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Alternative Market Briefing

40% of surveyed hedge funds consider ESG factors in investment decision

Friday, October 30, 2020

Laxman Pai, Opalesque Asia:

A survey by BNP Paribas Corporate and Institutional Banking of hedge funds found that 40% already implement Environmental, Social and Governance (ESG) criteria, while nearly 60% say they will incorporate ESG within the next two years.

The report highlighted that hedge funds are "reaching a tipping point" for ESG integration as they become "increasingly aware of their responsibilities to the environment and society".

Whilst the majority of funds surveyed do not currently integrate ESG, most of those who do only started integrating ESG in 2018. On this trajectory, by mid-2022 the majority of hedge funds will be integrating ESG approaches - likely sooner.

More than half (57%) of hedge funds in the survey will integrate ESG considerations no later than 2022, it said. 53 hedge funds with a combined AUM (Assets under Management) of more than $500 billion participated in the survey by BNP Paribas.

However, hedge funds are becoming increasingly aware of their responsibilities to the environment and society. 55% of hedge funds use ESG principles in the management of their companies driven by firm leadership. 62% of hedge funds are measuring their operational carbon footprint.

Interestingly, the survey found that the imbalance is not simply a matter of hedge funds being unconvinced about the business case of integrating ESG for a sustainable future, but that there are key barriers that have delayed integration. For ......................

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