Legal Considerations
in Responsible Investment

Aon Hewitt Investment Consulting (“Aon”) recently released results of a survey, Global Perspectives on Responsible Investment, which shows that 68% of investment professionals considered responsible investing (“RI”) important to their organizations. Aon launched the survey after noting a dramatic increase in the number of institutional investors exploring or implementing RI initiatives. The results confirm significant interest in RI among institutional investors globally.

Between November 2017 and March 2018, Aon surveyed 223 investment professionals from across the U.S., U.K., EU, and Canada about their attitudes toward RI. Five percent reported that it was “mission critical” and 68% reported it was at least somewhat important. Responses were largely consistent across respondents from all geographic areas, though fewer U.S. investors reported that RI was “mission critical”. The top five drivers of RI reported by survey respondents were concerns about fossil fuels, climate change, bribery and corruption, renewable energy, and weapons manufacturing.

Forty percent of respondents reported that they have an RI policy already in place, while 39% reported that they do not, and 14% indicated that they were in the process of implementing one. The number one reason respondents cite for implementing RI strategies is a belief that incorporating non-financial ESG data results in better investment decisions. Other reasons cited include a desire to impact global issues, a belief that RI will outpace traditional investing, and a belief that responsible investments will be less volatile over time.

The survey concluded that RI is gaining in momentum. Thirty-one percent of respondents indicated that they evaluate RI opportunities for possible inclusion in their portfolios and 24% indicated that they plan to increase their RI allocations. Still, practical hurdles impede some investors from implementing RI strategies. Just under 50% of the investors surveyed reported having no proactive responsible investments in their portfolios, though some reported that they were working toward including them. Investors indicated that industry agreement on terms and definitions, material agreement on key ESG factors, more reliable, comprehensive and consistent data on ESG factors, and more research on return profiles would make RI more accessible in the future.