According to a survey of institutional investors by research firm, Preqin, 65% of hedge fund managers do not have an ESG policy. Hedge funds have been the slowest among alternative asset managers to integrate ESG principles into investment decisions. “When it comes to environmental and social issues, in our observation, we’ve seen limited adoption of these principles by hedge funds,” said Aon Hewitt’s Chris Walvoord. To some hedge fund managers, constraining portfolios based on ESG considerations is contradictory; hedge funds exist to generate return across a range of markets and asset classes. As ESG factors are poised to grow in importance to investors, however, it is likely that those hedge funds that embrace ESG considerations may soon have a competitive advantage.
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