Survey: 57% of Institutional Investors Believe ESG Has Positive Impact on Returns

Thursday, March 26, 2015

Some 57% of asset owners and other institutional investors surveyed believe incorporating ESG into alternative investments decision-making has a positive impact on risk-adjusted returns, said a report Monday from Mercer and LGT Capital Partners.

Only 9% of the institutional investors believe incorporating environmental, social and governance risk factors lowers returns, while 34% believe it has no effect, said the report, “Global Insights on ESG in Alternative Investing.”

In all, 76% of the institutional investor respondents include ESG criteria when investing in alternatives, considering it an important aspect in risk and reputation management. Of the investors incorporating ESG criteria, 54% have done so for three years or less.

The extent to which the institutional investors incorporate ESG varies by alternative asset class.

Among respondents, 33% incorporate ESG to a significant extent in private equity, 27% in real estate, 22% in infrastructure and 7% in hedge funds.

On the other hand, 55% of respondents incorporate ESG to some extent in private equity, 56% in real estate, 64% in infrastructure and 59% in hedge funds.

Only 12% of the respondents don’t used ESG at all in private equity, 17% in real estate, 14% in infrastructure and 34% in hedge funds.

Source: Pensions & Investments (link opens in a new window)

impact investing, infrastructure, venture capital