by FNG
for sustainable mutual funds and audited by Novethic,
has been the most relevant innovation on the market.
Figure 35: Exclusions in Austria (EUR m)
Figure 36: Retail/Institutional breakdown

60
The ÖGUT Sustainability Certification for severance pay
funds (Betriebliche Vorsorgekassen) has evolved since it
was first established in 2004 and now covers 100% of the
local severance pay funds market.
Legal/Regulatory Framework
Austria has not seen any remarkable legal changes con-
cerning SRI or CSR since the last edition of the SRI Study.
Nevertheless, like other EU member states, the country
will have to implement the reporting guidelines under
the Non-financial directive of the European Commission,
due at the end of the year. Specific disclosure require-
ments for pension funds were already introduced in
2005. Since then, pension funds have been required to
report on ESG issues, provided they are implementing
an ESG approach.
Asset allocation shows that bonds are still the pre-
dominant asset class with a market share of 79% in
2015. Equity had a market share of almost 20% in 2015
and other asset classes had hardly any significance in
Austria, only about 2%.
The SRI asset managers believe that the market devel-
opment will be mainly driven by demand of institu-
tional investors. External pressure, e.g. from NGOs, trade
unions or the media, is considered the second most
important key driver, followed by fiduciary duty, the
demand of retail investors and international initiatives
like PRI. Sustainable investments have grown substan-
tially within the last two years in Austria and reached
double-digit growth.
19.31%
79.25%
1.15% 0.28%
Equity
Bonds
Monetary/ Deposit
Other
Figure 37: SRI asset allocation

61
Belgium
The asset management sector provides the economy
with an important source of funding. In Belgium, the
assets that are being managed represent 68% of the
Belgian GDP, while UCIs102
made up 14,5%103
of the house-
holds’ financial assets at the end of 2015. The total AuM
were at €279.12 billion, leading up to an 11% growth dur-
ing the course of the same year.
Both the institutional and the retail/private banking
segments have shown solid rates of growth, supported
by favorable asset price evolutions (roughly 40% of
asset growth over the past two years) and by net asset
inflows (60%).
Bonds have historically constituted the most impor-
tant asset class (approximately 70% of AuM), followed
by equity (22%) and cash (4%). The rest is ‘other assets’,
including private equity, structured products and hedge
funds. It seems that the extremely low interest rate envi-
ronment will continue to support asset management
markets for a number of years to come.
Belgium has over twenty years of history in Sustainable
and Responsible Investment and the Belgian market has
been very active as a result of both NGO activism and
the proactive approach of several financial institutions.
Nevertheless, the SRI industry has not grown at the same
pace as the fund industry. This could still be due to a
general lack of harmonised SRI-product definitions and
much needed regulatory initiatives. This adds further
to the legacy of the collapse of capital-protected prod-
ucts, which also include savings accounts and which are
not taken into account in the Study. Belgium is one of
the countries where the retail market is rapidly evolv-
ing compared to the institutional one and this is due
to a series of factors. On one hand we have historical
reasons linked to the country being a hub for savings’
products and therefore targeting mainly retail clients.
On the other, we have some of the major players direct-
ing their SRI offer to private clients, therefore the surge
in demand in the retail sector can also be chalked up to
the interest of high net worth individuals (HNWI).
Positive signs for the industry may be coming from a
continued interest in the potential of SRI, coupled with
raised awareness amongst new actors. On the one hand,
institutional investors have been progressively more
exposed to and acquired increasing experience in SRI
strategies, offering a broader set of ever more sophisti-
cated SRI solutions. Nearly all financial institutions are
gradually elaborating CSR and SRI strategies, including:
by hiring increasing numbers of ESG/SRI specialists, by
linking credit policies to assets gathered on SRI savings
accounts or longer term products, by publicly defining
sector policies, by announcing SRI-defined asset man-
agement policies and by integrating ESG research into
security selection processes. On the other hand, uni-
versities have been setting up ethical committees and
categorising “ESG-issues” in the portfolios managed by
their asset managers, while local authorities are taking
their ‘fair-trade community’ or CO2-reduction plans to
the next level, by introducing sustainability into their
finances. This shows a clear trend of the importance of
the institutional market in Belgium taking the lead for
growth in SRI. To a large extent, asset owners and SRI
investors lean on financial institutions while defining
their proprietary SRI policies, underlining a major need
for further SRI education.
A number of SRI certification options for financial prod-
ucts are available on the Belgian market, including the
Ethibel PIONEER and EXCELLENCE labels. These labels
are designed for investment funds which exclusively
invest in shares or bonds included in Forum Ethibel’s
Investment Register and have a high rating, being
linked to companies with an above average corporate
social responsibility (CSR) performance. Forum Ethibel
also developed SRI indexes. The ESI Excellence Europe
index selects the 200 best companies rated according
to Forum Ethibel’s methodology. After the latest review
in March 2015, this index contained 198 companies. The
ESI Excellence Global index selects the best rated com-
panies among the largest companies worldwide, again
based on Forum Ethibel’s methodology. After the 2015
review, this index included 85 companies.104

62
62%
38%
Retail
Institutional
Figure 38: Retail/Institutional breakdown Figure 39: Net Assets of SRI Funds and their share in
the total Belgian Fund market, source BEAMA website
Figure 40: Number of SRI Funds, source BEAMA
website
There is an overall positive growth on almost all SRI
strategies this year, with the most striking one being
Impact Investing, as foreseen in the previous Study. The
growth is mainly significant given the fact that it marks
the inception of this strategy in Belgium. We anticipate
that this figure will become significantly larger in the
years ahead and that this growth will be increasingly
due to High Net Worth Individuals (HNWIs).
Exclusions still remains the dominant strategy at € 253
billion, and together with Norms-based screening, which
registers a CAGR of 58%. Conversely, the significant drop
in Sustainability Themed investments can largely be
attributed to the change in strategy of one of the main
players.
Engagement and Voting continues to be on a rising trend,
with a 20% increase of AuM, mainly thanks to the contin-
ually growing interest from the insurance sector and the
fact that over half of this year’s respondents declared
that they had a formal engagement policy, indicating a
better understanding of the advantages in the formali-
sation of practices.

63
816
275
-
340
17 542
17 132
50 426
20 235
38 006
45 645
226 026
253 946
Impact Investing
Exclusions
Best-in-Class
Figure 41: Overview of SRI strategies in Belgium
Regulatory Framework
Since the previous Eurosif Study, Belgian public author-
ities and trade bodies have shown only very timid inter-
est in further promoting Responsible Investment in
Belgium.
Historic legal initiatives and frameworks remain in place:
the 2003 Supplementary Pensions Law that mandates
some form of (non-public) ESG disclosure for Pension
Funds, the 2012 obligation for mutual funds to clarify the
extent to which ESG-factors form a part of investment pol-
icy, the 2013 “Belgian Financial Sector Federation (Febelfin)
– Belgian Asset Management Association (BEAMA)” har-
monised sustainable financial products definitions and
obligation for SRI funds to comply with the European
Transparency Code and to define and implement a policy
on controversial activities.

64
Denmark
The Danish financial services industry is characterised
by a large number of well-established asset owners,
notably in the form of private and labour market pen-
sion funds covering the bulk of the Danish labour force.
Despite its small size, Denmark hosts nine of the world’s
300 largest asset owners. As compared to asset owners
in other European markets, Danish asset owners have,
in general, considerable in-house investment expertise
and rely only to a small extent on investment consult-
ants and asset managers.
28 of the largest 50 institutional investors are asset own-
ers who with a total AuM of €386 billion (at the end 2014),
almost “equally split” the market with asset managers at
€436 billion. It is important to note that this category
also includes asset managers such as banks with pen-
sion funds which are asset owners at the same time105
.
SRI is well-established in the Danish financial sector
with a set of rather mature players. In the past couple
of years, several Danish institutional investors have
dropped out of PRI due to governance concerns with
the organization of PRI. This has led to a significant drop
from a 54% membership rate of PRI in 2012 among the 50
largest Danish institutional investors to currently 32%106
.
In the same period, Dansif has experienced a constant
increase in membership, now representing close to half
of the 50 largest institutional investors. The commit-
ment to the UN Global Compact has slightly increased
in the past year.
Dansif serves as the key convening actor for SRI in
Denmark with a broad membership base of asset own-
ers, asset managers and service providers. The organisa-
tion regularly launches surveys and hosts debates among
investors, NGOs and other interested parties, as well as
experts from both Denmark and abroad. Dansif also ini-
tiates in-depth studies on specific focus areas chosen by
the members and thus contributing to the specialisation.
All the surveyed asset owners and asset managers
have a general exclusion policy in place and Exclusions
remain the most popular strategy with AuM at €305 bil-
lion with an increase of 25% over four years (Dansif did
not feature in the Eurosif 2014 SRI Study). Norms-based
Screening follows closely, registering an increase of 22%
at €261 billion of AuM.
Engagement and Voting has also increased significantly
by 21%, confirming a strong interest in the local mar-
ket and a rising trend since 2012. The top 5 issues on
12%
88%
Retail
Institutional

65
engagement - 3 of which are environment focused - are
human rights, corporate governance, climate change,
environmental controversies and environmental impact
related. Over 75% of respondents have a formal policy
on Engagement and Voting which specifically focuses on
ESG issues.
Danish institutional investors are highly involved in
alternative investment with a focus on low-carbon and
climate-friendly infrastructure such as on and offshore
wind farms. This is in line with one of the most significant
trends regarding Sustainability themed Investments,
which reached a total AuM of €5 billion against €43 mil-
lion in 2012. There are clearly two preferences of themes
for investors, almost equally split amongst the building
sector and renewable energy. Denmark set a new world
record for wind production in 2014, getting 39.1% of its
overall electricity from the clean energy source. The lat-
est figures put the country well on track to meet its 2020
goal of getting 50% of its power from renewables107
.
This year’s results indicate a decrease in the use of Best-
in-Class investment strategies. However, this is due to
the absence of a large Asset Manager whose assets this
year were allocated under the Swedish market.
The Danish government has set the goal to be inde-
pendent of fossil fuels by 2050, with the 2020 targets of
reducing gross energy consumption by 12% from a 2006
46.15%
52.41%
Renewable energy
Buildings sector
43
5 232
-
31 500
15
127
261 776
213 906
187 718
227 651
244 227
305 109
Impact Investing
Exclusions
Best-in-Class
Figure 44: Sustainability themes applied
Figure 43: Overview of SRI strategies in Denmark

66
baseline, reaching a share of 35% renewable energy
and 50% wind energy in Danish electricity consump-
tion. According to the Danish Ministry of Foreign Affairs,
Cleantech has been the fastest-growing sector of Danish
exports in recent years and a large growth in Cleantech
exports is expected over the next four to five years.108
The ambitious climate targets and the rising Danish
Cleantech industry are expected to boost sustainability
themed investments, in particular in the areas of renew-
able energy and energy efficiency. These developments
are already apparent in the findings of this Study.
Denmark is also a signatory of conventions that prohibit
the production and use of landmines and cluster bombs.
In 1998, Denmark ratified the Ottawa Convention’s ban
on the production, use, stockpiling and transfer of land-
mines. In 2006, the Norwegian government initiated the
so-called Oslo Process, aiming to secure a new con-
vention against cluster weapons. Denmark has actively
supported the Oslo Process. The Danish Parliament has
approved Denmark’s ratification of the convention on
cluster munitions, which entered into force on 1 August
2010. Moreover, as a NATO ally, Denmark recognises the
Treaty on the Non-Proliferation of Nuclear Weapons.
Given these processes, the Danish government has
developed soft law initiatives, including recommenda-
tions for investing in controversial weapons.
According to the Danish Financial Statements Act, the
Danish financial sector is subject to reporting require-
ments for social responsibility which needs to cover the
core business of investors, i.e. their investment policy.
Additionally, more than 90% of investments by institu-
tional investors are either directly covered by the con-
ventions or subject to policies for responsible invest-
ments. Under these policies, enterprises manufacturing
weapons subject to the conventions are screened and
can lead to the systematic exclusion of such enterprises.
With regard to pension assets managed by life-assurance
and pension companies, over 99% are covered by poli-
cies against investments in weapons subject to the con-
ventions and by screening and systematic exclusion).109
In the coming years, we foresee an increase in the
use of active ownership among investors in Denmark.
Furthermore, climate will play an increasing role in both
investments as well as in RI policy through Engagement
and Exclusion.
The Danish Committee for Corporate Governance is
expected to start work on a stewardship code for
investors in 2016. However, most Danish investors have
already implemented guidelines for active ownership,
so the impact of a new stewardship code is not expected
to have major implications for most investors.
As regards asset class allocation, no major changes
can be foreseen although alternative investments are
expected to increase in infrastructure and real estate.
The contents of this country profile are based on
research and analysis conducted by Dansif and Eurosif.
35%
52%
4% 2%
Equity
Bonds
Alternative
Venture Capital/ Private Equity
Other
6%

67
Finland
At the end of 2015, the Finnish financial market110
com-
prised 281 credit institutions including deposit banks,
finance houses, credit card companies, mortgage credit
banks and others.
The Finnish banking sector maintained good results in
2015 and increased its capital adequacy, despite the chal-
lenging market environment and economic situation in
Finland, which required the sector to adapt its business
models and strategies111
. Influencing factors included low
or even negative market rates, stricter regulation, increas-
ing digitalisation and weak national economy develop-
ment. However, even under these difficult conditions, the
strength of the Finnish banking sector has enabled the
real economy by supporting growth of lending.
The insurance sector in Finland also achieved good
results in 2015, with equity and real estate investments
yielding the highest returns. However, the premium
income development was negatively impacted by the
unemployment rate, which did not show signs of recov-
ery throughout the year. At the end of 2015112
, the Finnish
insurance market included 55 licensed insurers with 38
specialising in non-life business and reinsurance, 11
in life insurance, and 6 in statutory employee pension
insurance.
Finland remains a relative newcomer to the SRI space
compared to the other Nordic countries, but since 2013,
the Finnish SRI market has grown in size and impor-
tance. As of June 2016, Finsif had over 60 member organ-
isations, including not only all of the largest pension
funds and asset managers, but also a wide variety of
other institutional players such as trade unions, endow-
ments and municipalities.
All of the largest asset managers and asset owners have
started or have at least taken the first steps to initiating
carbon footprinting and reporting for their investment
portfolios. Moreover, the largest fund management
companies have already started or will start to report
the carbon footprint for mutual funds before the end of
2016. These actions followed commitments made under
initiatives such as the Montreal Carbon Pledge and the
Portfolio Decarbonization Coalition, which mobilises
investors to measure, disclose and reduce their port-
folio carbon footprints. Investors signing the Montreal
Carbon Pledge, launched in September 2014, commit to
measuring and disclosing annually the carbon footprint
of their portfolios.
In 2016, the Finnish pension system communicated on
its commitment to take environmental considerations
into their investing113
. Varma, Finland’s largest statutory
earnings-related pension insurance company, has cal-
culated the carbon footprint of its own investments in
listed shares, corporate bonds and real estate assets.
Their goal is to reduce the carbon footprints by 25%, 15%
and 15% percent respectively by the year 2020.
During 2015, investors strengthened their ESG capaci-
ties by recruiting more ESG professionals, or putting in
place new ESG departments or teams. Key drivers for
these developments are certainly an increasing client
demand for SRI and related SRI market growth, carbon
footprinting and reporting commitments, new engage-
ment strategies and competitive advantage, as well as
pressure from media, NGOs and other key stakeholders.
Asset owners and asset managers are now using more
external ESG data and services than ever before. This is
partly linked to the carbon footprint trend, but also to
the increasing need for broader ESG data.
Impact Investing has also reached the Finnish market.
There have been product launches and other events
linked to this topic (for example as part of Finsif’s anni-
versary event in June 2015). In addition, the Finnish
Innovation Fund Sitra has been actively promoting the
field of Impact Investing focusing on developing the first
Finnish social bond. Through another project, Sitra has
been driving carbon footprinting among Finnish inves-
tors, for example by providing a free carbon footprint
calculator for Finnish listed equities, developed in coop-
eration with the Southpole Group.
Two of the most popular strategies highlighted in our
previous Study, Norms-based screening and Exclusions,
are leading again this year. Norms-based screening wit-
nessed a very significant increase of 72% reaching AuM
of €111.8 billion. Exclusions increased by 45% and it is
interesting to note the sharp focus of categories that
interest Finnish investors. Tobacco exclusion is at 50%
followed closely by nuclear energy at 42%.

