Responsible investment strategies now account for 26% of all professionally managed assets globally, totaling US$22.82 trillion
Mercer, a global consulting leader in advancing health, wealth and career, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), is urging business leaders to move from a business as usual mindset to ‘Business As Different’ (B.A.D.) on environmental, social and corporate governance (ESG) issues.
With more than US$22 trillion of assets (or 26% of all professionally managed assets globally) now being managed under sustainable investment strategies, it’s clear that adopting ESG approaches has gone beyond theory and is fast capturing the attention of business leaders in Australia.
“Investing sustainably requires a Business As Different mindset,” says Helga Birgden, Global Business Leader for Responsible Investment (RI) at Mercer. “It’s about seeking to generate sustainable financial outcomes for beneficiaries, by thinking differently; taking off the blinkers and looking through a wide angle lens at risk and opportunity over the long-term.”
“Every year the world seems to get faster and more uncertain”, says Birgden. “But this shouldn’t be an impediment to making strategic decisions today that are in the long-term interest. Leaving aside the moral arguments, investing should now be about risk mitigation and positioning portfolios for sustainable growth.”
Recently voted a global leader in RI consulting, Mercer is seeing growing demand for RI advice from institutional investors such as pension funds, insurers, public sector funds, not-for-profits and tertiary education endowments. These investors are insisting their investment managers adopt a long-term mindset by integrating ESG factors into the investment decision making process and to consider sustainability-themed opportunities.
“ESG investing has gained significant traction over the years because of the role it plays in managing risk and creating value over the long-term,” says Birgden.
“Importantly, there is a wealth of research by academics, asset managers and industry associations, such as the Investor Group on Climate Change, suggesting responsible investing does not come at a detriment to financial returns.”
“Investors are waking up to the advantages of having a comprehensive ESG strategy implemented through their investment portfolio,” she says.
Mercer notes there is growing evidence that companies and businesses with better ESG practices are associated with better corporate financial performance.
As evidence of this, over seven years to 30 April 2018, the Mercer Socially Responsible Australian Shares Fund has exceeded the S&P/ASX 300 Accumulation Index by 2.5% per annum on a before fee basis.
Birgden says it’s not only institutions that are seeing the need to do things differently. According to the RIAA’s 2017 benchmark report, 92% of Australians expect their superannuation and other investments to be invested responsibly.
“Australians want ESG investment,” she says. “Increasingly superannuation funds are integrating ESG across the portfolio and asset classes. It’s clear that the shift is underway.”
At Mercer, we think true leadership is about seizing the opportunities that arise from change - what we call ‘Business As Different’. In order to have investment resilience going forward, Boards need to be up to speed with the pace of change when it comes to the stewardship aspects of investment. It’s exciting to see many mainstream funds moving into this space and we expect many in the market will follow.
Click here for more information on Mercer’s Responsible Investment Solutions.
Notes for Editors:
Mercer has been ranked the top Investment Consulting Firm for Sustainable and Responsible Investment. This ranking comes from a 2017 survey run by Extel in conjunction with the industry website SRI Connect, surveying 1136 professionals across 43 countries.
The Mercer Socially Responsible Australian Shares Fund and Socially Responsible Global Shares Funds (Hedged and Unhedged) have both been certified by RIAA according to the strict operational and disclosure practices required under the Responsible Investment Certification Program.
Mercer was recently announced by the RIAA as a leader in RI, as one of only 13 funds with a comprehensive approach to RI.
Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Across the Pacific, organisations look to Mercer for global insights, thought leadership and product innovation to help transform and grow their businesses.
Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With more than 65,000 colleagues and annual revenue over $14 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver
 GSIA; Global Sustainable Investment Review 2016.
 The IRRI Survey 2017, published by Extel and SRI-CONNECT