Free Trial

Global Investor Magazine Copying and distributing are prohibited without permission of the publisher

Slow burner - SRI starts to affect asset managers

26 July 2011

Environmental, social and governance considerations have taken a long time to catch the imagination of mainstream investors. But that isn't stopping leading fund managers from dedicating resources worthwhile new research, says Bob Campion

Read more: Socially responsible investing ESG environment

The question of whether environment, social and governance (ESG) factors have a significant impact on the performance of an investment portfolio is one that has troubled pension funds for many years. But as the latest research attempts to bring us near to a conclusion on this, as yet unanswered, question, will the asset management industry finally start taking ESG seriously?

Analysis of ESG factors has been ongoing for more than a decade by specialist responsible or socially responsible investment (SRI) fund managers and interested pension funds. There is still plenty of confusion as to the difference between ethical investing – avoiding unethical companies – and using ESG factors to feed into normal investment decisions. Many funds marketed as responsible combine the two approaches.

Within mainstream asset management there is a growing appreciation for the influence of ESG in analysis of securities across all asset classes: from stocks to bonds, property...