68
There is a small decrease in Engagement and Voting.
However, this is due to the absence of a large Asset
Manager whose assets this year were allocated to the
Swedish market.
The Finnish market opens its doors to Impact Investing
for the first time, a strategy which has been gaining
traction amongst a number of consultancies and state-
owned investment companies.
Equity represents a large proportion of SRI assets in
Finland, closely followed this year by venture capital
and corporate bonds.
Sustainability themed investments have witnessed an
interesting growth in the country, largely due to the
change in strategy by one local asset manager and the
presence of a new player specialised in timberland
investments.
A key driver for growth is derived from the appetite
of institutional investors and the pension fund space
clearly favours SRI.
The key pieces of national legislation influencing the
Finnish investment landscape are the Companies
220
656
-
444
439
310
111 868
64 667
50 565
46 711
95 248
138 422
Impact Investing
Exclusions
Best-in-Class
Weapons
(Production and Trade)
Nuclear Energy
Tobacco
Figure 46: Overview of SRI strategies in Finland
Figure 47: Top Exclusion Criteria in Finland

69
Act, the Employment Contracts Act, the Employment
Accidents Act, as well as social security and legislation
and the extensive environmental protection legislation
in place. For instance, the Finnish Accounting Act states
that company financial accounts need to be accompa-
nied by an annual report containing information on
employment and environmental issues that can affect
the company’s economic performance.
Finland still has no direct legislation in place focusing on
sustainable investment. In 2016, however, the EU Non-
financial and Diversity Disclosure Directive with its support-
ing changes is being transposed into Finnish legislation on
a comply or explain basis. Other pieces of SRI-related EU
legislation are also implemented in Finland, and the gov-
ernment supports the voluntary implementation of the
OECD and UN guidelines on sustainable business conduct.
As regards self-regulation of stock markets and listed com-
panies, there are many good governance guidance docu-
ments for listed companies, which non-listed companies
often use voluntarily. For instance, the Finnish Securities
Market Association, whose main task is to promote and
define good securities market practice, approved a new ver-
sion of the Finnish Corporate Governance Code for Finnish
listed companies in October 2015. The recommendations
included in this code are complementary to Finnish law
and include a new guideline on diversity policy whereby
companies are recommended to define a diversity policy
and report on their objectives regarding the representation
of both genders on the board and the measures taken to
achieve those objectives114
.
Furthermore, the Finnish government has recently
developed CSR guidance for wholly and partly state-
owned companies. The latest guidance document is
the Government Resolution On State-Ownership Policy
from May 2016 and focuses on changes necessary in the
State’s ownership strategy in order to make sure that
CSR is at the core of state-owned companies and that
they contribute to sustainable development, among
other goals. In addition, companies are encouraged to
apply to internationally recognised CSR guidelines and
principles such as the OECD Guidelines for Multinational
Enterprises, the UN Global Compact, the ISO 26000 Social
Responsibility Guidance Standard and the UN Guiding
Principles on Business and Human Rights115
.
Another notable development which impacted the
Finnish SRI market was the introduction of a tool – eval-
uating how well the companies in a fund’s portfolio man-
age the ESG investing factors relevant to their industries
– by Morningstar Sustainability rating for funds.
In a separate development, the Nordic Ecolabel has
gathered Finnish investors to comment on a new label
they are preparing for mutual funds.116
The Finnish equity market continues to be a small and
concentrated market, both in terms of investors and
listed companies. There are only 125 companies listed in
the main market, with the largest three companies rep-
resenting on average 80% of each sector. The five largest
pension funds together with the five largest asset man-
agers manage a total of around €175 billion, a dominant
market share. Given the nature of the Finnish market, is
fair to estimate that Engagement and Voting will remain
highly valued among domestic investments.
Like other Nordic countries, Finland scores relatively
highly on development indexes, such as the Corruption
Perception Index, the Freedom of the Press, Equality and
Diversity Indexes. Therefore, one can argue that sustain-
able development and corporate responsibility come
naturally to Finnish investors from a moral standpoint.
This explains the prevalence of Exclusions and Norms-
based Screening as well as the high penetration of
responsible investment in general in the Finnish invest-
ment market.
2.15%
74.02%
12.21%
5.75%
3.24%
2.62%
Equity
Bonds
Alternative
Real Estate/ Property
Other

70
France
France’s pension system is made up of a public pillar
financed on a pay-as-you-go basis, a mandatory occu-
pational system, and voluntary occupational and per-
sonal arrangements117
. The statutory pension insurance
scheme is a compulsory basic social security system,
which provides earnings-related benefits for employ-
ees in the private sector. Private retirement income in
France is almost entirely based on compulsory systems.
In addition to the basic social system, all employees are
members of compulsory supplementary plans. Voluntary
occupational pension schemes are still only a small part
of the market. The compulsory schemes are known as
AGIRC (for executives) and ARRCO (for non-executives),
and are based on collective agreements. They offer
defined benefit (DB) plans. The AGIRC and the ARRCO
schemes merged in 2003. The funds are financed accord-
ing to the pay-as-you-go system based on employer and
employee contributions.
Finally, life insurance products are well developed sav-
ing products, offering client attractive tax incentives and
contributing to the importance of the insurance indus-
try sector in the country, which represents €2 trillion
in assets as of 2015118
. The French financial industry is
made up of more than 1.500 actors. There are nearly 840
asset owners of which 620 are registered with the French
Financial Markets Authorities. Most of them are small
structures - personal insurance companies, in particular
complementary health insurance entities - with limited
scopes. The field is completed by a few large asset own-
ers, especially state linked asset owners and insurance
companies.
The French asset management industry is the second
largest at European level with AuM worth €3.600 billion,
and €1.900 billion for discretionary mandates and for-
eign funds managed at national level.119
France remains among the most developed SRI markets
in Europe with around 50 Asset Managers and Asset
owners. The SRI market has grown significantly over the
last two years resulting in an increase of 61.7% in AuM.
This growth for the 2013-2015 period has outpaced the
2011-2013 growth of 47.2%.
Insurance companies are the main contributors to this
growth as the French SRI market is driven by asset own-
ers who own 90% of assets. ESG integration, in particu-
lar, is gaining ground with insurance companies.
Along with the French SIF (FIR)120
, Novethic is a key part-
ner in the Eurosif Study. In 2016, Novethic launched a
new Study on the SRI market in France121
and developed
a new methodology to assess SRI approaches in terms
of impact (high-impact, significant impact and limited
impact).
Figure 49: Overview of the European Insurance market- The place of France in the
European Insurance sector
PwC Market Research Centre - European Institutional Investors Poster September 2016 - https://www.pwc.lu/en/asset-management/docs/
pwc-european-institutional-investors.pdf - NB: Portfolio Investment of insurers and not level of premium or other criteria

71
All Responsible Investment strategies have continued to
grow, and two in particular have increased substantially
in 2015. Best-in-Class and ESG Integration account for
more than €300 billion each.
The French SRI market is traditionally defined by the
Best-in-Class approach. The significant growth of 36%
can essentially be explained by the major conversions
of funds by a few big asset owners and asset managers.
In line with the previous Study, there is still a significant
increase in Sustainability themed strategies, as the total
amount of sustainability themed assets has increased
exponentially, reaching €43 billion in 2015. The COP21
and the reporting obligations arising from Article 173
(see page 73) of France’s Energy Transition law prompted
this phenomenon.
This is due to many investors’ engagements to integrate
climate-related issues into their investment policy. The
most popular theme applied is renewable energy with
almost 40%, followed by water management at 25% and
energy efficiency at 18%.
ESG integration in financial management covers a broad
range of approaches. The Study reviews the assets cov-
ering ESG constraints and which totalled €338 billion in
2015.
Cluster munitions and anti-personnel mines exclusion
overlays are mandatory by law in France. Hence, they are
not included in the Exclusions figures.
Exclusions of weapons, tobacco and the extraction or
production of asbestos fibre are being applied by a
growing number of investors up to €666 billion, from
€473 billion in 2013. This evolution is mainly due to new
Exclusions applied by some asset owners.
Moreover, a large number of French asset managers and
investors adopted norm-based Exclusions strategies,
applied to a large share of their assets, accounting for
€2,650 billion in 2015.
Shareholder engagement is becoming formalised in
France, especially through stronger requirements from
policies of public asset owners. Two trends have been
noted:
Voting at general meetings follows a comply or explain
rule, which has led to an increase of the voting rate by
responsible asset managers, practised by 84% of those
surveyed (35% in 2010) for a majority of their shares.
In June 2013,“say-on-pay” was introduced in the AFEP-
MEDEF122
Governance Code, encouraging listed compa-
nies to let investors vote on executive remuneration at
AGMs. In 2016, the French Government introduced a pro-
ject law in the “SAPIN 2” law that is expected123
to make
the “say-on-pay” vote binding.
Some asset managers conduct engagement activities
around specific SRI products but shareholder engage-
ment is mostly conducted by asset owners. The assets
covered by such activity represent about €38.5 billion.
This figure does not account for engagement activities
4 392
43 065
1 020
1 138
321 984
173 213
2 650 582
1 119 040
55 304
38 500
472 660
666 215
Impact Investing
Exclusions
Best-in-Class
Figure 50: Overview of SRI strategies in France

72
1.78%
39.03%
5.77%
18.49%
2.22%
6.67%
1.35%
24.71%
Renewable energy
Energy efﬁciency
Buildings sector
Water management
Waste management
Others
12%
88%
Retail
Institutional
20.14%
75.37%
2.58% 1.91%
Equity
Bonds
Monetary/ Deposit
Other

73
carried out across various products as such statistics
do not exist. The figure is therefore not comparable to
other European country data in this Study but tends to
indicate that there is ample room in the French market
for more engagement.
The French Responsible Investment market was primar-
ily boosted by state-linked asset owners like the French
Reserve Fund (FRR), the French civil servants comple-
mentary pension schemes (ERAFP and IRCANTEC) and
the Caisse des Dépôts. Over the last two years, growth
in the French SRI market was again driven by asset own-
ers and specifically by private and mutual insurance
companies.
As previously mentioned, institutional investors today
hold approximately 90% of SRI assets. Insurers have
spearheaded the growth of the French market and repre-
sent more than 60% of SRI assets with total AuM of €465
billion in 2015. They have generated 55% of the increase
in the volume of Responsible Investment in 2015.
On the individual investors’ side, employee savings saw
the strongest growth (+14% in 2015). In total, the assets
held by individual investors amounted to €63 billion
and accounted for 12% of the SRI market. According to
the AFG (the French asset management association), SRI
AuM in employee savings rose to €22 billion. Besides
employee savings, French retail and high net worth indi-
viduals SRI asset saw a timid growth.
Three quarters of SRI assets in the French market are
bonds, while shares represent approximately 20% of
total assets. This breakdown by asset allocation is linked
with the large share of institutional investors in the
French SRI market, as the latter are mainly fixed income
oriented.
In France, the main innovation in the legal regulatory
framework is the Article 173 of the France’s Energy
Transition law of August 2015. Asset owners and asset
managers are now required to disclose information on
their management of climate-related risks, and, more
broadly, on the integration of ESG parameters in their
investment policies. This regulation is clearly a step for-
ward, and France is the first country to introduce such
disclosure requirements. In all likelihood, a few more
years may be necessary to measure its impact on asset
owners’ practices.
The French Sustainable Investment Forum (French SIF)
has published a guidance booklet124
to support and facil-
itate the implementation of this article by asset own-
ers. Other associations (asset owners, asset managers,
insurers, etc.) also released documents for their mem-
bers and the French SIF’s publication reflects the sin-
gular identity of the association, which brings together
asset owners, asset managers, but also rating agencies,
brokers, trade unions, consultants, academics, etc.
In France, the context of fund labelling has greatly
evolved over the last two years. Two new labels have
been introduced in 2015, both supported by the French
government. They take over Novethic’s SRI and green
labels which stay in effect until the end of 2016. The
SRI label was launched by the Minister of Finance in
September 2015 during the Responsible Finance Week.
The Energy and Ecological Transition for Climate label
(so called TEEC) run by the Ministry of Environment was
launched during COP21.
For both labels, requirements have been defined and
auditors are accredited by a specific body called COFRAC.
Asset managers are free to contract with accredited
auditors.
The SRI label’s methodological framework introduced
an impact dimension through mandatory reporting on
at least one indicator in each Environmental Social and
Governance pillar. At the beginning, each asset manager
will choose indicators they find relevant for each pillar,
and then the framework should evolve following best
practices. These new requirements complement other
transparency and technical requirements. As of today,
Afnor Certification and EY France have been accred-
ited to audit and deliver certification to SRI funds.
Discussions are on-going for the accreditation of other
auditors. First labels were attributed in September 2016
and at least 50 funds should be labelled by the end of
2016. The promotion of the SRI label is ensured by a ded-
icated committee formed with representatives of French
SIF, AFG, the French asset management association and
the Ministry of Finance. Label promotion towards the
general public started in the autumn of 2016, through
the launch of a website and social network communi-
cations. This promotion will progressively reach other
mass media.
The TEEC label’s methodological framework is based
on the Climate Bond Initiative taxonomy to define
green investment themes, and requires fund managers
to exclude fossil fuels and nuclear power. The invest-
ment universe is limited to Europe. TEEC label is open
to a wide range of fund types (listed equity, green
bond funds, private equity and green infrastructure).

74
The article 173-VI of the French Energy Transition Law incentivizes investors to integrate climate and ESG
issues through a mandatory reporting on how they integrate these issues into their investment policies,
how they contribute to the energy transition to limit global warming to 2°C.
The text has a “comply or explain” approach and investors will have to report starting 2017 on 2016 data.
The French government has planned to review the implementation decree by the end of 2018, after two
years of experimentation. This ground-breaking law is the first of its kind to make ESG and climate report-
ing mandatory and it could inspire similar bills in other countries and at European level.
The booklet on this article released by French SIF is divided in two parts: the first one is focused on
the spirit of the law in order to understand its objectives and principles. The second one is a roadmap
designed to help newcomers on these topics to initiate an ESG-Climate process by having a look at best
practices. Aiming to be clear and pedagogical, the booklet includes a glossary and a bibliography, but
also testimonies from experts, leading French figures like Nicolas Hulot, Ségolène Royal, Minister of
Environment or Michel Sapin, Minister of Finance but also international experts from FSB climate disclo-
sure taskforce.
This booklet, available in both English and French, also aims to open a dialogue platform and allow read-
ers in its online version to post comments, share views, experience or good practices.
Table 4
Article 173 - FIR guidance booklet for Investors
EY France and Novethic have been accredited to audit
and deliver certification to green funds. The first certi-
fications were granted in May 2016 and AuM targeted by
Minister of Environment, Ségolène Royal is € 1 billion by
the end of 2016.
The CIES label is delivered by the French CIES (Inter-
Union Employees Savings Fund Committee), an entity
gathering four trade union organizations (CFDT, CGT,
CFTC and CFE-CGC). It ensures that the range of funds
proposed as part of employee savings scheme are tak-
ing into account ESG criteria in their asset management.
The range of funds has to fulfil several requirements like
socially responsible asset management, fund govern-
ance or price level, to obtain the label. Some 15 ranges
of funds are CIES-labelled.

