More hedge fund managers embrace ESG but majority still reluctant

Solar panelsThere has been a marked improvement in hedge fund managers’ approach to environmental, social and governance (ESG) issues, says asset manager Unigestion.

The firm found that 40% of hedge fund managers now incorporate ESG criteria into their strategies, an increase on the results of a previous survey in 2011 where only 25% were concerned with ESG.

However, private asset managers are more advanced in incorporating ESG criteria than their hedge fund counterparts, with only 27% indicating they would be reluctant to adopt ESG criteria.

Unigestion’s latest survey also found that factors such as location and strategy impacted managers’ adoption of ESG criteria. A quarter of equity-related strategy managers incorporated ESG issues into their strategies, compared to only 5% of tactical trading strategy managers.

In terms of location, European hedge fund and private asset managers are more likely to show an interest in ESG than US-based firms. Large private asset managers are also more likely to adopt ESG investment approaches than smaller firms.

Eric Cockshutt, responsible investment coordinator at Unigestion says: “We conduct these surveys as part of our due diligence process when deciding which fund managers to invest in and report the results back to our clients, many of whom are increasingly demanding that ESG be taken into account.”

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