Press Release

Social Investment Forum: Nearly All US Investment Consultants Surveyed Agree Responsible/ESG Investing is Here to Stay

CONTACT:

Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com

SIF/Pensions & Investments Poll Finds Responsible Investing/ESG Not Seen Widely as Drag on Performance; U.S. Survey Released with Similar Review Conducted by Eurosif.

U.S. investment consultants believe that the growing interest of their clients in environmental, social and governance (ESG)/responsible investing issues is not going to be a short-lived phenomenon:  Nearly nine out of 10 (88 percent) believe that client interest in ESG will continue to grow over the next three years, and none believe it will decrease, according to a new survey conducted by the Social Investment Forum and Pensions & Investments.

The 2009 survey was adapted from a similar poll carried out by Eurosif, which is a pan-European membership association dedicated to addressing sustainability through financial markets.  The U.S. survey was based on 41 respondents from 40 firms that ranged in size from four top firms with assets under advisement (AUM) of greater than $1 trillion, down to three firms with less than $100 million AUM each.  The Social Investment Forum (http://www.socialinvest.org) is the U.S. national nonprofit membership association for professionals, firms and organizations dedicated to advancing the practice and growth of socially responsible investing. 

To determine to what extent investment consulting firms recognized or promoted ESG integration services as a specialty, the survey asked recipients to indicate whether they advise clients on any of six ESG integration approaches: proxy voting; corporate engagement; exclusion of stock/bonds in a portfolio; integration of ESG analysis into investment decision making; inclusion of stock/bonds in a portfolio (best-in-class); and positive selection according to sustainable themes (climate change, etc.)  

A plurality of the respondents — ranging from 38 to 49 percent — said they believe that five of the six ESG integration strategies they were asked about have a positive impact on portfolio performance, and a majority believed these five strategies do not harm portfolio performance. Collectively, the investment consultants gave the highest marks to “positive selection according to sustainable themes” such as climate change (with 49 percent of respondents saying such a strategy has a positive impact), followed closely by corporate engagement (48 percent). 

Social Investment Forum CEO Lisa Woll said: “A broad swath of investors in the United States are practicing investment strategies that consider various corporate environmental, social or governance criteria in addition to traditional financial analysis.  As a result of the survey we undertook through P&I, we now have a much better understanding of their expertise and capacity with regard to ESG issues, the demand they perceive from clients for integration of ESG analysis into investment policy, and whether they perceive this market to be growing.  However, our study makes clear that much remains to be done to ensure that the investment consulting industry is proactive in offering ESG related services and sufficiently knowledgeable to respond effectively as client demand grows.”

Sarah Cleveland, a senior consultant at Watson Wyatt Investment Consulting and a member of the board of the Social Investment Forum, said:   “This survey is an important baseline for our industry and I commend the Social Investment Forum for taking the lead in the US.  We’re on our way toward a ‘new normal’ where ESG integration is considered best practice for mitigating risk and enhancing return.”  

Of the six ESG strategies, respondents were negative on balance about only one—excluding stocks and bonds from a portfolio—with a plurality of 41 percent saying it has a negative impact on portfolio performance. In addition, for each of the six strategies, a full quarter to a third of all respondents said they did not know whether the strategy had a positive, negative or no impact.    

A majority of advisors (71 percent) reported that they only discuss ESG integration when clients ask about it.

The U.S. survey was sponsored by four SIF members:  Bloomberg, Calvert Investments, Sentinel Investments and TIAA-CREF.  SIF conducted the survey in cooperation with Pensions & Investments, which sent the questionnaire by email to the contacts in P&I’s database of investment consultants. 

The full survey report is available online at: 

http://www.socialinvest.org/resources/pubs/documents/Investment_consultant.pdf.

Eurosif is releasing a similar study today, focusing on the ESG/responsible investing views and practices of European-based investment consultants.

Matt Christensen, executive director of Eurosif, said: "Both the European and US reports show parallel trends in terms of expectation of future growth, drivers and current practices of the consultants. Differences are found in the type of strategies advised on. For instance, European clients seek more advice on positive selection than their American counterparts.  The Eurosif study shows that some firms are aggressively developing products and services in anticipation for further market growth in the coming years.”

To view the Eurosif report, go to

http://www.eurosif.org/publications/investment_consultants_ri.

ABOUT SOCIAL INVESTMENT FORUM

The Social Investment Forum (http://www.socialinvest.org) is the U.S. national nonprofit membership association for professionals, firms and organizations dedicated to advancing the practice and growth of socially responsible investing.  Critical to responsible investment practice is the consideration of environmental, social and corporate governance criteria in addition to standard financial analysis.  Nearly 400 SIF members support SRI through portfolio selection analysis, shareholder advocacy and community investing. 

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