Across the 22 countries surveyed, 76% of respondents said they have incorporated ESG criteria when investing in alternative asset classes.
The US was said to be the least interested in ESG factors, with over half showing little or no interest. This contrasts significantly to both Europe and Asia, where just under a quarter of respondents showed no interest.
Conducted by alternative investment specialist, LGT Capital Partners, and financial services consulting firm, Mercer, the research pointed to topics – such as human rights abuses, controversial weapons and carbon intensity – as factors which institutional investors are becoming increasingly concerned about.
Factors like alcohol, gambling and tobacco, on the other hand, are rarely considered.
“Beyond ethical concerns”
“This shows that ESG analysis has moved beyond ethical concerns and has firmly found its place as a risk and investment management topic,” said Tycho Sneyers, managing partner of LGT Capital Partners.
“Given the high rate of recent adoption of ESG and broad interest in the topic, we can safely assume that ESG integration will continue its rapid expansion.”
Nearly 60% of the 97 respondents contributing to the “Global Insights on ESG in Alternative Investing” survey said they thought ESG criteria had a positive impact on risk-adjusted returns, while only 9% thought it lowered returns.
Global head of investment research at Mercer, Deb Clarke, said incorporating ESG considerations into investment decisions “strengthens a portfolio’s defense against risks arising from governance failures, changes in policy and regulation, and environmental and social trends”.
