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Only 9% of investment strategies receive top ESG rating in Mercer survey

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  • Only 9% of investment strategies receive top ESG rating in Mercer survey

GLOBAL - Fewer than one in ten investment strategies with an environmental, social or governance (ESG) friendly approach have achieved the highest rating in a new survey conducted by Mercer.

Of more than 5,000 strategies surveyed by the consultancy, over half focused on equities, with 4.5% of strategies investing in emerging markets achieving the highest rating - the best result by region.

Broken down by asset class, more real estate strategies received the top rating than any other, while over a quarter of private equity strategies claimed either the highest or second-highest mark. On this measure, real estate came a distant second with 19.6% of strategies in the top two categories.

Commenting on the results, Mercer's global chief investment officer Andrew Kirton said there was still work to be done by the investment community to fully integrate responsible investment (RI) practices.

"We would expect the number of highly rated strategies to increase over the next few years as more and more investment professionals come to recognise the sound investment and competitive reasons for active ownership."

Jane Ambachtsheer, the consultancy's global head of RI added: "The focus on ESG factors as a way of managing risk is still a relatively young concept."

Of the seven investment approaches surveyed, hedge funds and fixed income contained the highest percentage of strategies with the worst rating - with 80.4% and 78.1%, respectively, earning an ESG4 score from Mercer.

Infrastructure, meanwhile, came a close third behind real estate, with 18.1% of its strategies receiving either the best or second-best rating.

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