Future for SRI Reporting - New Survey
26 May 2005 at 1:05 pm
Most investment managers worldwide see Socially Responsible Investing (SRI) practices becoming mainstream. But there is some disagreement on precisely how this will work, according to a new survey.
The majority of investment managers worldwide expect that (SRI) practices will become a common component of mainstream investment processes within 10 years, according to a survey by Mercer Investment Consulting (Mercer IC).
More than 190 regional investment management organisations responded to Mercer’s 2005 global Fearless Forecast survey. The surveyed organisations cover a wide spectrum of professional investment management firms, from small regional boutique equity specialists to larger national firms.
As part of that survey, managers were asked for their views on whether certain SRI practices would become a common component of mainstream investment processes in the near and long terms. In total, 195 managers responded to the SRI questions; these respondents manage in excess of US$30.5 trillion in assets.
Managers in Asia, Australia, Canada, Pan-Europe, and the US were asked for their predictions on whether the following SRI practices would become common components of mainstream investment processes: active ownership (shareholder engagement/activism, proxy voting); positive or negative screening for social and/or environmental factors; and the integration of social and/or environmental corporate performance indicators.
Findings show that, on average, investment managers are becoming more convinced that the adoption of SRI practices and strategies will become commonplace. Some 89% predict that active ownership will be a mainstream practice within 10 years; 73% predict that the incorporation of social or environmental corporate performance indicators will become mainstream within 10 years; and 65% predict that positive or negative screening will be mainstream within 10 years.
Tim Gardener, global leader of Mercer IC says that in the past, it was just a small group of organisations that were interested in SRI, but there are a growing number of mainstream investors who believe these issues can have an impact on long-term investment performance.
On a regional level, the managers’ responses varied widely. US managers were the most skeptical, with more than 60% saying they believe that screening and the integration of social and/or environmental factors will never become a mainstream investment practice.
Among Asian and Australian managers, on the other hand, more than 8 in 10 (85%) predict that all three SRI-related practices will become mainstream within 10 years.
However more specifically, Australian investors do not see any momentum for change for another 3-5 years.
European managers predict the most short-term activity will be seen in relation to the integration of social and/or environmental criteria, and positive and negative screening.
Full survey findings are available on Mercer’s website at www.mercerIC.com.