Spain

Financial market overview

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 positive 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 financial 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 represented 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 occupational 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.

SRI Market and strategy overview

This year is marked by the exponential growth of sustainability 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 targeting innovative and operating projects, aiming to create social value (B-Ready) and accelerate start-ups with a social impact ‘that provides – with proven success – networking, mentoring, financing, capacity building and visibility to promising initiatives’. 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 development 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 strategy 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 strategy, 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 insurance 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.

Regulatory framework

The SRI market’s growth rate has increased exponentially 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 services industry. The legal framework has been encouraging reporting and further transparency for issuers. This has not gone unnoticed by institutional investors eager to add further value to their investments.

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.

This article concerns the inclusion of the corporate governance report in the management report. The steps taken by the National Stock Market Commission (CNMV) are also noteworthy. In 2015, the CNMV published a voluntary guide for companies on corporate governance, including 25 guiding principles for a company committed to good corporate governance and going beyond the standards outlined in previous legislation.

Pension funds have also seen some interesting advancements. As of August 2014, through the modification of a Royal Decree, 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 investors in the SRI market. But the development of ESG criteria tools measurement for investment funds and an increasing awareness of the benefits of financial institutions using ESG criteria will probably lead to an increase in retail investment.

Financial market overview
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 positive 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 financial 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 represented 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 occupational 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.

SRI Market and strategy overview
This year is marked by the exponential growth of sustainability 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 targeting innovative and operating projects, aiming to create social value (B-Ready) and accelerate start-ups with a social impact ‘that provides – with proven success – networking, mentoring, financing, capacity building and visibility to promising initiatives’. 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 development 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 strategy 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 strategy, 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 insurance 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.
Regulatory Framework
The SRI market’s growth rate has increased exponentially 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 services industry. The legal framework has been encouraging reporting and further transparency for issuers. This has not gone unnoticed by institutional investors eager to add further value to their investments.
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.
This article concerns the inclusion of the corporate governance report in the management report. The steps taken by the National Stock Market Commission (CNMV) are also noteworthy. In 2015, the CNMV published a voluntary guide for companies on corporate governance, including 25 guiding principles for a company committed to good corporate governance and going beyond the standards outlined in previous legislation.
Pension funds have also seen some interesting advancements. As of August 2014, through the modification of a Royal Decree, 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 investors in the SRI market. But the development of ESG criteria tools measurement for investment funds and an increasing awareness of the benefits of financial institutions using ESG criteria will probably lead to an increase in retail investment.