The UK is widely acknowledged as a global leader in sustainable and responsible finance. Its dynamic cluster of sustainable and responsible investment expertise is spread across a range of institutions, including asset managers, investment consultants, investment banks and independent research houses. It was a pioneer in carbon trading and is now a key centre for the carbon markets.

In September 2010, 13% of the asset managers (57 of over 400 worldwide) and 16% of the professional service providers (26 of more than 150) among the signatories to the UN-backed Principles for Responsible Investment (PRI) were from the UK, as were 10% (22 from about 200) of the asset owner signatories.

In addition to UKSIF, the Sustainable Investment and finance association, globally significant responsible investment initiatives headquartered in the UK include the UN-backed Principles for Responsible Investment (PRI), the Carbon Disclosure Project (CDP), the Institutional Investors Group on Climate Change (IIGCC) and the Forest Footprint Disclosure Project (FFDP).

Key developments in 2010 include:

• The 10^th anniversary of the introduction in the UK of the world’s first regulation requiring disclosure by occupational pension funds of their policies on responsible investment. This UK leadership triggered similar initiatives from Scandinavia to Australia and was the first step towards today’s wide acceptance of the value of long-term responsible ownership and investment approaches.
• The launch by the UK Financial Reporting Council of the world’s first “Stewardship Code” on responsible asset ownership. Asset managers regulated by the UK’s financial services regulator will be required to disclose whether or not they implement this principles-based “comply or explain” code.
• National Ethical Investment Week, which raises awareness among private clients and values-based organisations, takes place for the third successive year. Now being replicated in both Europe and the United States, it was the world’s first ever promotional week for sustainable and responsible investment when it was launched in 2008.

Building on the shocks of the financial crisis, UK public opinion has been shaken by a growing awareness of the financial implications of environmental risks. In particular, the impact on UK dividend income of BP’s Gulf of Mexico oil spill has delivered a wake-up call.

Sustainable and Responsible Investment has developed and evolved in the UK in recent years for both institutional and private clients. Today’s product and service innovation focuses on investing in solutions to environmental and social challenges or encouraging improved management of associated risks and opportunities.

This study found that the total of SRI AuM in the UK at end December 2009 was £938.9 billion (€1,043.3 billion) with £54.7 billion (€60.7 billion) defined as Core SRI and £884.2 billion (€982.5 billion) as Broad SRI.

Comparing these figures with the total assets managed in the UK by member firms of the UK’s Investment Management Association, which remained broadly static at £3.4 trillion at end 2009 compared with end 2007, the 19% increase in total SRI AuM is a positive indication that despite the financial crisis, SRI continues to grow and develop.

Some facts about the UK market (as of 31/12/2009):

• SRI Market Size: Core £54.7 billion, Broad £884.2 billion
• Influential actors: Pension funds, asset managers, investment banks, investment consultants and independent research houses
• Leading Strategies: Engagement, Integration, norms- and values-based exclusions
• Legal Milestones: SRI Pensions Disclosure Regulations (2000)
• SIF (yes/no): Yes, UKSIF since 1991

For more information on SRI in the UK please visit UKSIF: www.uksif.org

Download the UK section of Eurosif's European SRI Study 2010.