United Kingdom

The historical roots of SRI in the UK lies with Victorian social concerns such as temperance and just employment conditions. The modern roots of SRI can be traced back to the 1920s when the Methodist Church wished to start investing in the stock market whilst avoiding companies involved in alcohol and gambling. In 1948, the establishment of the Church Commissioners led to the Church of England operating under an ethical investment policy.

The first retail ethical investment fund, the Friends Provident Stewardship fund was established in 1984. This was followed by a number of other ethical funds being established and by the late 1980s, the first Green funds were introduced. The period was also marked by a number of charitable foundations adopting ethical investment policies.

SRI moved into the financial mainstream in 2000, when there was considerable growth in the institutional SRI market. A major catalyst for the growth was the SRI Pensions Disclosure Regulations (which came into effect on 3 July 2000). This period saw the value of total SRI assets rise almost ten-fold from 1997 to the end of 2001. 1 Since 2000, there have been numerous developments and initiatives that have further fuelled the growth in the institutional SRI market. These include large pension funds adopting SRI critieria (for example USS), an increase in engagement activities and the establishment of coalitions of SRI funds working on core interests and subjects (for example the Institutional Investors Group on Climate Change, IIGCC).

Recent developments in SRI have included the growth of SRI activities on the ‘sell-side’ and an increase in SRI investment in ‘alternative’ asset classes. The UK has become a world centre for sustainable and responsible finance, with a growing reputation for developing and hosting catalytic initiatives (Carbon Disclosure Project, core secretariat of the UN Principles for Responsible Investment).

Some facts about the UK market (as of 31/12/2007):

  • SRI Market Size: Core £54.1 billion, Broad £709.4 billion
  • Influential actors: Pension funds, asset managers, investment banks, investment consultants and independent research houses
  • Leading Strategies: Ethical exclusion and some positive screening, Engagement, Integration
  • 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

Or download the UK section of Eurosif European SRI Market study.

1 Russel Sparkes