75
Germany
Although only one German bank ranks among the 25
largest banks in the world, the German banking industry
is one of the largest in the world and the financial sector
constitutes 4% of the country’s 2015 GDP.
The German finance industry is highly diversified and
home to more than 361 asset management companies.
The market is largely driven by the public sector and
cooperative banks. The German fund industry managed
€2.6 trillion as of December 2015. €378 billion of this
was collected as assets outside investment funds, while
retail funds and mandates accounted for €883 billion
and €1.3 trillion respectively. Insurance companies con-
tinue to be the largest investor group for mandates,
making up just under 48% of all AuM, or €530 billion.
Fund companies are managing a further €276 billion
for retirement benefit schemes, such as pension funds.
Since the end of 2009, equity funds have been the larg-
est group among retail funds in terms of volume. Since
then, their AuM grew from €180 billion to €322 billion.
This equates to a current market share of 36%125
.
All three pillars of the German banking industry – pub-
lic-owned as well as private and cooperative banks – are
important with respect to the SRI market. The govern-
ment-owned bank KfW is active in the field of sustain-
able investment. Several private banks, including the
market leaders, offer a broad variety of SRI products.
A few other SRI specialised fund management compa-
nies are less important in quantitative terms but vitally
important with regard to standard setting and best
practice.
Another characteristic of the German SRI market is the
high amount of sustainability-oriented specialist banks
in Germany, which play an important role within the
German sustainable finance and investment market.
These include players such as Triodos, Umweltbank,
GLS-Bank, Bank im Bistum Essen, DKM Münster, Bank für
Kirche und Caritas, Evangelische Bank, Bank für Kirche
und Caritas, Bank für Kirche und Diakonie and Bank für
Sozialwirtschaft. Some of these contributed decisively
to the development and promotion of SRI in its early
days, dating back to the last century. They play a signif-
icant role in the financing of companies, projects and
initiatives that contribute to sustainable development.
Moreover, they employ a broad set of ethical criteria in
their investment decisions that comprise Exclusions as
well as ESG screenings.
The overall outlook across SRI strategies in Germany
is very positive and made of double- and triple-digit
growth. In the case of Engagement and Voting, we have a
CAGR of 65% this year, an outstanding result considering
that the CAGR in the previous review of just above 20%
was already remarkable.
4 127
8 157
1 366
4 763
21 088
15 813
15 379
10 177
11 736
31 880
25 269
44 884
Impact Investing
Exclusions
(Product-speciﬁc)
Best-in-Class
Figure 54: Overview of SRI strategies in Germany

76
The overall market share in Germany for funds and man-
dates is at 2.7%, but it has to be noted that asset over-
lays are not counted126
.
In this year’s review, the total figure for Exclusions is €1.8
trillion. This figure includes criteria especially applied
to funds and segregated mandates (product specific),
which totals €44,884 million, plus exclusions applied as
asset overlays to product ranges.
Since the inception of SRI in Germany, the country’s main
sustainable investment approach has been the appli-
cation of Exclusion criteria. These are mainly focused
on weapons (both production and trade), violation of
labour rights, violation of human rights, environmen-
tal damage, and corruption. In the past two years, ESG
integration has become the second most important SRI
Strategy.
The non Product-specific Exclusions are usually anti-per-
sonnel mines and cluster munitions.
TOP 5 Exclusion Criteria in Germany
1 Weapons (Production & Trade)
2 Nuclear energy
3 Pornography
4 Violation on Human Rights
5 Tobacco
The Best-in-Class approach in Germany has gone from
being the second most important sustainable invest-
ment strategy to this year being the seventh in terms
of growth. Nevertheless, it still registers an important
growth of 33% this year and a CAGR of 15%.
The main drivers for this category are demand of insti-
tutional investors, legislative, and external pressure
(NGOs, media).
Impact Investing is largely driven by two specialised
players, who represent 81% of the AuM for this strategy.
Microfinance still features as one of the main categories
of investment, representing 75% of all the categories
looked at.
The main motivators for Impact Investing are linked to
the wish to contribute to sustainable development and
local community development – very much in line with
the drivers linked to these strategies127
.
Another related category of investment which also
closely monitors impacts is Sustainability Themed
investment, and it has grown by 98% since the pre-
vious review with a CAGR of 41%. Renewable energy
and energy efficiency are the most popular categories
of investment. This is fitting, considering Germany’s
position as the second biggest player in the European
market for investment in renewables, which reached
$8.5 billion128
in 2015. This is closely linked to Germany’s
Renewable Energy Act (Erneuerbare-Energien-Gesetz,
EEG), which first came into force in 2000 and has since
been continuously revised. The act promotes the gen-
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
20152013
893 685
25 269
96.60%
3.40%
1 803 473
44 884
Figure 55: Exclusions in Germany (EUR m)

77
eration of electricity using renewable energy sources.
The initial goal of the EEG was to facilitate market entry
for new technologies - such as wind and solar - through
fixed payments, guaranteed purchase, and preferential
feed-in. The EEG created the basis for the development
of renewables in Germany and their transition from
niche to a key pillar representing 25% of the German
electricity supply. However, this exponential growth
also resulted in an increase of the EEG levy. A reformed
version of the EEG came into force in August 2014. The
main objectives of this reform were to put a halt to cost
increases, to steer the further development of renewa-
bles, and to better connect them to the market.129
An important development in 2015 was the launch of a
new quality label for mutual funds, the FNG Label for sus-
tainable mutual funds, audited by Novethic. In Germany,
no new formal SRI initiatives have been launched since
the last edition of the SRI Study. However, the strong
focus on ESG consideration on the part of the banking
and investment sector are still worth noting. Nearly
every important financial industry organisation has
implemented taskforces on sustainability. For instance,
the BVI, the largest asset management association,
launched a voluntary guide for SRI as early as 2012, and
in 2015, the GDV - the German Insurers – followed suit.
Furthermore, foundations continue to be engaged in
SRI. The church is traditionally active in this field, and
after the launch of the Guideline “Leitfaden für ethisch
Nachhaltige Geldanlagen in der evangelischen Kirche”
in 2011, they published a renewed version in 2013. The
Catholic Church - Deutsche Bischofskonferenz (German
Bishops’ Conference) und Zentralkomitee der deutschen
Katholiken (ZdK- Central Committee of German Catholics)
- followed in 2015 with its guide “Ethisch-nachhaltig
investieren”.
No specific regulation on SRI or CSR has been enforced
since the previous edition of the Eurosif SRI Study.
There was nevertheless an update, as reforms of the
Renewable Energies Act are being made.
By the end of 2016, the EU-Directive on disclosure of
non-financial and diversity information by certain
large undertakings and groups will be implemented in
German law.
1.36%
69.20%
4.47%
24.96%
Renewable energy
Energy efﬁciency
Water management
14.67%
85.33%
Institutional
Retail
Figure 56: Sustainability themes applied Figure 57: Retail/Institutional breakdown

78
German authorities are taking important steps to imple-
ment strategic sustainability goals in the financial sec-
tor. The UN Sustainable Development Goals as well as
the targets of COP-21 in Paris are increasingly focusing
on the financial sector.
As in previous years, survey participants from Germany
see institutional investors as key drivers to SRI mar-
ket growth over the next few years. Today, institutional
investors represent 85% of the total AuM invested in SRI.
Other main drivers for SRI are legislation and external
pressure from NGOs, media and other stakeholders. As
for the types of institutional investors, public pension
funds play the most significant role with a share of 48%.
They are followed by religious institutions and charities,
at 24%, and foundations, at 12%.
With respect to asset allocation, the importance of
bonds decreased. Their market share went from 48% in
2013 to 31% in 2015. Conversely, equity gained market
share in 2015 (44% compared to 30% in 2013).
The following years could see an increase in new activi-
ties developing around SRI. In particular, the 2015 Paris
Climate Conference raised awareness of green finance
and both investors and authorities have begun to react
to the risks and opportunities posed by climate change.
Chancellor Angela Merkel mentioned the importance of
sustainable and responsible investments in a welcoming
address to the Council for Sustainable Development.130
1.58%
44.49%
0.10%
31.48%
17.18%
5.18%
Equity
Bonds
Venture Cap/ Private Equity
Monetary/ Deposit
Other

79
Italy
The Financial industry overview
In the last two years, and especially in 2015, the Italian
financial market has benefited from the start of economic
recovery and an expansionary monetary policy. Indeed,
the value of corporate shares and bonds increased while
yields on government bonds decreased131
.
At the end of 2015, the total assets managed by insti-
tutional investors in Italy (insurance companies, pen-
sion funds, mutual funds and wealth management)
amounted to about €1,400 billion132
.
The market is mainly driven by a few big players, in
particular insurance companies. Indeed, Italy repre-
sents one of the top four insurance markets by GWP at
European level133
.
Furthermore pension funds increased their market
presence over the last two years, although their assets
are still limited: according to the data published by
COVIP (the Italian Supervisory Commission on Pension
Funds and Plans) voluntary pension schemes (Second
Pillar) represent a total AuM of around €140 billion
as of December 2015. €55,3 billion are represented by
Fondi Pensione Preesistenti and €42,5 billion by Fondi
Pensione Negoziali.
As of December 2015, the Italian asset management
industry was responsible for the management of about
€1,900 billion and approximately 10% of Italian house-
hold financial portfolios for both retail and institutional
investors134
.
Characteristics of the SRI Market
Institutional investors continue to lead the Italian SRI
market, mainly driven by a few large insurance compa-
nies. Pension funds are also showing an increasing com-
mitment to SRI, but there is still room for improvement
– as highlighted in the first and second edition of the
SRI Benchmark on pension plans launched in 2015 by
FFS and MEFOP using VBDO’s methodology135
. Similarly,
Foundations display an interesting potential that needs
to be further developed in the coming years.
The retail side has also witnessed interesting growth
as several Italian asset managers recently decided to
launch SRI products, in order to meet the increased
awareness level of private investors. Over the last two
years, as monitored by FFS, the retail sustainable funds
distributed by Italian asset managers have increased
by a staggering 26%136
. Leading the way, Etica SGR – the
Italian asset manager that promotes and manages exclu-
sively socially responsible investments – has reached
almost €2 billion in AuM in the last two years.
A series of events aimed at raising investors’ aware-
ness took place in the country. In the last years, the SRI
Week - launched by FFS in 2012 (www.settimanasri.it) –
has become the most important event on sustainable
finance in Italy, gaining increasing visibility and insti-
tutional support. In 2015, the initiative gathered over a
thousand participants and was granted the patronage
of four Italian Ministries. The Economy and Finance
Minister Pier Carlo Padoan participated at the open-
ing conference. The rising importance of sustainability
in the financial sector has marked the 2016 edition of
Salone del Risparmio137
– the main event organized by
Assogestioni, the Italian investment management asso-
ciation – where SRI and Impact Investing were explored
during several events and ad-hoc training sessions.
Also, the Italian Stock Exchange, in partnership with FFS,
has this year launched a renewed section of its institu-
tional website focused exclusively on sustainable finance.
For the majority of the strategies, the Italian SRI market
has experienced a slow but steady growth over the last
two years.
Sustainability themed investments have experienced
the largest increase, driven both by some “traditional”
players in the Italian SRI market having augmented the
assets reported for this strategy and by a few new play-
ers, also coming from the private equity sector. The inte-
gration of environmental – particularly climate-related
– concerns can be identified as the main catalyst for this
strong growth, especially in the post COP21 context.
Italian investors seem to have moved towards
Sustainability themed to the detriment of other SRI
strategies, such as Best-in-Class (+2%) and Engagement,
that this year registered a slight decrease. This is largely
due to the fact that one of the biggest players on the
Italian market has considerably reduced the amount
of assets reported under this strategy. Meanwhile,
other key actors, such as pension funds, have shown an
increasing activism towards engagement and promoted
a few interesting initiatives within the last two years.
For instance, at the end of 2014, a group of 14 pension
funds, led by Fondo Cometa – the largest of the coun-

80
try – and coordinated by Assofondipensione, launched
the first collective engagement action in Italy. The initi-
ative138
, following the one launched by Boston Common
Asset Management through the PRI Collaboration
Platform, was aimed at encouraging banks to disclose
more information about climate-related risks. Fondo
Cometa continued to lead engagement initiatives in
2015, launching a new project focused on children’s
rights that was supported by more than 30 institutional
investors (mostly pension plans but also asset manag-
ers, representing approximately €50 billion AuM).
Even if traditional strategies such as Exclusions and
Norms-based screenings still represent the larg-
est amount of assets, an interesting growth can also
be recorded on more innovative approaches such as
Impact Investing – a strategy, which we are reporting on
at member state level this year for the first time. In Italy,
it registered a significant growth over the past two years.
This can be explained by an increase in social housing
investments, driven by the national programme pro-
moted through “Fondo Investimenti per l’Abitare-FIA”,
managed by CDP Investimenti Sgr139
. The fund invests
in several local funds, also collecting resources from
other investors (mainly Foundations); the general aim
is to increase the availability of accommodation that is
affordable for people on low incomes, who can neither
access the traditional public housing sector (Edilizia
Residenziale Pubblica - ERP) nor afford market rents.
The regulatory framework has been rather stable for
the past two years, without any major developments.
Nevertheless, this period has been instrumental for
FFS in building a constructive dialogue with several
Italian ministries – namely Economy and Finance and
Environment. The end goal is a fruitful collaboration,
where the FFS will be able to play an increasingly advi-
sory role in shaping a more promising legal framework
and promoting the actions needed to push sustainable
finance in Italy; also in the context of the financial pack-
age to stimulate growth “Finanza per la crescita”. FFS’
SRI definition outlined in the previous edition of the
Study140
has served as a reference point in the discus-
sions with Italian institutions.
Moreover, FFS has co-led, together with Fondazione
Cariplo, the working group on “Greening institutional
investors” in the framework of the Italian National
Dialogue on Sustainable Finance promoted by UNEP and
the Ministry of Environment.
The adoption of the Directive 2014/95/UE on disclosure
of non-financial and diversity information is also set to
be introduced in Italian legal framework by the end of
2016.
Looking ahead, the SRI market in Italy will be facing key
challenges in the coming years. First of all, the mar-
ket players – especially institutional investors such as
insurance companies and pension plans – will need to
properly understand and address the emerging environ-
mental and climate change issues, in line with the post
COP21 scenario and the commitment to keep average
temperatures well below 2°C.
1 094
2 064
2 003
2 927
4 058
3 917
565 607
351 754
54 372
43 303
496 561
569 728
Impact Investing
Exclusions
Best-in-Class
Figure 59: Overview of SRI strategies in Italy

81
Italian Asset Owners and Asset Managers will need to
systematically take into account ESG aspects across the
different asset classes, including real estate, private
equity and project financing at a multi-scale level, both
national and local. These important challenges cannot
be tackled without a systemic perspective and a strong
institutional backing: that’s why the Italian government
and the financial authorities will be playing a central
role in shaping the discussion and promoting a frame-
work capable of unlocking the much needed reforms.
Those financial players that are already integrating ESG
aspects will also be instrumental in fostering further
developments of the Italian market, by making the busi-
ness case for sustainable finance and debunking the
persistent prejudices against SRI.
Insurance companies and pension funds will continue to
be the actors with the biggest potential for growth; while
Foundations are expected to show a growing appetite
for SRI as an investment strategy fully aligned with their
mission and fiduciary duties.
On the retail side, asset managers will continue to
widen their offer, in response to the increasing aware-
ness shown by investors. This is particularly true for the
private banking sector, where there is already a grow-
ing demand for SRI products aimed at High Net Worth
Individuals (HNWI).

