Money Management Institute Sustainable Investing Community
September 27, 2019
A suite of educational resources for engaging clients on sustainable investing

Responsible Investment in Hedge Funds

Content Provided by:
Cerulli Associates/Principals for Responsible Investment
Originally Published May 2019

Investing responsibly

Responsible investment (RI) is among the most prominent themes in asset management today, both across the board and in the hedge fund sector specifically. Investors and managers are paying ever more attention to the integration of environmental, social, and governance (ESG) factors, mirroring the concerns of wider society.
 
Companies are increasingly judged on their environmental impact, not just their profitability. Individuals are thinking about their legacy in terms of the climate and social issues, not just their finances. The financial services sector has an opportunity to direct investors toward the types of places that they want to put their money, but exactly how to do so is not necessarily clear at this stage.
 
Even the language can be confusing. The terminology varies—ESG, RI, sustainable investing—and market participants must seek a common understanding of what they are trying to achieve. As the space evolves, things should become clearer. Regulation and standardization will help asset owners and asset managers focus their investments and ensure that both parties feel they are investing in a responsible manner. For now, though, the challenge is to determine what ESG could entail for hedge funds.
 

Our surveys

To get a sense of where the hedge fund industry is currently positioned in terms of ESG, during January and February 2019 Cerulli partnered with the UN-supported Principles for Responsible Investment to launch two unique surveys for hedge fund managers and asset owners globally. The hedge fund survey, with 42 respondents, gave us insight into how managers are positioning themselves with regard to responsible investment. The asset owner survey, with 27 respondents, gave us insight into how important RI practices are in the hedge fund sector, as well as how asset owners are approaching the issue and what they want to see from the industry.
 

Stay Informed and Register at   mmi-sii.org  for ongoing updates and to participate in our private community.  A full copy of Responsible Investment in Hedge Funds white paper from Cerulli Associates/PRI can be found here upon registration.

More from Money Management Institute Sustainable Investing Community
The most important insight of the day
Get the Harvest Daily Digest newsletter.