Fund managers are facing a growing demand from clients to integrate environmental, social and corporate governance (ESG) issues into their investment decisions, according to Mercer Investment Consulting.
Within ESG, globalisation and corporate governance ranked as the issues of most concern to fund managers with almost two-thirds of the 157 investment management companies surveyed by Mercer citing them as material to portfolio performance.
"The environmental and social effects of globalisation are being experienced across all regions as pressures on resources grow," said Jane Ambachtsheer, global head of Mercer's Responsible Investment business: "Corporate scandals have hit the headlines in almost all regions, so it is not surprising that these two issues are viewed as the most important responsible investment factors by investment managers. "
Terrorism ranked third overall in the issues of concern for fund managers with 41 per cent citing it as a relevant factor in investment analysis. Australian fund managers appeared most concerned about terrorism with 67 per cent citing it as an issue compared with 43 per cent of US managers. In the UK, 37 per cent of managers said they were concerned about terrorism, making it the second most important issue behind corporate governance.
The survey also looked forward to the next five years, with environmental issues seen as growing in importance for performance.
This year, 13 per cent of investment managers expected to see increased demand for specialist investment strategies built on ESG analysis.