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Industry Landscape
The Responsible Investment industry, encompassing ESG and Islamic Finance, is experiencing significant growth driven by increasing investor demand for ethical and sustainable options, evolving regulatory frameworks, and greater awareness of climate change and social issues. Technology plays a crucial role in providing granular data and screening tools, though data fragmentation and lack of standardization remain challenges. The market is competitive, with established players and new entrants vying for market share.
Total Assets Under Management (AUM)
Assets Under Management (AUM) in Sustainable Investing in United States
~As of 2022, sustainable investing assets under management (AUM) in the United States reached approximately $8.4 trillion, representing a significant portion of the total AUM. (USSIF, 2022 Report on US Sustainable and Impact Investing Trends)
(Not explicitly mentioned for 2023, but the US SIF Foundation reported a 2020-2022 decrease, although prior periods showed strong growth. CAGR)
- 2020-2022 saw a decline in the US due to changes in methodology.
- Prior periods (2018-2020) showed substantial growth (42%).
- Global sustainable investing AUM continues to grow.
Total Addressable Market
8.4 trillion USD
Market Growth Stage
Pace of Market Growth
Emerging Technologies
AI-Powered Data Analytics
Leveraging artificial intelligence and machine learning to process vast amounts of unstructured and structured data for more accurate ESG and Shariah compliance screening, risk assessment, and predictive insights.
Blockchain for Transparency
Utilizing distributed ledger technology to enhance the transparency and traceability of sustainable investment products and supply chain ESG data, reducing greenwashing risks.
Natural Language Processing (NLP)
Applying NLP to extract and analyze qualitative data from corporate reports, news, and social media for nuanced insights into ESG performance and controversies, beyond numerical scores.
Impactful Policy Frameworks
SEC Climate-Related Disclosures (Proposed, 2022)
The U.S. Securities and Exchange Commission (SEC) proposed rules in March 2022 requiring public companies to disclose extensive climate-related information, including greenhouse gas emissions, climate-related targets, and governance.
This policy significantly increases the demand for granular and verifiable ESG data, directly benefiting IdealRatings by expanding the need for their data collection and screening services.
California Climate Disclosure Laws (SB 253 & SB 261, 2023)
California enacted two landmark climate disclosure laws in October 2023, SB 253 (Climate Corporate Data Accountability Act) requiring large U.S. companies operating in CA to disclose Scope 1, 2, and 3 emissions, and SB 261 (Climate-Related Financial Risk Act) requiring public and private companies with over $500M revenue to report on climate-related financial risks.
These laws mandate extensive corporate climate reporting, creating a substantial market opportunity for IdealRatings to provide data aggregation, analysis, and compliance solutions to affected companies and their investors.
DOL's Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (2022)
The U.S. Department of Labor (DOL) finalized a rule in December 2022 clarifying that fiduciaries of retirement plans may consider ESG factors when making investment decisions, reversing prior restrictions.
This rule validates the consideration of ESG factors in mainstream investment decision-making for a large pool of assets, driving demand for IdealRatings' ESG data and screening tools among pension funds and asset managers.
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