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Hedge fund body primes industry for ESG demand

ESGGlobal hedge fund managers are responding to investors’ increasing interest in responsible investment, according to a trade body for the sector.

“Responsible investment is one of the most significant and fast-growing trends in the hedge fund industry today,” claimed the Alternative Investment Management Association (AIMA) as it published a paper on the topic this week.

The paper is geared towards helping hedge fund managers approach responsible investment and encouraging dialogue between investors and hedge fund managers.

According to AIMA’s chief executive Jack Inglis, “hedge fund managers understand that investors want their principles to be reflected in their investments”.

The AIMA paper says that, given the choice between two otherwise equal energy companies, an environmental, social and governance-led portfolio would include the energy company which derives more of its energy from renewable sources.

AIMA’s paper includes definitions of key responsible investment terms and explanations of how the most common forms of responsible investment may apply to hedge funds in order to facilitate conversations between managers and investors.

“We hope that this primer will contribute to a constructive dialogue between managers, investors, and policymakers on how to ensure a sustainable future whilst acknowledging the need to grow investors’ capital over the long term,” said Inglis.

A recent survey found that 47% of alternative investors had excluded working with fund managers not primed toward responsible investments.

More than 50% of investors said environmental, social and governance was important to investment decision-making, LGT Capital’s study found.

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