82
The Netherlands
Over the past few years, the Netherlands has seen a con-
siderable increase in fund sponsors and asset manag-
ers establishing Dutch vehicles for holding international
investments. The Netherlands has a strong financial
sector and is an attractive asset management location,
as it does not levy taxes such as stamp duties or other
taxes on capital contributions in an investment vehi-
cle, annual subscription or net worth taxes. Moreover,
the Dutch withholding tax does not apply to outbound
interest payments. According to OECD 2015 findings on
pension funds, the Netherlands is, together with the UK,
one of the two biggest countries in Europe in terms of
pension funds’ assets171
. With a long-standing savings
and investing tradition, the insurance sector is also
strong with over €500 billion AuM. There are five catego-
ries of funds: Undertakings in Collective Investments in
Transferable Securities (UCITS), Alternative Investment
Funds (AIFs), Funds managed by managers domiciled in
jurisdictions with adequate supervision, Funds managed
by exempted fund managers, and Funds managed by
fund managers subject to voluntary supervision172
.
The SRI market in the Netherlands has become increas-
ingly mainstream. This is clearly reflected by the expo-
nential growth rate for most of the SRI strategies, even
taking into account that some large players decided not
to collaborate on the questionnaire this year. Although
not all players have the same level of maturity, most
of the asset managers and asset owners at least have
a responsible investment policy in place. Levels of SRI
implementation tend to vary according to market sectors
- banks, pension funds or insurance companies - but
there are also interesting variations within each sector.
This makes the SRI market in the Netherlands rather
fragmented. Although not the strongest in size, the two
ethical retail banks – ASN and Triodos – are the most
developed in terms of their SRI offer – thanks to their
long-established experience and specialisation in SRI.
Due to their large presence in the market, pension funds
and insurance companies remain the most important
players. The 30 biggest insurance companies and 50
largest pension funds manage assets for over €1,370
trillion in total and therefore have a big impact on the
financial services industry. The Federation of the Dutch
Pension Funds (Pensioenfederatie) has recently pub-
lished a Service Document on Responsible Investment173
,
a framework with guidelines for pension funds’ respon-
sible investment policies. The framework offers guide-
lines to pension funds on how to develop, implement,
monitor, and evaluate sound policies for responsible
investing174
.
The majority of the investments which today make up
the Dutch market do not all take into account all of the
four key characteristics, leaving us to conclude that ‘just
over half of impact investments by Dutch institutional
investors can be typified as ‘light impact investments175
’.
In fact, as highlighted in the VBDO Study, the monitor-
ing part still does not follow a formalised approach and
therefore remains the most problematic characteristic.
Responsible investing has a long history in the
Netherlands, starting back in the 1970s with the first
introduction of ethical banks. Over the course of the
2000s, more and more retail banks started practicing SRI
and since 2007, institutional investors have also turned
to responsible investments due to increasing attention
to the topic in the media.
It is common practice for Dutch pension funds to appoint
a fiduciary manager to manage their portfolio. These
fiduciary managers are often asset managers that man-
age several pension funds’ assets. This implies an impor-
tant role of asset managers in the SRI market as they
play a central role in the investment decision-making.
Although pension funds and their asset managers have
relatively well developed SRI practices, collaboration
with other funds and consultation with participants,
governmental or civil society organisations about SRI
is limited and could restrict development. In the last
decade, transparency has changed fundamentally,
due to an increase in societal and regulatory require-
ments. In response to this phenomenon, the quality of
reporting has increased and now third parties auditing
is increasingly common practice. While pension funds
are required to report on their responsible investment
strategies, many insurance companies do not yet dis-
close their strategies on responsible investment176
.
An obvious trend in the Netherlands is that frontrun-
ners in the financial industry increasingly implement
SRI strategies for their whole portfolio, developing spe-
cific targets. Overall, several players in the Asset Owners
space, like insurance companies, work through ad-hoc
Responsible Investment Departments. On the one hand,
this is a way to encourage a further elaboration of SRI
strategies, but on the other hand, there is a lower degree
of engagement at strategic level with management.

83
During the last years, SRI strategies have developed
both in terms of scale and diversity.
Exclusions continue to feature as the most popular
strategy at €1.123 trillion, registering a slight growth, fol-
lowed by Norms-based screening with €936 billion.
Engagement and Voting, as part of Active ownership, is
a well-established practice within pension funds and
insurance companies; which has continued to show
stable growth this year, with €726 billion in assets.
However, it is mostly outsourced and not always solely
focused on sustainability topics. Dialogue and debate
are part of sector-wide engagement. Pension funds are
also increasingly engaging with policy-makers, some-
thing which is becoming an established practice for
most players now. Tracking and monitoring the outcome
of these active ownership practices is not yet a shared
common practice.
ESG-integration has kept delivering a positive trend
which, culminated this year with a total of € 440 bil-
lion. A positive evolution, as ESG information is increas-
ingly considered part of the standard information for
financial analysis. Basic ESG-integration is increasingly
becoming mainstream with 94% of pension funds apply-
ing at least some ESG criteria in the evaluation of equity
investments177
. The same is true for insurance compa-
nies, albeit to a lesser degree178
.
Best-in-Class is the strategy that registers the second
highest level of growth of over 272% with €56 billion.
This is mainly due to the fact that some of the main play-
ers who were seemingly not applying this strategy in the
past or only in a very limited fashion, this year reported
a generally high degree of involvement.
Although it is still early days, Impact Investing is becom-
ing a firm fixture on the Dutch SRI market. This year, it
was the strategy registering the highest growth rate over
the last two years; clearly indicating that the category is
getting important buy-ins from a wide variety of players.
According to the VBDO’s 2016 report on Impact Investing,
the strategy has been defined as one that ‘aims to gener-
ate both financial and social or environmental return’179
.
The Study found the Dutch impact investment market
rather ‘fragmented, comprising several sub-markets’.
Composed of newer (social impact bonds) and more
established (microfinance) investment vehicles, impact
investing is today very broad and for this reason, it is
challenging to have one definition which captures all
the different nuances and types of impact investments
across all asset classes.
The market is largely dominated by a few of the largest
pension funds and insurance companies which alone
represent almost 90%180
of the impact investment mar-
ket. In their report, VBDO highlighted specific key char-
acteristics of this strategy (see table 5 on page 84).
One important step in 2015 was an announcement from
the governor of the Dutch Central Bank (DNB), the main
supervisor on the Dutch market, that the DNB sees sus-
tainability as a part of its mandate and will step up its
20 163
37 114
8 821
40 791
56 645
15 232
936 399
746 125
649 198
726 314
1 068 769
1 123 133
Impact Investing
Exclusions (All)
Best-in-Class
Figure 60: Overview of SRI strategies in the Netherlands

84
efforts in the coming years in this field. Therefore, the
DNB is also set to publish several studies in the field of
SRI and energy transition in 2016181
.
The distinction between institutional and retail inves-
tors regarding SRI strategies will remain. The retail
investors focus mainly on Best-in-Class and thematic/
impact investing strategies. This, however, is a relatively
small portion of the SRI market in the Netherlands and
will probably not grow significantly in the coming years.
In the institutional market (pension funds, insurance
companies and asset managers), a variety of instru-
ments will be used. As a base line, the organisations
will have a screening and excluded companies from the
investable universe. This will probably not increase in
the future, since many institutional investors agree that
Exclusion is not an effective method to make the capi-
tal markets more sustainable. But when it comes to the
integration of ESG-criteria into the investment decision,
more institutional investors are of the opinion that it
will provide better risk-adjusted returns. It is therefore
expected that there will be an increase in not only the
number of investors that apply ESG-integration, but also
the quality of the integration and the asset classes on
which it applies.
The same applies for active ownership practices. The
quality of the engagement is expected to improve,
since it is regarded as an effective tool for making the
market more sustainable. The largest Dutch inves-
tors work together at AGMs to ask questions regarding
sustainability.
Another interesting topic is the inclusion of sustaina-
bility in strategic asset allocation. Megatrends, such as
climate change, have a large impact on different assets
in the portfolio. Investors are increasingly looking at
the effects of these megatrends on the entire portfo-
lio, as opposed to just the single asset. Related to this,
some large investors have set targets (KPIs) to reduce
the carbon footprint of their portfolio by 25 or 50%. It is
expected that others will follow suit, although it is not
always clear how this will be measured, as these tools
are still being developed.
1. Intention to achieve a positive societal impact: The intention can originate from the investor or from
the investee
2. Competitive financial return: This characteristic distinguishes impact investing from philanthropy.
The financial return can range from below market to above market financial returns
3. Impact measurement: The commitment from investors to measure the social and environmental
performance and progress of their investments.
4. Long-term horizon: Impact investments focus on addressing social and environmental challenges
and creating long-term value in these areas.
Table 5
VBDO Impact Investing key characteristics

85
-
-
3 762
-
34
2 717
3
2 769
773
578
1 060
2 769
20152013
Impact Investing
Exclusions
Best-in-Class
EUR in millions
Figure 61: Overview of SRI strategies in Poland
Poland
Compared to the economic slow-down that charac-
terised Poland’s economy up until 2013, the last two
years have been significantly more dynamic. 2015 has
witnessed a GDP growth rate of 3.6%, up from 3.3% in
2014, according to Central Statistical Office of Poland
(GUS) estimates. This growth is nearly twice as large
as the EU average, estimated at 1.9%. The asset man-
agement industry in Poland continues to grow at a fast
pace and the Warsaw Stock Exchange (WSE) continues
to be a financial center of both European and inter-
national relevance. At the end of 2015, 487 companies
with a combined market capitalisation of €117 million
were listed on the WSE Main Market. During 2015, there
were 30 initial public offerings (IPOs) compared to 28 in
2014. The total value of IPOs on the WSE Main List in 2015
amounted to €2 billion. WSE is also a member of the UN
Sustainable Stock Exchanges (SSE)141
.
The SRI market in Poland remains in the very early stage
of developments. One of the reasons for this stagnation
is the low demand due to insufficient knowledge about
SRI, its effectiveness and performance compared with
mainstream investment. Moreover, the link between
the financial performance of SRI and traditional invest-
ments, although widely analysed and proven by certain
scientific studies, is still controversial142
. While there
is still no SRI leader in Poland building its portfolios
entirely on a SRI approach, one large thematic fund
investing in environmental protection projects is cur-
rently associated with public money. The National Fund
for Environmental Protection and Water Management
(NFEP&WM) was established in 1989 in cooperation
with Voivodeship funds for environmental protection
and water management. Together, these funds form
Poland’s system of financing environmental protection
projects. The National Fund is regulated by the Act of
the Environmental Law and according to the EU ‘pol-
luter pays’ principle. Foreign funds are also absorbed
by the National Fund, for example, from the Cohesion
Fund, the European Regional Development Fund, the
LIFE+ Programme, the Norwegian Financial Mechanism
and the European Economic Area Financial Mechanism.
Over the period 1989-2014, the National Fund contrib-
uted with some €8463 million from its own funds to the
co-financing of environmental projects, and supported
ecological projects with approx. €5411 million from the
European funds at its disposal.143
In 2009, the WSE initiated the RESPECT Index Project,
promoting high ESG standards among its listed compa-
nies and investors. The index portfolio includes com-
panies listed on the WSE Main Market which follow the
highest environmental, social and corporate governance
standards. The portfolio selection is carried out by WSE
and the Association of Listed Companies, and audited by
Deloitte. So far, eight editions of the survey have been

86
completed with 16 to 24 companies included in the index
portfolio at each time144
.
Another project aimed at increasing SRI awareness
among listed companies and investors is “ESG Analysis
of Companies in Poland”, an initiative developed by the
Polish Association of Listed Companies and the ESG rat-
ing agency Global Engagement Services. The aims of this
project is to analyse the ESG performance of all WSE
listed companies and engage with them on increasing
the quantity and quality of their ESG disclosure, using
an internet platform available in English and Polish. The
project is already in its fourth edition.
Although there is a wide-spread perception that the
demand for SRI products is almost non-existent, inves-
tors are increasingly taking ESG risks into account and
trying to include them in their investment analysis and
decision-making processes. In addition, the reporting
of ESG data following the transposition of the EU Non-
financial and Diversity Disclosure Directive is expected
to lead to a greater use of ESG information by investors.
The SRI market in Poland would profit from the pres-
ence of a large international player able to engage in
the marketing and promotion of SRI. This would cer-
tainly increase customer awareness of SRI investment
and stimulate the growth of the market.
This year, we are able to have a much clearer picture of
the extent to which the different strategies are actually
implemented and almost all the strategies witnessed
at least a double-digit growth. The most striking data is
certainly that concerning Best-in-Class which grew to €2
billion, registering a CAGR of almost 3000%. Also impres-
sive is the growth of Sustainability themed funds, – the
most popular strategy amongst the actors in the mar-
ket, which went from non-existent in the last review to
a total AuM of € 4 billion. Norms-based screening grows
steadily with a CAGR of 89%, mainly due to one of the
leading asset managers in Poland currently managing
close to 70 investment funds. Due to the non-partici-
pation of a large institutional player mainly focused on
Engagement and Voting, we are not able to report data
on this specific approach this year.
The capital market in Poland is regulated by the fol-
lowing regulations: Act on Public Offering, Conditions
Governing the Introduction of Financial Instruments to
Organised Trading, and on Public Companies, Act on
Trading in Financial Instruments, Act on Capital Market
Supervision. Each of these acts addresses one of the
main three aspects of capital market operations: the pri-
mary market, secondary trading and market supervision.
There is currently no specific SRI regulation in Poland
for funds, asset managers or asset owners. However,
according to Polish legislation, every public company is
required to include a detailed statement on corporate
governance in its annual report, and the vast majority of
companies do fulfil this obligation.
In January 2016, the Warsaw Stock Exchange published
updated Exchange Rules, which determine the rules of
trading on the regulated market, while also introducing
a new code of corporate governance: “Best Practice of
GPW Listed Companies 2016”. The goal of this revised
corporate governance code is to enhance the quality
of corporate governance standards of companies oper-
ating in the Polish capital market, and to support effi-
cient management, effective supervision, respect for
shareholders’ rights, and transparent communications
between companies and the market.145
Regarding the disclosure of social and environmental
issues, the Polish Ministry of Finance is implementing
the Directive 2014/95/EU on disclosure of non-financial
and diversity information by certain large undertak-
ings and groups. Poland has not communicated on the
transposition of measures to the European Commission
so far. Nevertheless, Poland is experiencing an increase
in ESG corporate reporting with around 290 non-finan-
cial reports currently on the market and over 40 reports
being published yearly146
.

