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ESG Investing: It's All The Rage - A Guide For Business

Posted on January 25, 2016 at 8:55 PM

Market volatility and institutional investors: if nothing else, it's a great backdrop to look at survey results on the kinds of business concerns that make people think hard (as they tend to do when parting with their money).

An online survey conducted by Natixis Global Asset Management  in October 2015 with 660 senior decision makers working in institutional investment is revealing about the rise and rise of Environmental, Social and Governance (ESG) concerns in making investment decisions.

"Many institutional investors (64%) say it has become increasingly difficult to achieve alpha. Half (50%) now see environmental, social and governance (ESG) investing, which considers those factors in investment analysis and decision making, as a potential source of return, and 51% say ESG assessments help mitigate headline-making risks" says the report on the survey. (my emphasis)

It adds: "Most (95%) institutional investors are to some extent incorporating ESG strategies. More than three in ten (31%) of them do so primarily because it’s in their fund’s mandate."

Institutional investors worldwide say it is challenging to find diversification among traditional asset classes, with more than half (54%) saying stocks and bonds are too highly correlated to provide distinctive sources of return, according to Natixis.

Its survey also "found evidence that alternative assets are taking on new prominence within institutional portfolios to help generate better risk-adjusted returns - the top priority of institutional investors in 2016."

“The events of the last month have shown the need for a sophisticated, balanced approach to asset allocation,”John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia, said today. 

“That’s part of the reason institutional investors plan this year to supplement traditional stocks and bonds by making an even bigger commitment to non-correlated, alternative assets,” he added.

All of which should be of interest not only to investors....but to the businesses seeking their attention.

"Institutions worry about their ability to fund liabilities in a volatile, low-rate market. In response, they are adapting their investment strategies, risk management approach and business operations to better meet their long- and short-term obligations" says Natixis.

The full report is available here.

Note: For more on sustainable business and better investments via better leadership, see me at Forbes.

I also write for Entelligent.com , whose mission is:  'connecting energy and environment for the smart investor.'



Categories: Governance, Green Issues, Investors