Almost 65% of investment managers globally believe the effects of globalization are material to mainstream asset performance, while 62% think corporate governance is a relevant issue, according to a survey by Mercer Investment Consulting.

Environmental issues like climate change feature less prominently now but are tipped to grow in consideration within five years.

The survey reflects the views of 157 investment management firms from around the world which manage aggregate assets in excess of US$20 trillion. Respondents were asked how significant environmental, social and corporate governance (ESG) issues were to investment performance, and what expectations of future client demand are for related investment services.

“The environmental and social effects of globalization are being experienced by governments, local communities and businesses across all regions, as pressures on resources grow,” commented Jane Ambachtsheer, Global Head of Mercer IC’s responsible investment business. “Similarly, corporate scandals have hit the headlines in almost all regions, so it is not surprising that these two issues are viewed as the most important responsible investment factors by investment managers.”

Over the next five years, environmental issues are expected to have a larger impact on asset performance, and in many regions environmental management is likely to become one of the top three issues for consideration.

While terrorism is also currently a key concern in many regions, managers outside the United States believe its impact and relevance to investment decision-making will decrease considerably in five years’ time.

Investment managers from every region except Australia expect to see some client demand for ESG factors to be integrated into investment processes this year. Current anticipated demand is highest in Europe, at 26%, followed closely by the Untited Kingdom, at 21%.

Over the next three years 38% of managers surveyed expect clients to demand that ESG issues should be integrated into their investments.

This year, 13% of investment managers anticipate increased client demand for specialist investment strategies built on ESG analysis. This expectation is greatest in Europe where 39% of managers predict growing demand, followed by the UK and Canada.


Looking forward, expectations rise dramatically, with 31% of managers globally expecting to see more requests for specialist products built on ESG analysis. U.S. managers remain least convinced, with just 19% expecting that such demand will materialize.

“Demand for specialist responsible investment products is likely to depend on the rate at which ESG analysis is incorporated into mainstream investment processes. If managers move rapidly to integrate ESG factors into their processes because of client pressures or otherwise, it is logical that the demand for specialist products may decrease,” said Tim Gardener, Global Head of Mercer IC.