87
Spain
The financial market
After years of continued recession, the Spanish economy
continues to be on a rising trend, already observed in
our 2014 Study and which has been confirmed by a posi-
tive GDP growth of 4.6% over the past three years.
Boosted by a stronger economy, the financial services
industry has grown by 3,66% in the last two years. 100%
of the growth experienced was due to the collective
investment institutions (CIIs), which are companies that
publicly recruit funds or assets to invest and manage
them jointly.
Spain’s financial services industry remains dominated
mainly by deposits, which represent 38,64% of all finan-
cial products in the country in the end of 2015. This is
still an interesting characteristic of the Spanish market
but it is important to note that it has shrunk by about
5% in five years.
Nevertheless, the Investment and Pension Funds repre-
sented 18.07% of the total of financial products in Spain
at the end of 2015, in comparison to 13.2% in 2010. This is
a growth of 4.87% in the last five years. These two types
of financial products are the most representative of the
SRI market in Spain and their growth is aligned with the
growth of SRI market.
Characteristics of the SRI market
The main players in the SRI space are the larger banks,
Santander and BBVA with a 23% and a 34% of SRI market
share respectively. The other main players are the occu-
pational pension funds, considered the pioneers of SRI
in Spain. They have over € 35,000 million in AuM, 65% of
which is backed by an SRI strategy.
The SRI market is dominated by institutional SRI, but
the SRI retail continues to develop, as indicated by the
growth of both retail impact investment initiatives and
investment products that focus on individual investors.
For the graph of investor type, we have used a weighted
average, according to the SRI AuM of each respondent
company.
The SRI market is almost equally split between equity
and bonds and almost equally split between corporate
and sovereign.
3.39%
96.61%
Retail
Institutional
24.93%
62.38%
3.57%
3.13%
5.36% 0.62%
Equity
Bonds
Monetary/ Deposit
Other
Figure 62: Retail/Institutional breakdown Figure 63: SRI asset allocation

88
This year is marked by the exponential growth of sus-
tainability themed investments, reaching €300 million
AuM, a record growth of 267% since the last review. This
underpins a developing interest from pension funds,
mainly on themes relating to renewable energy. This
trend clearly shows Spain’s willingness to reclaim the
position it lost during the financial crises as a global
champion of renewable energy. The fact that renewable
companies can no longer count on as many subsidies as
they once could have reduced the value of their assets,
making them more attractive for buyers. This is also in
line with Spain’s commitment to meet 20% of its energy
needs through renewables by 2020, compared to the
current 15%.
Impact investing is the second fastest growing strategy
in the country this year, with a growth of over 200%. This
is mainly down to the two social impact funds target-
ing innovative and operating projects, aiming to create
social value (B-Ready147
) and accelerate start-ups with a
social impact ‘that provides - with proven success - net-
working, mentoring, financing, capacity building and vis-
ibility to promising initiatives148’
. The important growth
in Impact Investing supports the exponential increase
in renewables investments, which has flourished amidst
the country’s crises and the insecurity of the Spanish
financial world. This phenomenon has led to the devel-
opment of new financial tools, which have also garnered
great interest among the public financial players, such
as the “Instituto Oficial de Credito” (ICO), which in 2015
issued the first Social Bond of Spain, in order to create
or maintain employment in economically disadvantaged
Spanish regions. This issue was a success and in 2016,
ICO launched a second bond.
Norms-based screening has also registered a significant
increase since the last review, mostly linked to Allianz
Popular Asset Management, which has made this strat-
egy a main pillar of its portfolio together with Exclusions.
Exclusions still remain an important strategy for both
Asset Managers and Asset Owners with a growth of 16%.
In the autumn of 2014, the Ministry of Employment and
Social Security published the official Spanish CSR strat-
egy, which focuses one of its main lines of action on SRI
and innovation. This line of action has resulted in an
agreement between the Ministry and Spainsif. Another
important collaboration supported by Spansif involves
the general administration of pension funds and insur-
ance from the Ministry of Economy and Competitiveness.
The goal is to develop an SRI information datasheet for
employee pension funds, in order to generate quality
and transparent information.
The SRI market’s growth rate has increased exponen-
tially in comparison to the growth rate of the financial
service industry over the last two years. This fact is a
very significant indicator of the strength that the SRI
market is beginning to have in the Spanish financial ser-
vices industry. The legal framework has been encourag-
ing reporting and further transparency for issuers. This
has not gone unnoticed by institutional investors eager
to add further value to their investments149
.
Interesting developments in corporate governance have
taken place in Spain this year. The reform of the Capital
Companies Law has become a mandatory standard for
reporting, with a specific focus on article 538. This arti-
cle concerns the inclusion of the corporate governance
report in the management report150
.
ThestepstakenbytheNationalStockMarketCommission
(CNMV) are also noteworthy. In 2015, the CNMV published
a voluntary guide for companies on corporate govern-
ance, including 25 guiding principles for a company com-
mitted to good corporate governance and going beyond
the standards outlined in previous legislation.
10.76%
37.39%
15.40%
36.44%
Renewable energy
Buildings sector
Water management

89
Pension funds have also seen some interesting advance-
ments. As of August 2014, through the modification of
a Royal Decree151
, occupational pension funds are now
mandated to include in their investment policy if and
how they are taking into account in their investment
decisions, extra-financial risks affecting the assets in
their portfolio.
In the coming years, the financial services industry will
keep on developing and so will the SRI market. At the
same time, Exclusion will be the most relevant strategy
used, although its growth rate will keep on decreasing.
Regarding the SRI products, the most developed ones
are those related to the Impact Investment, like Green
and Social Bonds.
We hope that the regulatory framework enriches the way
the ESG reporting works and develops SRI. The European
directives of non-financial reporting and the SRI labels
in some European countries are among the important
indicators.
Institutional investors will remain the dominant inves-
tors in the SRI market. But the development of ESG cri-
teria tools measurement for investment funds and an
increasing awareness of the benefits of financial institu-
tions using ESG criteria will probably lead to an increase
in retail investment.
82
300
87
267
2 535
1 961
24 003
14 247
9 103
10 455
92 421
123 516
Impact Investing
Exclusions
Best-in-Class
Figure 65: Overview of SRI strategies in Spain

90
Sweden
In 2015, a net total of € 9 billion was invested in invest-
ment funds. During 2015, total fund assets under man-
agement in Sweden increased from € 27 billion to € 353
billion, the highest year end figure ever recorded. The
interest for index funds remained very strong. Despite
an overall net outflow from equity funds, index funds
recorded net inflows of over € 2 billion in 2015. At the
end of 2015, index funds accounted for over 13% of the
total assets in equity funds.
Most of the Swedish financial institutions can be consid-
ered mature SRI players as a large number of asset own-
ers and asset managers have been active in the Swedish
SRI space for more than ten years. Almost all of the large
institutional investors in Sweden have some form of pol-
icy for Sustainable, Responsible and/or Ethical investing
in place and they constitute the majority of the leaders
in this industry.
Sweden’s commitment to the EU Roadmap 2050 sets the
overarching goal of a society with zero GHG emissions
by the year 2050152
. Related targets include reducing GHG
emissions from a 1990 baseline by 40% by 2020 and hav-
ing a completely fossil-free vehicle fleet by 2030153
.
Investments in environmental R&D have made Sweden
an innovation leader for several clean energy technolo-
gies, including biofuels, smart grids and carbon capture
and storage (CCS)154
.
Despite the mature SRI market, SRI practices in Sweden
are not governed by an explicit legal framework, but
are driven bottom-up by frontrunners such as the
national pension funds (AP funds), the Swedish Church
and Folksam. All of the major banks have established
SRI policies and procedures and provide the SRI market
with a wide variety of SRI products and solutions, and
a fast growing number of investors are following suit. A
leading driver continues to be the pension fund initia-
tive ‘Ethical Council’, which consists of the collaboration
between four of the Swedish pension system funds (AP1,
AP2, AP3 and AP4), aiming to make a difference by act-
ing as ‘strategically accountable and committed owners
who exert influence on companies worldwide to improve
their efforts on environmental and social issues’155
. In
2015, the Ethical Council conducted dialogues with 178
portfolio companies worldwide concerning a total of 254
incidents, pertaining mainly to business ethics, human
rights, labour rights, corruption and the environment. In
most cases, the discussions have led to improvements
and the dialogue was considered successful.
Net sales of funds, EUR billions
Net sales
December 2015
Net sales excl. PPM
December 2015
Total net sales
2015
Equity funds 2.8 0.30 -0.28
Balanced funds 1.1 0.26 8.37
Bond funds 0.0 -0.51 0.01
Money market funds 0.5 0.50 -0.35
Hedge funds 0.0 0.03 1.23
Other funds 0.0 0.00 0.17
Total 4.4 0.59 9.17
Table 6
Fondbolagens forening Swedish Investment fund association Yearly report: Fund
Saving 2015 page 3; originally in SEK, converted into EUR using 31 December
2015 exchange rate

91
Over the past two years, Sweden has continued to wit-
ness a modest growth in SRI which signals a trend among
all major investors and asset managers to apply a mix of
SRI strategies to their portfolios. In fact, a common prac-
tice among Swedish institutional investors is to combine
several strategies including Exclusions, Engagement
and Voting as part of a holistic approach to integrat-
ing ESG factors into the investment policy, process and
decision-making.
Sweden has been receptive to international initiatives
such as the UN Global Compact and the UN-supported
Principles for Responsible Investment (PRI), and it is
common for investors in Sweden to sign up to both the
PRI and the base investment guidelines on the princi-
ples of the UN Global Compact when assessing invest-
ment portfolios. As of 31 May 2016, there are 1525 signa-
tories of the PRI globally, including 51 signatories from
Sweden, split between asset owners, investment manag-
ers and professional services providers.
Swedish initiatives such as Sustainable Value Creation156
and Swesif’s ESG Profile157
have also been well received
in the market and support increased transparency and
disclosure within the business community and the fund
management industry. The Sustainable Value Creation
initiative is a collaboration between 17 of Sweden’s larg-
est institutional investors and, since spring 2015, also
the NASDAQ Stockholm which operates the Stockholm
Stock Exchange. The cooperation was initiated in 2009
when investors and owners of Swedish companies saw
a need to further highlight the importance of compa-
nies working systematically with sustainability issues.
The Swesif’s ESG Profile (“Hållbarhetsprofilen”) was
developed by Swesif together with its member compa-
nies. The ESG Profile is a standardized information leaf-
let describing the fund’s work on ethics and sustaina-
bility issues, and is a supplement to the financial fund
fact sheets, developed in 2013 to help fund investors by
giving them easier access to information. In May 2015,
1 985
2 315
1 058
1 421
10 967
48 151
378 189
420 718
349 736
444 719
648 348
714 638
Impact Investing
Exclusions
Best-in-Class
Figure 66: Overview of SRI strategies in Sweden
4.49%
62.18%
2.93%
30.41%
Equity
Bonds
Other

92
Swesif launched the ESG profile on the private market in
Sweden. After one year, 38 fund companies have already
joined and today more than 670 funds are reporting
their sustainability efforts158
.
Some specific areas of development over the past
two years have been in relation to Impact Investing,
Green Bonds and Sustainably Themed. Notably, there
is a growing interest in Green Bonds – or sustainable
bonds, and in the last few years, the number of Green
Bonds launched has increased greatly. The Swedish city
of Gothenburg became the first Nordic city to enter the
climate bonds space, closing a € 54 m, 6-year green
bond to fund public transport, water management,
energy and waste management projects. The bond is
part of a potential € 218 million green bond programme
for such projects in Gothenburg159
.
As mentioned, the growing interest in Sustainability
Themed investments tends to focus mainly on the
environment and specifically on climate change. This
strategy has grown by 16% since the last review and,
as shown in the graph, the most popular categories are
energy efficiency, renewable energy and water manage-
ment. The Swedish Government is actively encouraging
the Swedish investment community including the pub-
lic pension funds, the banks and the fund industry to
agree on a common standard for reporting their funds’
carbon footprints, while Sweden’s Minister of Financial
Markets has spoken in favour of self-regulation as the
best alternative.
Furthermore, the Swedish Investment Fund Association
representing the Swedish fund industry has taken the
first step towards creating additional transparency and
comparability regarding the carbon footprint for funds’
holdings by producing a guide for coordinated report-
ing. At this stage, the reporting is still voluntary.
Exclusions remain the dominant strategy, preferred by
asset managers and asset owners, with a total of €714
billion AuM and a growth of over 10%. Over 83% of
respondents report on general exclusion policies and in
terms of preferential categories, weapons remains the
Exclusion selection most often applied by 37%.
Engagement and Voting also registers a significant
increase of 27% with total AuM at €444 billion. Active
corporate governance continues to be on the rise and is
well on its way to becoming an alternative to Exclusions.
The SRI market in Sweden is predicted to continue to
grow and develop in terms of assets under manage-
ment using a diversity of SRI strategies, approaches and
products.
34.96%
57.15%
5.80%
2.09%
Corporate Bonds
Supranational Bonds
Souvereign Bonds
1.54%
31.17%
1.15%
0.21%
1.11%
31.08%
31.08%
2.66%
Renewable energy
Energy efﬁciency
Buildings sector
Water management
Waste management
Other
Figure 68: Breakdown of SRI bond assets Figure 69: Sustainability themes applied

93
With the state pension funds and other asset owners
willing to increase their transparency on their strate-
gies and, showing that SRI can be implemented without
harming performance and with positive impacts on com-
panies and markets, the likelihood of others following
suit is high.
Furthermore, the growth of the market for Sustainable
and Responsible Investment in Sweden is supported
by the active participation of asset owners, invest-
ment managers, service providers, academia, and other
stakeholders in debates, discussions and collabora-
tion aiming at increasing knowledge and competence.
Although there are no legal requirements on private
institutional investors and asset managers in relation to
SRI, the Swedish financial market shows a high degree
of self-regulation160
. For instance, the ‘Ethical Marketing
Committee for Funds (ENF), was set up as an independ-
ent committee whose task is to monitor that fund man-
agement companies follow the marketing rules in their
information and marketing,161
’in order to prevent mis-
leading marketing of investment funds.
In May 2016, the Swedish fund industry agreed on a
method of reporting carbon footprint for the funds’
holdings162
. This initiative was taken to compensate the
lack of coordination and supply of data around the car-
bon footprint of funds’ holdings. This is why the Swedish
Investment Fund Association produced a guide for
coordinated carbon footprint reporting in the spring of
2016163
.
Another initiative from the Swedish Investment Fund
Association is an industry standard for reporting the
fund management companies’ sustainability work. The
Sustainability review aims to increase transparency for
savers and give an overview of how the fund manage-
ment company works with sustainability issues along
with concrete follow-ups on how this work has been
done in practice during the previous year.
The sustainability review at fund management company
level will be updated annually and is due to come into
force as of 2016164
.
The contents of this country profile are based on
research and analysis conducted by Swesif and Eurosif

94
Switzerland
The financial sector is one of the Swiss economy’s central
components, with almost a tenth of the country’s 2015
GDP stemming from financial and insurance services;
making it comparable to almost any other major hub
in global finance. In addition to this status, Switzerland
is also the world leader in cross-border asset manage-
ment, in which it holds 25% of the global market share.
The finance industry here is highly diversified and home
to more than 2000 pension funds and over 200 insur-
ance companies, while its banking sector is made up of
275 individual banks.
The peculiarity of the Swiss pension system with its
compulsory second pillar makes Switzerland one of
the few countries where the three pillars contrib-
ute almost equally to old-age income165
. Asset owners
have become increasingly interested in sustainable
finance and to prove it, on the 3rd of December 2015,
BVK Personalvorsorge des Kantons Zürich, compenswiss
(Ausgleichsfonds AHV/IV/EO), comPlan, Pensionskasse
Post, Pensionskasse SBB, Swiss Federal Pension Fund
PUBLICA and Suva joined forces to establish the “Swiss
association for responsible investing (SVVK-ASIR) “.
SVVK-ASIR’s founding members manage a total of over
150 billion Swiss Francs166
. The fiduciary duty of the fund-
ing members requires the inclusion of ESG (Environment,
Social, Governance) criteria. By setting up SVVK-ASIR,
the founding members meet this requirement in the
most effective way167
.
The actors engaged with sustainable finance amount to
220 institutions. Here, Switzerland’s historically strong
position in asset management is reflected by the fact
that the largest category of institutions active in sus-
tainable finance is the group of asset managers, then
followed by pension funds and philanthropy organisa-
tions. Yet, despite that comparably smaller number of
active institutions and an overall SRI market share of
4.5% of total investment funds, recent developments
give rise to the assumption that sustainability concerns
are abandoning their niche status. Over 2014, sustain-
able investments have grown by around 26% and over
2015 by almost 170%168
, with J. Safra Sarasin Group, Credit
Suisse and Pictet being among the most important asset
managers.169
In terms of SRI strategies applied to funds and mandates,
Exclusions has remained the dominating strategy at €2.5
trillion. This figure includes criteria especially applied
to funds and segregated mandates (product specific),
which totals €123 billion, plus Exclusions applied as
asset overlays to product ranges.
2015 has also witnessed a heavy increase in the integra-
tion of ESG criteria into financial analysis, which grew
by 311% since the last review. It is now the second most
popular strategy. Norms-based screening registered
a CAGR (Compound Annual Growth Rate) of 152% and
Engagement and Voting a CAGR of 103%.
11 061
21 017
4 231
9 818
38 866
25 428
75 051
10 454
16 563
77 345
28 565
122 907
Impact Investing
Exclusions
(Product-speciﬁc)
Best-in-Class
Figure 70: Overview of SRI strategies in Switzerland

