Environmental, social and corporate governance (ESG) issues are gaining momentum in terms of investor interest, delegates were told at the annual Mercer Investment Consulting conference which was held in Dublin on March 29th.
Keynote speaker at the event was former US vice president Al Gore, who currently wears two hats as both an environmental activist and as an investment manager, through his role as chairman of Generation Investment Management, an independent privately-owned long only fund manager.
Gore explored the investment rationale for the integration of environmental, social and corporate governance issues into the investment decision making process of global pension funds. In particular, he stressed that climate change is one of the most financially significant issues facing investors today, and that it is widely recognised that addressing the financial risks posed by climate change is consistent with a pension trustee's fiduciary obligations.
'Pension funds and other institutional investors rely on continued economic growth to protect or enhance their assets. In practice, institutional investors own a slice of the global economy and so need the global economy to thrive. If global climate change is a threat to long term global growth, it is in their interests, and consistent with prudent investment practice, to identify, measure and mitigate that risk,' he said.
Also at the conference was Andrew Kirton, the European Head of Mercer Investment Consulting and co-chair of the conference. He added, 'While these ESG factors are increasingly perceived as having an impact on corporate finance performance, they are scarcely ever incorporated into investment decision making. This leaves room for corporate scandal, environmental degradation and human rights abuses all of which can effect both companies bottom line and share price'. |
