Many institutional investors integrate ESG* into their investment process. ESG integration headlines are most typically associated with asset managers and some of the world’s largest pension funds. Hedge funds for the most part, prefer to keep their investment and trading strategies very private. Therefore little research has been conducted on hedge funds and ESG integration to date.
Given the exciting frontiers being crossed in terms of ESG data and fintechs, the risk-return arguments in favour of ESG, and the regulatory push to company disclosure of ESG risks, some hedge funds are likely integrating ESG. But what form does it take?
And for those that don’t integrate ESG, might they do so or are the perceived barriers insurmountable?
To answer these, and many more questions, we have conducted in depth primary research among 54 hedge funds representing USD half a trillion in Assets Under Management. We publish our findings in October. Our report will look at the two camps of those who do and do not integrate ESG, the drivers and the barriers, and the likely trajectory of ESG integration for hedge funds, including what if anything can be learned from the ESG path already taken by traditional asset managers.
*Environmental Social and corporate Governance