95
Impact Investing has been growing exponentially to the
tune of 104% since the last review with a CAGR of 43%.
The main players are asset managers and the main area
of focus is Microfinance (73%)170
Sustainability Themed investments have gone up by 67%
with a strong focus on climate change investments.
ESG considerations have begun to factor more promi-
nently into the activities of foundations. In 2015, Swiss
Foundations issued a renewed version of the broadly
used Swiss Foundation Code, which now incorporates
guidance on sustainable investment. Another initiative
which stimulated the market was certainly the FNG-
Label for mutual funds. Launched in 2015, it is audited
by Novethic.
Other initiatives launched in 2014 and 2015 demonstrate
the extent to which SRI considerations are not confined
to only a few specialist institutions. The platform Swiss
Sustainable Finance (SSF), which was introduced in 2014,
provides support to further increase the level of sus-
tainability in the industry.
No SRI specific legislative development has taken place
since the previous edition of this Study. In terms of
measures to directly promote SRI, Swiss authorities
have taken some steps that could lay the groundwork
for stronger engagement in the future. In early 2016, the
Federal Council issued its Fifth Sustainable Development
Strategy, which concentrates on the implementation of
the UN Sustainable Development Goals, and extending
the National Action Plan Green Economy. Both foresee
measures to strengthen sustainable finance and green
investments as one of their focus areas. Furthermore,
the Federal Council has officially defined Switzerland’s
international role as being able to become a global
leader in sustainable finance.
The following years could generate an increase in new
activities in the field of SRI. In particular, the Paris
Climate Conference in 2015 has raised awareness of
green finance and both investors and authorities have
begun to react to the risks and opportunities posed by
climate change. In September 2015, the Federal Office for
the Environment published the Study Carbon Risks for
the Swiss Financial Centre, which urges for more sus-
tainable investment behaviour.
Asset allocation hereby shows that equities continue to
be the most popular category by far (50%), followed by
bonds (32%), of which corporate ones represent 55%.
The biggest dynamic, however, may come from institu-
tional investors, who might increasingly engage with
their investees in order to reach more sustainable busi-
ness conduct and who currently represent 75% of the
industry.
EUR in millions
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
20152013
1 561 974
28 565
96.60%
3.40%
2 536 014
122 907
Figure 71: Exclusions in Switzerland (EUR m)

96
2.27%
9.78%
4.86%
20.04%
60.04%
3.00%
Renewable energy
Energy efﬁciency
Buildings sector
Water management
Other
(including climate change and multi-theme)
2.86%
49.51%
15.83%
31.81%
Equity
Bonds
Monetary/ Deposit
Other
Figure 72: Sustainability themes applied Figure 73: SRI asset allocation
18.76%
55.23%
19.06%
6.96%
Corporate Bonds
Supranational Bonds
Souvereign Bonds
25.02%
74.98%
Retail
Institutional
Figure 74: Breakdown of SRI bond assets Figure 75: Retail/Institutional breakdown
TOP 5 Exclusion Criteria in Switzerland
1 Nuclear energy
2 Violation of Human Rights
3 Violation of Labour Rights
4 Corruption & Bribery
5 Ecological destruction

97
United Kingdom
As a whole, the UK’s fund industry continues to grow
significantly with assets growing faster in the UK than
globally. The industry continues to be highly interna-
tional, with around 40% of the £5.5 trillion of AuM com-
ing from overseas clients. Pension schemes are still the
largest client source, although new savers automatically
enrolled into defined contributions schemes are going
to influence the relation between asset managers and
the pension market significantly. While savers are being
offered more opportunity to invest as they choose,
asset managers may also be deemed to be gaining new
responsibilities. Such changes will give asset manag-
ers the opportunity to diversify their offer to provide
new generations of retirees with new suitable solu-
tions. Recently introduced “pension freedoms” in the
DC area, coinciding with the wider introduction of auto-
matic enrolment, may lead to a transformation in retire-
ment saving, as pensioners leave their assets invested
throughout their retirement. The Investment Association
forecasts this may lead to increased demand for out-
come-focused funds, income generation and more
diversified multi-asset portfolios182
.
The UK SRI market is well-diversified and flourishing. Its
greatest strength probably lies in its fund management
community, clustered in London and Edinburgh. This
group has close working relationships with networks of
significantly sized pension funds, with active charity and
faith investors, and with committed financial advisers
serving the retail market. These market structures are
supported by world-leading support services in invest-
ment consulting183
, metrics and investment banking. This
value chain means that the UK is home to SRI provid-
ers in all key asset classes, usually in both retail and
institutional forms. There are clear signs indicating that
SRI is becoming mainstream in fund management in the
UK. This is evidenced by the changing nature of fund
managers’ engagement in terms of the background and
seniority of individuals and the strength of public com-
mitment. In some cases, firms have explicitly told UKSIF
that SRI support which was previously “philanthropic” is
now being judged by conventional commercial criteria.
This is a welcome sign of growing scale and maturity.
The process of mainstreaming has seen an extension in
the reach of SRI approaches, notably the launch of the
UK’s first daily priced social bond fund and the impend-
ing launch of a multi-asset class product utilising skills
developed in a long-standing equity fund.
A feature of the past two years in the UK fund man-
agement space has been increased activism by insti-
tutional asset-owners. At least 3 initiatives should be
noted: the Pension Fund Roundtable, an informal group
of large funds, outlined what they wanted in important
respects from fund managers184
; the Aiming for A coa-
lition, despite origins in fund management, has built
its profile on support from around 100 named asset
owners and successfully filed shareholder resolutions
on transparency at major oil and mining companies185
;
and the Association of Member Nominated Trustees
(AMNT) drafted best practice voting instructions across
“E” and “S” as well as “G”.186
This is reflected in the con-
tinued growth in Engagement and Voting figures which
have increased from € 1.7 billion to over € 2.5 billion at
year-end 2015, reflecting growth across the overarching
majority of Asset Managers.
In addition to the data in this report, other sources sug-
gest strong growth in UK fund management SRI. Retail
data from EIRIS and the Investment Association both
suggest growth in the retail area of more than 10% p.a.
The data from the IA is monthly; despite recent data
revisions which cloud the picture, sales of the funds
they define as “ethical” have been running at well above
historic levels187
.
Beyond fund management, banks operating in the UK
generally have a high-level of stated commitment to
SRI and to disclosure on their activities and impact.
However the reputation of banking generally has not
recovered from the damage stemming from the finan-
cial crisis. Although less frequent, there are still new
scandals and court cases continue. UKSIF worries that
the level of disclosure in retail banking, as opposed to
investment banking, may be too low. The past few years
have seen several so called “challenger” banks emerge.
These banks have a retail focus but little in the way of
explicit ethical commitment. There remains, however, a
small number of explicitly ethical banks and they are
beginning to widen their remit. In terms of financial
inclusion, the UK remains well-positioned. The propor-
tion of UK citizens without a bank account remains low
compared to the US and continental Europe, and the
Government took action in 2014 on bank charges for
simple bank accounts to protect this position.
Although the UK impact and social investment markets
are still small compared to the whole investment field,
they are growing steadily and continue to be a hub for
innovation. In a recent report, Big Society Capital has

98
estimated the value of social investment at the end of
2015 to be £1.5 billion while the wider impact investment
market is believed to be worth around £73 billion. The
report highlights the diverse mix of social investment
products now available.
The UK SRI market is broadly based. Mention should
be made of the large number of NGOs and think tanks
which are based or active in the UK. Bodies such as WWF
and Carbon Tracker have made important contributions
which affect multiple sectors. In fund management, the
IIGCC, CDP, PRI and AODP are UK based. A significant
number of single-issue campaigns are also active in
the country. Our subjective view is that the agenda and
intellectual content used by the SRI community increas-
ingly reflects work done by bodies which sit outside the
financial services sector. It seems likely that SRI issues
will receive more attention following the recent change
in government. In particular the new Prime Minister has
made comments suggesting changes in the approach to
executive pay and wider corporate governance which
may resonate with the drivers of the growth in engage-
ment and voting reported above. Her attitude to cli-
mate change is not yet clear, but her government has
endorsed the fifth carbon budget in line with expert
recommendations.
The UK Stewardship Code, representing a series of com-
mitments made by asset owners, continues to develop.
So far, it has been signed by 196 Asset Managers, 88
Asset Owners and 14 Service Providers.
The UK fund management sector may be about to see
significant regulatory change as a result of work flagged
in the 2014 European SRI report. In the spring of 2016, The
Pensions Regulator (“TPR”) endorsed a legal interpreta-
tion of fiduciary duty proposed by the Law Commission,
namely that “where [trustees] think ESG issues are finan-
cially significant you should take these into account”.
TPR also said that “where appropriate” trustees should
seek to influence managers’ stewardship policies, and
“where practicable” trustees may wish to agree specific
voting criteria with managers. These opinions may come
to represent charters for both ESG investment and more
active Stewardship by owners. There have been some
similar developments in thinking on charity invest-
ment, but they are driven by a lawyer’s opinion rather
than a regulatory intervention. The TPR's thinking will
most immediately support momentum in trust-based,
institutional pensions. If their approach is echoed by
the Financial Conduct Authority then it should support
subsequent growth in the smaller, but rapidly growing
personal pensions market, and it may stimulate activity
in direct retail markets. All fund markets may get some
stimulus from the greater availability of fund ratings,
with increases in the number and reach of ratings agen-
cies in the past 12 months, but sector opinion is divided
as to the real worth of this development.
In banking, the outlook is for “more of the same” as
banks seek to persuade society that they have changed
and are making a worthwhile contribution to the quality
of life.
12 860
21 022
1 400
4 564
8 368
3 335
7 806
71 456
1 717 461
2 573 731
472 963
1 870 896
Impact Investing
Exclusions (All)
Best-in-Class
Figure 76: Overview of SRI strategies in the UK

99
The implications and impact of the recent EU referen-
dum decision to ‘leave’ are as yet unclear. It is unlikely to
affect the development of domestic UK SRI thought, but
to the extent that UK-domiciled services are supported
by sales into the EU, uncertainty has been created. UKSIF
is confident that the UK will continue to remain a world
leader in sustainable finance in the future and we look
forward to continuing to work with Eurosif and our mem-
bers to ensure that this is the case.
The most impressive growth that we observe across
SRI strategies in the UK is on Exclusions which grew
by almost 300% in the last two years across all Asset
Managers who participated in our questionnaire.
As forecasted in the previous Study, we notice consider-
able growth in Impact Investing as well but it concerned
mainly 3 players (Impax Asset Management, Columbia
Threadneedle and WHEB Asset Management). We expect
further growth in this area, with interest from individual
investors spurred by the UK’s 30% social investment tax
relief.
After registering growth of less than 12% from 2011 to
2013, norms-based screening registers an important
decrease this year to € 7.8 billion. This is mainly due to
managers now classifying their process as integration
rather than norms-based. UKSIF views this as evidence
of the evolution of thought and approach in the UK mar-
ket. Given that our subjective view is that integration has
grown steadily in the UK, the small decline in the figures
below almost certainly reflects the current lively debate
about further developing definitions and interpretation
of ESG criteria.

100
APPENDIX
Methodological Approach
At the end of 2015, Eurosif revised its research design
in consultation with its member SIFs and a number of
SRI practitioners and research partners through an
iterative process that lasted until December 2015. This
allowed Eurosif to make a number of simplifications
and improvements to its SRI questionnaire. One of the
key changes to the questionnaires was that this year’s
respondents did not need to list SRI funds and man-
dates separately, but rather, they were directly asked for
a total assets figure for each SRI strategy they applied,
as well as two separate sums of SRI strategies without
multiple counting when several strategies applied to the
same assets. This greatly simplified the data collection
process for Eurosif, and also made it less time consum-
ing for asset managers and asset owners to respond. In
addition, an evaluation section was added at the end of
the questionnaire in order to collect feedback and ideas
for further improvement. The questionnaires included
a balanced number of both quantitative and qualita-
tive questions. Qualitative questions dealt mostly with
practices, themes, influencing factors and trends for SRI
strategies, while quantitative questions referred to SRI
assets under management according to different SRI
strategies used, asset allocations, and customer seg-
mentation (institutional, retail). In particular, qualitative
questions188
were added to address the factors influenc-
ing investors’ demand for SRI and their SRI strategies,
as well as their perspectives on the legal requirements
on ESG disclosure. In addition, and in order to guaran-
tee further clarity to respondents, this year Eurosif sent
out two separate questionnaires to Asset Managers and
Asset Owners.
Credits
Project Supervisor
Eurosif, Flavia Micilotta
Project Manager
Eurosif, Ines Gavrilut
Editing
Eurosif, Sophie Rasbash
Communication & PR
Eurosif, Sophie Rasbash
Eurosif, Dimitrios Mavridis
Contributors
Dansif, Sandra Bossen
Dansif, Jens-Christian Stougaard
Eurosif, Ines Gavrilut
Eurosif, Flavia Micilotta
FFS, Francesco Bicciato
FFS, Arianna Lovera
Finsif, Magdalena Lönnroth
Finsif, Outi Kalpio
FIR, Grégoire Cousté
FIR, Thiên-Minh Polodna
Forum Ethibel, Guy Mattan
Forum Ethibel, Herwig Peeters
FNG, Claudia Tober
FNG, Simon Dittrich
FNG, Viktoria Seifert
Novethic, Clémentine Chatelet
Novethic, Dominique Blanc
Poland Ernst & Young, Robert Sroka
Spainsif, Francisco Javier Garayoa
Spainsif, Adrian Garcia
Swesif, Philip Thormark
VBDO, Bas Bijleveld
VBDO, Janne Kuhn
VBDO, Rudy Verstappen
VBDO, Frank Wagemans
UKSIF, Simon Howard
UKSIF, Lisa Stonestreet
Design
Printing Company Van der Poorten
Printed by
Printing Company Van der Poorten
100% Climate Neutral

101
Sponsors:
About Eurosif
Eurosif is the leading European association for the pro-
motion and advancement of sustainable and respon-
sible investment across Europe, for the benefit of
its members.
Eurosif’s purpose is to:
1. PromotebestpracticeinSustainableandResponsible
Investment (SRI) on behalf of its members
2. Lobby for European regulation and legislation that
supports the development of SRI
3. Support its members in developing their sustainable
and responsible investment business
4. Promote the development of, and collaboration
between SIFs across Europe
5. Provide research and analysis on the development
and trends within the SRI market across Europe
6. Raise awareness of and increase demand for SRI
throughout the European capital markets
Joining Eurosif
Joining Eurosif through our national SIFs or as an direct
member189
means becoming part of the most influ-
ential network for the promotion of Sustainable and
Responsible Investment in Europe. Interacting with key
regulators to push the SRI agenda forward, Eurosif’s
mission is articulated around three main action points:
❍❍ Building trust and quality relations with European
regulators
❍❍ Organising research and events featuring influencers
and key policy makers
❍❍ Bringing its members a wealth of knowledge on cur-
rent ESG trends through its partners’ network
Benefits
When joining Eurosif, Member SIFs enjoy the following
benefits:
1. EU Policy
❍❍ The opportunity to help shape public policy on sus-
tainability and socially responsible investing at a
European level through exclusive meetings with
European policy makers and position papers that
Eurosif regularly submits in response to European
Commission’s legislative and non-legislative
initiatives.
❍❍ Access to our internal Policy Platform to share and
be informed on the latest policy news and develop-
ments in the SRI space.
2. Access to Market Leading Research
❍❍ Ability to help Eurosif choose research subject mat-
ter, act as advisory member to research initiatives
and have first-hand access to information and trends
to help improve your own development and client
reach.
❍❍ Access to all Eurosif research before it is made pub-
licly available.
3. Initiatives and High-level Events
❍❍ Interacting with key regulators and stakeholders to
push the SRI agenda forward.
❍❍ Influence in shaping initiatives such as the devel-
opment of voluntary codes and standards that will
affect all actors in the European SRI industry. The
European Transparency Code is one such initiative
with over 700 fund signatories.
❍❍ Participation in key EU level events and roundtables
reaching key SRI policy makers, asset owners and
eventually, the general public.
4. Continuous Learning and Networking
❍❍ Access to a multi-stakeholder environment to learn
from different organisations.
❍❍ Access to a series of public networking opportunities
and conferences.
❍❍ Access to the Eurosif Events, to meet SRI and ESG
professionals who are members of your network and
hear from keynote speakers the latest developments
and future plans in the market or in the regulatory
areas.

