European
Global investment managers expect social responsibility to become mainstream
By Finfacts Team
Apr 8, 2005, 10:34

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.”