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Laxman Pai, Opalesque Asia: An increasing number of institutional investors are requiring their hedge fund managers to incorporate environmental, social and governance (ESG) factors in the course of their investment activities, said a study.
According to a new report by KPMG, such investors now see ESG investing as serving their own long-term interest as much as those of wider society.
The survey, which involved 135 institutional investors and hedge fund managers with total assets of USD$6.25 trillion in 13 countries, shows that increasingly, investors now expect their asset managers to deliver attractive financial returns while considering the environmental and social risks associated with their investments.
Some 45 percent of institutional investors now base their investments in ESG-based hedge funds on the view that they offer opportunities to generate alpha, while also offering a more defensive portfolio that looks beyond the blind spots in markets that are slow to price in ESG risks.
Hedge fund managers have duly responded by advancing in the familiar ESG adoption cycle. Currently, 15 percent of the surveyed hedge fund managers define themselves at the 'mature' stage, where ESG is implemented across the firm via appropriate policies, committees, research, and data.
A further 44 percent are at the 'in progress' stage, while 31 percent are still at 'awareness raising' stage; leaving the remaining 10 percent as 'no implemen...................... To view our full article Click here
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