102
Endnotes
1 See EFAMA data on Summary and Conclusions page
2 The 2015 Green Bond issuance amounted to over 42 bn
USD according to CBI’s 2016 State of the Market Report,
available at: https://www.climatebonds.net/files/files/
CBI%20State%20of%20the%20Market%202016%20A4.pdf
3 Bonds and Climate Change. State of the Market Report
2016, p. 6, by CBI. Available at: https://www.climatebonds.
net/files/files/CBI%20State%20of%20the%20Market%20
2016%20A4.pdf
4 Category 1: ‘non-systematic ESG integration’; Category
2 : ‘systematic consideration/inclusion of ESG research/
analyses in financial ratings/valuations by analysts and
fund managers ; Category 3: ‘Mandatory investment con-
straints based on financial ratings/valuations derived
from ESG research/analyses. Source Eurosif Study 2014
page17
5 See ESRB Focus Section on page 16
6 These comparisons are based on Eurosif’s analysis, and
not verified by the PRI or EFAMA. Interested readers
should consult the original sources. Note that Eurosif is a
member of GSIA (www.gsi-alliance.org).
7 See Eurosif 2010 Study, page 9: Core SRI (Norms-based,
Exclusions,PositivescreeningandBest-in-Class)vs.Broad
SRI (Simple screening, Engagement and Integration).
8 Although this could become more complicated as SRI
asset management teams split across several locations.
9 For example, if a Danish asset manager with an SRI team
based in Copenhagen is managing assets for a Finnish
asset owner, this is counted in the Danish market. If the
SRI team is located in Berlin, it is counted in the German
market.
10 Norway is not covered due to a particularly low response
rate by key market participants.
11 Ethibel supported Eurosif wih the dissemination of the
questionnaires to Asset Owners
12 This estimation is based on EFAMA’s 2014 estimate of the
total assets under management (AuM) in Europe, pre-
sented in its 8th Annual Review, Asset Management in
Europe from April 2015, available at: http://www.efama.
org/Publications/Statistics/Asset%20Management%20
Report/150427_Asset%20Management%20Report%20
2015.pdf
13 Annual RI reports, the European Transparency Code,
UN-backed PRI reporting.
14 The data sample is different from the 2014 Study data
sample as it does not cover the Norwegian market, but
instead it covers the Danish market.
15 For instance, this is the case for Finland and Denmark,
where this year a large asset manager previously partly
counted to these markets, was counted entirely to
Sweden.
16 See section ‘Aggregating SRI strategies’
17 Refer to the page number that delves on this Law
18 Compound Annual Growth Rate (CAGR) calculated
(2015/2013)^0.5 -1
19 Or they can choose amongst just one of the criteria
20 AMF report on socially responsible investment in collec-
tive investment schemes, November 2015 page 13
21 AMF report on socially responsible investment in collec-
tive investment schemes, November 2015 page 13
22 Eurosif SRI Study 2014, page 59
23 Climate Conference commonly known as COP21 (21st
annual Conference of the Parties).
24 Other guidelines include: the UN Guiding Principles on
Business and Human Rights, the Universal Declaration of
Human Rights, the ILO Tripartite Declaration of Principles
Concerning Multinational Enterprises and Social Policy,
the Kyoto Protocol, the Oslo Convention on Cluster
Munitions, the Ottawa Convention on the Prohibition
of the Use, Stockpiling, Production and Transfer of
Anti-Personnel Mines and on their Destruction; the
Rio Conventions on Biodiversity, Climate Change and
Desertification; CITES (the Convention on International
Trade in Endangered Species of Wild Fauna and Flora);
World Bank Development Indicator; the UN Convention
on the Law of the Sea (UNCLOS)
25 Eurosif Shareholder Stewardship: European ESG
Engagement Practices 2013” page 6
26 http://www.lawcom.gov.uk/wp-content/uploads/2015/
03/lc350_fiduciary_duties.pdf
27 Guide to Investment governance – The Pensions Regulator
– July 2016, http://www.thepensionsregulator.gov.uk/
docs/dc-investment-guide.pdf
28 Also known as ‘negative screening’ as cited in the Eurosif
SRI Study 2014, page14
29 Read section on Norms-based screening
30 This is due to the fact that cluster munitions investments
no longer apply.
31 Others include: GMOs; Human rights violations;
Corruption, Fur, Unconventional oil and gas, Hazardous
substances, Environmental damage (including biodiver-
sity, climate change, deforestation and water), Factory
farming; High risk companies (as per internal analysis).
32 ExclusionswithoutCM&APL-assetssubjecttoexclu-
sions based on criteria other than Cluster Munition
(CM) and/or Anti-Personnel Landmines (APL).
Exclusions All CM&APL - in Belgium, France, Spain
(State’s Official Bulletin number 180 published on 29
July 2015. Ley 27/2015, de 28 de julio, de modificación
de la Ley 33/1998, de 5 de octubre, de prohibición
total de minas antipersonal y armas de efecto sim-

103
ilar. Available at: http://www.boe.es/diario_boe/txt.
php?id=BOE-A-2015-8471) and the Netherlands, CM
& APL excluded by law. The figures have therefore
been put to zero since Eurosif measures exclusions
beyond law.
33 Divestment, also known as divestiture, is the opposite of
an investment, and it is the process of selling an asset for
either financial, social or political goals. Assets that can
be divested include a subsidiary, business department,
real estate, equipment and other property. Divestment
can be part of following either a corporate optimiza-
tion strategy or political agenda, when investments are
reduced and firms withdraw from a particular geographic
region or industry due to political or social pressure:
http://www.investopedia.com/terms/d/divestment.asp
34 Go fossil free, 2016. Available at: http://gofossilfree.org/
about-fossil-free/
36 Special Report ESG: Carbon Risk, A changing climate.
February 2015 (Magazine) By Mark Nicholls. IPE, 2015.
Available at: http://www.ipe.com/reports/special-re-
ports/esg-carbon-risk/special-report-esg-carbon-risk-a-
changing-climate/10006437.fullarticle
37 Carbon Tracker, 2015. http://www.carbontracker.org/
wp-content/uploads/2015/10/New_Brochure_CTI_web_
v21.pdf
40 PRI, 2016. Montreal Pledge. Available at: http://montre-
alpledge.org/
41 Climate expert Lord Stern backs AP4-style decarbon-
isation but rejects straight divestment. Responsible
Investor, 2015. Available at: https://www.responsible-in-
vestor.com/home/article/stern_boe_research/
42 UK’s pension fund association warns of “problematic
and complex” fossil fuel divestment. RI, 2015. Available
at: https://www.responsible-investor.com/home/article/
napf_divestmetn_foss/
43 Divestment lobby ‘oversimplifying’ sale of fossil fuel
assets, argues union. IPE, 2015. Available at: http://www.
ipe.com/news/esg/divestmentlobbyoversimplifying-
saleoffossilfuelassetsarguesunion/10009947.article
44 Divestment ‘a waste of time’ as response to climate
change. IPE, 2016. Available at: http://www.ipe.com/
news/esg/divestment-a-waste-of-time-as-response-to-
climate-change/10012325.fullarticle
45 American Petroleum Institute says fossil fuel divestment
breaches fiduciary responsibility. RI, 2016. Available at:
https://www.responsible-investor.com/home/article/
american_petroleum_institute_fid_duty/
46 Lothian Pension Fund rules out fossil fuel divestment. IPE,
2015. Available at: http://www.ipe.com/news/esg/lothi-
anpensionfundrulesoutfossilfueldivestment/10008883.
article
47 Norwegian oil fund divests 73 companies on environmen-
tal risk grounds. IPE, 2015. Available at: http://www.ipe.
com/news/esg/norwegian-oil-fund-divests-73-compa-
nies-on-environmental-risk-grounds/10011817.fullarticle
48 RI Interview: CalSTRS’ CIO Chris Ailman on fossil fuel
divestment, stranded assets and active ownership (Part
1). RI, 2015. Available at: https://www.responsible-inves-
tor.com/home/article/ri_interview_calstrs_cio_pt1/
49 Oxford University stops short of fossil fuel divestment.
IPE, 2015. Available at: http://www.ipe.com/news/esg/
oxford-university-stops-short-of-fossil-fuel-divest-
ment/10008066.fullarticle
50 Axa to ditch €500m of coal holdings in 2015. Available
at: http://www.climatechangenews.com/2015/05/22/
axa-to-ditch-500m-of-coal-holdings-in-2015/
51 London government calls on LPFA to divest fossil fuels.
IPE, 2015. Available at: http://www.ipe.com/news/esg/
london-government-calls-on-lpfa-to-divest-fossil-fu-
els/10009187.fullarticle
52 The Financial Reporting Council (FRC) “Developments in
Corporate Governance and Stewardship 2015” page 15
53 Aviva earmarks 40 carbon intensive companies for
engagement and potential divestment. RI, 2015.Available
at: https://www.responsible-investor.com/home/article/
aviva_earmarks_40_carbon/
54 Dutch pension giant PFZW aims to halve its carbon
emissions by 2020. RI, 2015. Available at: https://
www.responsible-investor.com/home/article/
dutch_pension_giant_pfzw_co2/
55 COP21: Major French cities join fossil fuel divestment
push as campaign grows. RI, 2015. Available at: https://
www.responsible-investor.com/home/article/350org/
56 Ratifica ed esecuzione della Convenzione di Oslo sulla
messa al bando delle munizioni a grappolo, fatta a
Dublino il 30 maggio 2008, nonche’ norme di adegua-
mento dell’ordinamento interno” (“The Law on the
Ratification and Implementation of the Oslo Convention
on the ban on cluster munitions, done at Dublin on 30
May 2008, and adjustment of domestic standards”), No.
95, 14 June 2011. Hereafter referred to as Law No. 95 of 14
June 2011. Published in the Official Gazette of the Italian
Republic (Gazzetta Ufficiale della Republica Italiana), No.
153, 4 July 2011.
57 Cluster Munition Ban Policy, August 2015. Landmine and
Cluster Munition Monitor, Italy . Available at: http://www.

104
the-monitor.org/en-gb/reports/2016/italy/cluster-muni-
tion-ban-policy.aspx#fn1
58 Worldwide investment in Cluster Munitions: a shared
responsibility, November 2014 update, PAX, Utrecht,
November 2014.
59 State’s Official Bulletin number 180 published on 29 July
2015. Ley 27/2015, de 28 de julio, de modificación de la Ley
33/1998, de 5 de octubre, de prohibición total de minas
antipersonalyarmasdeefectosimilar.Availableat:http://
www.boe.es/diario_boe/txt.php?id=BOE-A-2015-8471
60 Señor Centella Gomez, General Courts, Diary Sessions of
the Congress of Deputies, 17 June 2015, p. 4.
61 Foreign & Commonwealth Office, Written Ministerial
Statement, 7th December 2009, The Financing of
Cluster Munitions Production. Available at: http://www.
stopexplosiveinvestments.org/uploads/pdf/UK%20
Ministerial%20statement.pdf
62 Stop Explosive Investments 2016, Legislation. Available
at: http://www.stopexplosiveinvestments.org/legislation
63 EPP – European People’s Party
64 ALDE – The Alliance of Liberals and Democrats for Europe
65 Interinstitutional negotiation meetings on legislative
proposals between representatives of the Parliament,
the Council and the Commission are a key part of the
EU codecision procedure according to which ‘the insti-
tutions shall cooperate throughout the procedure with
a view to reconciling their positions as far as possible
and thereby clearing the way, where appropriate, for the
adoption of the act concerned at an early stage of the
procedure’. This reconciliation of positions is reached
through informal interinstitutional negotiations called
trilogues. Source: European Parliament, 2014. Codecision
and Conciliation. A guide to how the European Parliament
co-legislates under the ordinary legislative procedure.
Available at: http://www.europarl.europa.eu/code/
information/guide_en.pdf
66 The IORPs II compromise text is available at: https://www.
rijksoverheid.nl/documenten/publicaties/2016/06/28/
bijlage-b
67 https://thegiin/org/impact-investing/need-to-know/
68 Eurosif SRI Study 2014 page 23
69 of the Global Impact Investing Network (GIIN),
70 Global Impact Investing Network (GIIN), 2016. Annual
Impact Investor Survey 2016, p. XI. Available at: https://
thegiin.org/assets/2016%20GIIN%20Annual%20
Impact%20Investor%20Survey_Web.pdf
71 Eurosif SRI Study 2014, page 27. Available at: http://www.
eurosif.org/wp-content/uploads/2014/09/Eurosif-SRI-
Study-20142.pdf
72 European Commission, 2016. http://ec.europa.eu/
finance/investment/social_investment_funds/
index_en.htm
73 European Commission, 2016. http://ec.europa.eu/
finance/investment/social_investment_funds/
index_en.htm#maincontentSec2
74 http://www.icmagroup.org/About-ICMA/
75 The GBP have four core components: 1. Use of Proceeds
2. Process for Project Evaluation and Selection 3.
Management of Proceeds 4. Reporting
76 The Green Bond Principles (GBP) file:///C:/Users/Flavia/
Downloads/Green-Bonds-brochure-150616.pdf
77 Green Bond Principles (GBP) Voluntary process guide-
lines that recommend transparency and disclosure and
promote integrity (by ICMA)
78 Climate Bond Standards (CBI) Sector-specific eligibil-
ity criteria for assets and projects that can be used for
Climate and Green Bonds (by CBI)
79 Green Bonds Survey: what investors want; by Catherine
Snowdon, Euromoney, September 2015
80 The 2015 Green Bond issuance amounted to over 42 bn
USD according to CBI’s 2016 State of the Market Report,
available at: https://www.climatebonds.net/files/files/
CBI%20State%20of%20the%20Market%202016%20A4.pdf
81 EIB Climate Awareness Bonds, Newsletter April 2016,
by EIB. Available at: http://www.eib.org/attachments/
fi/2015-H2-cab-newsletter.pdf
82 Bonds and Climate Change. State of the Market Report
2016, p. 6, by CBI. Available at: https://www.climatebonds.
net/files/files/CBI%20State%20of%20the%20Market%20
2016%20A4.pdf
83 The $100 Trillion Bond Market’s Got Bigger Concerns Than
Brexit, July 2016, Bloomberg. Available at: http://www.
bloomberg.com/news/articles/2016-06-26/the-100-tril-
lion-bond-market-s-got-bigger-concerns-than-brexit
84 To reflect also the distinction from Sustainability Bonds
85 Guidance for Issuers of Social Bonds, by ICMA Green
Bond Principles (GBP), 2016. p.2. Available at: http://www.
icmagroup.org/Regulatory-Policy-and-Market-Practice/
green-bonds/guidance-for-issuers-of-social-bonds/
86 Social Bonds report by HSBC, 2016., p.3. Available at: www.
gbm.hsbc.com/~/media/gbm/reports/insights/social-
bonds.pdf
87 Social Bonds report by HSBC, 2016., p.2 Available at: www.
gbm.hsbc.com/~/media/gbm/reports/insights/social-
bonds.pdf
88 Social Impact Bonds, The early years, July 2016, by Social
Finance. Available at: http://www.socialfinance.org.uk/
wp-content/uploads/2016/07/SIBs-Early-Years_Social-
Finance_2016_Final3.pdf
89 Social Impact Bonds, The early years, July 2016, by Social
Finance. Available at: http://www.socialfinance.org.uk/

