Hedge funds under pressure on ESG

Hedge funds are coming under more pressure to adopt ESG practices, according to a report from KPMG.

Demand is coming from institutional investors who are now requiring their hedge fund managers to incorporate ESG factors into their investments. The report: Sustainable investing: fast forwarding its evolution, is published by KPMG, the Alternative Investment Management Association (AIMA), Chartered Alternative Investment Analyst Association (CAIA) and CREATE-Research.

The report includes a survey of 135 institutional investors, hedge fund managers and fund managers with total assets of $6.25 trillion in 13 countries. According to Anthony Cowell, Head of Asset Management at KPMG, “in the hedge fund industry, ESG has gone from being a nice-to-have to a must-have.” The report says that 45 percent of institutional investors now base their investments in ESG-based hedge funds while 15% of the surveyed hedge funds define themselves at the ‘mature’ stage of ESG implementation. 44 percent are at the ‘in progress’ stage, while 31 percent are still at ‘awareness raising’ stage; leaving the remaining 10 percent as ‘no implementation to date’.