The majority of investment managers worldwide expect
that socially responsible investing (SRI) practices will become a common
component of mainstream investment processes within 10 years, according to a
survey by Mercer Investment Consulting (Mercer IC).
More than 190 regional investment
management organizations responded to Mercer IC's 2005 global Fearless
Forecast survey. Surveyed organizations cover a wide spectrum of
professional investment management firms, from small regional boutique equity
specialists to larger national firms.
As part of that survey, Mercer IC
asked managers for their views on whether certain SRI practices would become a
common component of mainstream investment processes in the near and long terms.
In total, 195 managers responded to the SRI questions; these respondents manage
in excess of US$30.5 trillion in assets.
Managers in Asia, Australia,
Canada, Pan-Europe, and the US were asked for their predictions on whether the
following SRI practices would become common components of mainstream investment
processes: active ownership (shareholder engagement/activism, proxy voting);
positive or negative screening for social and/or environmental factors; and the
integration of social and/or environmental corporate performance
indicators.
Findings show that, on average,
investment managers are becoming more convinced that the adoption of SRI
practices and strategies will become commonplace: 89% predict that active
ownership will be a mainstream practice within 10 years; 73% predict that the
incorporation of social or environmental corporate performance indictors will
become mainstream within 10 years; and 65% predict that positive or negative
screening will be mainstream within 10 years.
“In the past, it was just a small
group of organizations that were interested in SRI, but there are a growing
number of mainstream investors who believe these issues can have an impact on
long-term investment performance,” says Tim Gardener, global leader of Mercer
IC. “Investment managers' views are clearly changing.”
Regional views
vary
On a regional level, the managers'
responses varied widely. US managers were the most skeptical, with more than 60%
saying they believe that screening and the integration of social and/or
environmental factors will never become a mainstream investment practice. Among
Asian and Australian managers, on the other hand, more than 8 in 10 (85%)
predict that all three SRI-related practices will become mainstream within 10
years. European managers predict the most short-term activity will be seen in
relation to the integration of social and/or environmental criteria, and
positive and negative screening.
“We see a range of investor
approaches to SRI across regions,” says Jane Ambachtsheer, Mercer IC's global
head of SRI, “and although managers' views do vary, it is interesting to note
that nearly all predict that SRI practices will become
mainstream.”