105
wp-content/uploads/2016/07/SIBs-Early-Years_Social-
Finance_2016_Final3.pdf
90 Green and social bonds: what’s at stake for investors?
2014 Study by Mirova, p.12. Available at: http://www.
mirova.com/Content/Files/Green%20and%20social%20
bonds%20what%E2%80%99s%20at%20stake%20for%20
investor.pdf
91 Law N° 2015-992 on Energy Transition for Green Growth
(Energy Transition Law)
92 The Austrian Environment Mark, available at: https://
www.umweltzeichen.at/cms/de/produkte/nachhaltige-fi-
nanzprodukte/content.html
93 Category 1 : ‘non-systematic ESG integration’; Category
2 : ‘systematic consideration/inclusion of ESG research/
analyses in financial ratings/valuations by analysts and
fund managers ; Category 3: ‘Mandatory investment con-
straints based on financial ratings/valuations derived
from ESG research/analyses. Source Eurosif Study 2014
page17
94 ‘Profile of responsible investors in Europe’ 2015 edition
focus on climate, page 6
95 Last year’s 21%
96 Green Bonds Europe 2016: https://www.environmental-fi-
nance.com/content/events/green-bonds-europe-2016.
html
97 Eurosif Policy Position on the Capital Market Union
Action Plan, December 2015 - http://www.eurosif.org/
wp-content/uploads/2015/12/EUROSIF-CMU-Action-Plan-
position.pdf
98 beyond those required by law
99 Vereinigung Österreichischer Investmentgesellschaften
(VÖIG) Österreichischer Investmentfondsmarkt, 2015.
Available at: http://www.voeig.at/voeig/internet_4.nsf/
sysPages/17E57ACB3C8CD9DDC1257545004EECBB/$file/
AKZG%2006-15.pdf)
100 Asset Overlays are strategies which are referring to part
or the whole assets of an asset manager or asset owner,
mainly used for exclusion
101 plus exclusions applied as asset overlays to product ranges
102 UCIs - Undertakings for Collective Investment
103 BEAMA annual report 2014-2015, page 2. Available at:
http://www.beama.be/en/news-en/beama-annual-
report-2014-2015
104 Forum Ethibel 2016, http://forumethibel.org/content/
ethibel_pioneer_excellence_labels.html, http://forume-
thibel.org/content/ethibel_sustainability_index.html
105 Denmark 2015 SRI Study page 4
106 Denmark 2015 SRI Study page 4
107 5 Countries Leading the Way Toward 100% Renewable
Energy, Ecowatch 2015. Available at: http://www.ecow-
atch.com/5-countries-leading-the-way-toward-100-re-
newable-energy-1881999459.html
108 Ministry of Foreign Affairs of Denmark, 2016, http://www.
investindk.com/Clusters/Cleantech
109 Danish Council for Corporate Responsibility 2016, http://
csrcouncil.dk/responsible-investments-and-conventions
110 Finnish Banking in 2015. Financial overview of Finnish
banks, p. 2, 3. Federation of Finnish Financial Services
FFI. Available at: http://www.finanssiala.fi/en/material/
Finnish_Banking_2015.pdf
111 Finnish Banking in 2015. Financial overview of Finnish
banks, p. 2, 3. Federation of Finnish Financial Services
FFI. Available at: http://www.finanssiala.fi/en/material/
Finnish_Banking_2015.pdf
112 Finnish Insurance in 2015 Financial overview of Finnish
insurance companies, p. 5. Federation of Finnish Financial
Services FFI. Available at: http://www.finanssiala.fi/en/
material/Fk-julkaisu-Finnish-insurance-in-2015.pdf
113 Nordic pension insurers take up environmental investing.
Finance Finland, 2016. Available at : http://www.finans-
siala.fi/en/news/Pages/Nordic-pension-insurers-take-
up-environmental-investing.aspx
114 Finnish Securities Market Association 2016, http://cgfin-
land.fi/en/recommendations/the-finnish-corporate-
governance-code/
115 Prime Minister’s Office Finland 2016, Government
Resolution On State-Ownership Policy. Making the bal-
ance sheet work – Growth-generating ownership policy;
http://vnk.fi/documents/10616/1221497/Periaatepäätös_
en+final.pdf/27ea3917-e78d-4843-b0ef-e8659b12db8a)
116 The Nordic Ecolabel is the official Ecolabel of the Nordic
countries and was established in 1989 by the Nordic
Council of Ministers. It is a voluntary scheme that eval-
uates a product’s environmental impact throughout its
lifecycle, with the goal of contributing to sustainable con-
sumption and production. Source: Nordic Ecolabelling,
2016. The Nordic Ecolabel - Limiting CO2 Emissions.
Available at: http://www.nordic-ecolabel.org/
117 http://www.pensionfundsonline.co.uk/content/
country-profiles/france/117
118 http://www.ffa-assurance.fr/content/tableau-de-bord-de-
assurance-en-2015
119 The AFG report 2016
120 FIR – Forum pour l’Investissement Responsable
121 France RI figures – June 2016, Novethic in partnership with
the French SIF (FIR). Available on: http://www.novethic.
com/fileadmin//user_upload/tx_ausynovethicetudes/
pdf_complets/2015-figures-on-RI-in-France.pdf
122 AFEP and MEDEF are the two leading French corporate
associations: http://www.psa-peugeot-citroen.com/
sites/default/files/document/misc/corporate_govern-

106
ance_code_of_listed_corporations_-_amended_in_
november_2015_0_0_0.pdf
123 At the time this report went into press
124 See text box Article 173 - FIR guidance booklet for
Investors
125 BVI 2016. Daten, Fakten, Perspektiven. Available at:
www.bvi.de/uploads/tx_bvibcenter/BVI_3178_2015_
Jahrbuch_2016_RZ_final_web.pdf
126 Asset Overlays are strategies which are referring to part
or the whole assets of an asset manager or asset owner,
mainly used for Exclusions.
127 For a European outlook on drivers and deterrents, go to
page 54
128 Global trends in renewable energy investment 2016, UNEP
and Bloomberg Nez Energy finance, 2016, page 42
129 German Ministry for Economy and Energy. Renewable
Energy Information Portal, 2016. Available at: https://
www.erneuerbare-energien.de/EE/Redaktion/DE/
Dossier/eeg.html?cms_docId=73930
130 Merkel: Ein Anspruch an unser Handeln. Die
Bundeskanzlerin, 2016. Available at: https://www.bun-
deskanzlerin.de/Content/DE/Artikel/2016/05/2016-05-31-
merkel-nachhaltige-entwicklung.html
131 Banca d’Italia, Relazione annuale 2015, p.155: http://www.
bancaditalia.it/pubblicazioni/relazione-annuale/2015/
rel_2015.pdf
132 Ivi, p.151: http://www.bancaditalia.it/pubblicazioni/
relazione-annuale/2015/rel_2015.pdf
133 http://www.pwc.lu/en/asset-management/docs/pwc-eu-
ropean-institutional-investors.pdf
134 h t t p : / / w w w . a s s o g e s t i o n i . i t / i n d e x . c f m /
1,855,11122,49,html/il-mercato-italiano-del-rispar-
mio-gestito-agg-to-dicembre-2015-
135 The 2016 edition of the survey has been conducted in col-
laboration with Mondo Institutional.
136 http://investiresponsabilmente.it/
137 The main event addressed to Italian asset managers.
138 Financing Climate Change: Carbon Risk in the Banking
Sector. Thought Piece, July 2014. By Boston Common
Asset Management. Available at: http://www.boston-
commonasset.com/documents/ThoughtPiece-2014-07-
FinancingClimateChange.pdf
139 A company shared by CDP Spa (70%), ACRI (15%) and ABI
(15%). Regarding the FIA, see the dedicated website:
http://www.cdpisgr.it/social-housing/FIA/caratteris-
tiche-fondo/caratteristiche-scopo-fondo.html
140 In 2013, FFS launched a working group on SRI definition
involving all members of FFS and major experts on sus-
tainable finance in Italy. The group agreed on the follow-
ing definition: “Sustainable and Responsible Investment
is a medium to long-term investment strategy which, in
the evaluation of companies and institutions, combines
the financial analysis with a robust Environmental, Social
and Governance (ESG) analysis, with the aim to create
value to the benefit of investors and the society as a
whole”.
141 The Sustainable Stock Exchanges (SSE) initiative is a peer-
to-peer learning platform for exploring how exchanges,
in collaboration with investors, regulators, and compa-
nies, can enhance corporate transparency – and ulti-
mately performance – on ESG (environmental, social and
corporate governance) issues and encourage sustainable
investment - http://www.sseinitiative.org/about/
142 ‘Analysis Of The Effectiveness Of Socially Responsible
Investment Funds In Poland’ by Agata Lulewicz-Sas, Jaroslaw
Kilon, Economics and Management: 2014. 19 (4)
143 The National Fund for Environmental Protection
and Water Management (NFEP&WM), 2016. Available
at: https://www.nfosigw.gov.pl/en/nfepwm/
financing-environmental-protection/
144 Warsaw Stock Exchange 2016, https://www.gpw.pl/Index
145 GPW Launches “Best Practice of GPW Listed Companies
2016”. Warsaw, 15 October 2015. Warsaw Stock Exchange
2016. Available at: https://www.gpw.pl/WSE_corporate_
governance. And “Best Practice for GPW Listed Companies
2016”. Available at: https://www.gpw.pl/pub/files/PDF/
RG/DPSN2016_EN.pdf
146 Emerging Europe 2016, http://emerging-europe.com/
intelligence/non-financial-reporting-no-longer-second-
ary-consideration-cee/)
147 B-Ready is a new program to accelerate social startups,
innovative social projects (http://innovationforsocial-
change.org/category-with-slider/?lang=en)
148 Great expectations for the social impact investment sec-
tor in Spain? By EVPA (European Venture Philanthropy
Association), November 2015. Available at: http://
evpa.eu.com/blog/great-expectations-social-impact-
investment-sector-spain/
149 In this term, the last version of the Regulation of pension
plans and funds, approved by Royal Decree 304/2004 of
20 February. Whose article 69 paragraph 5 explains that
the pension funds of employment, in its comprehensive
statement of the principles of investment policy should
mention when taking into consideration or not, in invest-
ment decisions, extra-financial risks affecting to different
assets in the portfolio of the occupational pension fund.
150 Article 540 refers to the minimum content on the cor-
porate governance report while Article 541 refers to the
minimum content on the remuneration of the company
directors’ report.
151 https://www.boe.es/buscar/act.php?id=BOE-A-2004-
3453&p=20140802&tn=1
152 Sweden official website 2016, https://sweden.se/nature/

107
sweden-tackles-climate-change/)
153 Sweden official website 2016, https://sweden.se/nature/
sweden-tackles-climate-change/)
154 OECD Environmental Performance Reviews: Sweden
2014. Available at: http://www.oecd.org/env/country-re-
views/oecd-environmental-performance-reviews-swe-
den-2014-9789264213715-en.htm
155 The Ethical Council of the Swedish AP Funds 2016 - http://
etikradet.se/?lang=en
156 http://hallbartvardeskapande.se/
157 http://www.swesif.org/swesif/the-esg-profile/
158 www.hallbarhetsprofilen.se.
159 http://www.greengothenburg.se/media/1099/facts_
green-bonds.pdf
160 EFAMA SRI report 2014 page 30
161 h t t p : / / f o n d b o l a g e n . s e /e n / R e g u l a t i o n s /
Ethical-Committee-for-Fund-Marketing/
162 http://fondbolagen.se/en/About-us/Priority-issues/
Responsible-Investments/
163 http://fondbolagen.se/en/Press/Press-releases/2016/
The-Swedish-fund-industry-agrees-on-carbon-
reporting-for-funds/
164 http://fondbolagen.se/en/About-us/Priority-issues/
Responsible-Investments/
165 http://www.pensionfundsonline.co.uk/content/
country-profiles/switzerland/107
166 Assets are not yet taken into account in this reporting
period
167 Eurosif March 2016 Insight, interview with Patrick Wirth
168 Even if the methodological changes that partially sus-
tain the strong growth number for 2015 are isolated, the
growth in 2015 amounts to 30 %
169 For Switzerland all growth rates are calculated in CHF.
170 FNG Marktbericht Nachhaltige Geldanlagen 2016, p. 53.
Forum Nachhaltige Geldanlagen (FNG). Available at:
http://www.forum-ng.org/images/stories/Presse/
Marktbericht_2016/FNG_Marktbericht2016_online.pdf
171 OECD Pension Funds in Figures May 2015. Available at:
https://www.oecd.org/finance/Pension-funds-pre-data-
2015.pdf
172 Dutch Fund and Asset Management Association.
Investment Funds in the Netherlands, June 2015. Available
at: http://www.dufas.nl/site/assets/files/1304/rapport_
ifitn-ey-dufas.pdf
173 Service Document on Responsible Investment. Federation
of the Dutch Pension Funds, June 2016. Available at: http://
www.pensioenfederatie.nl/Document/Publicaties/
English%20publications/Servicedocument_Responsible_
Investment.pdf
174 Service Document on Responsible Investment. Federation
of the Dutch Pension Funds, June 2016. Available at: http://
www.pensioenfederatie.nl/Document/Publicaties/
English%20publications/Servicedocument_Responsible_
Investment.pdf
175 Impact Investing: From niche to mainstream, February
2016, page 9. By VBDO. Available at: http://www.vbdo.nl/
files/report/ImpactInvestment_Final.pdf
176 http://www.vbdo.nl/files/report/VBDOInsurance20151.
pdf
177 Benchmark Responsible Investment by Insurance
Companies in the Netherlands 2015. VBDO.
Available at: http://www.vbdo.nl/files/report/
VBDOResponsibleInvestmentDutchPensionFunds.pdf P.8
178 http://www.vbdo.nl/files/news/VBDOInsurance20151.pdf
2016, page 8. Report by VBDO. Available at: http://www.
vbdo.nl/files/report/ImpactInvestment_Final.pdf
2016, page 9. Report by VBDO. Available at: http://www.
vbdo.nl/files/report/ImpactInvestment_Final.pdf
181 NEDERLANDSCHE BANK, 27 NOVEMBER 2015 [Online].
Available at: http://www.dnb.nl/binaries/KK_tcm46-
334439.pdf?2015120218
182 Asset Management Survey 2014-2015 page 8
183 Typified by a Study on the impact of climate change on
asset values run from the UK by Mercers
184 A Guide to Responsible Investment Reporting in Public
Equity [http://www.btpensions.net/download/353/
Guide+to+Responsible+Investment+Reporting+in+
Public+Equity+-+26.01.15.pdf]
185 Aiming for A [http://investorsonclimatechange.org/
portfolio/aiming-for-a/
186 Red Line Voting [http://amnt.org/red-line-voting/]
187 See press releases at http://www.theinvestmentassocia-
tion.org/
188 See section on Qualitative Questions on page of the
Study
189 In countries where there are no SIFs, interested organisa-
tions can join the Eurosif network directly. Find out more
on www.eurosif.org

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