Institutional investors demand SRI/ESG mandates

SRIUS asset managers are receiving more requests for socially responsible investing (SRI) and environmental, social, governance (ESG) mandates from institutional clients, according to new research from

global analytics firm, Cerulli Associates.

More than 50% of asset managers surveyed by Cerulli said they had received institutional client requests for SRI or ESG mandates.

"Many executives we spoke with during our research interviews told us that they are getting more client inquiries regarding responsible investing strategies," says Susana Schroeder, senior analyst at Cerulli. These strategies can include ESG, SRI, mission-related investing, impact investing, and program-related investing.

"There is increasing acceptance among investors and managers that ESG factors, such as hazardous waste disposal and predatory lending practices, can have a material impact on a company's financial wellbeing," she adds.

Schroeder says public defined benefit plans and nonprofits are most likely to incorporate ESG factors into their investment process, because of pressure from donors, students, taxpayers, and other constituents.

The Cerulli report, Institutional Markets 2014: Opportunities in a Crowded Market, found that institutional sales teams are dealing with many clients inquiries about this area, and clients are keen to better understand the different aspects of sustainable investing.

"Even professionals working in the trenches have witnessed this shift, including request for proposal (RFP) teams, which have reported a rise in the number of RFPs with embedded ESG-related questions," Schroeder concludes.

Cerulli evaluated US institutional markets, including distribution and product trends within public and private pensions, endowments and foundations, and insurance general accounts in the report, and covered topics such as market sizing, segmentation, and asset projections for institutional channels.

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