Ethical Performance
inside intelligence for responsible business


Asian investment managers think SRI will go mainstream

May 2005

New research shows that 85 per cent of Australian and Asian investment managers believe SRI practices will become mainstream within ten years. These managers were more optimistic than their counterparts in other parts of the world, including the US, where 60 per cent thought screening for social and environmental factors, or integrating SRI performance indicators, would never become mainstream.

Australian managers made their prediction even though specialist SRI funds in their country have lagged behind in the past three years. On average Australian SRI funds have returned 11.2 per cent a year since 2002, compared with 12.4 per cent for other funds. Observers attribute this to the reluctance of SRI funds to invest in the strongly performing materials sector, including mining and oil companies.

However, David Carruthers, principal at Mercer Investment Consulting, which conducted the study, says that the number of investment managers who consider that a poor social or environmental record can damage a company’s performance is growing. In addition, more managers are said to think the weaker financial performance of SRI funds is a short-term phenomenon.

Erik Mather, head of the governance advisory service of BT, the investment management arm of Australia's Westpac Banking Group, says: ‘If you look at the various pressures that are impacting on urban communities, a lot of the issues are sustainability issues and there is a fundamental shift in how they are being viewed from an economic perspective.’

Mercer sought the views of 195 investment managers for its study.

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