According to the annual PRI report for 2011, there are over 900 signatories from 48 countries to the UN Principles of Responsible Investment, representing a total of USD 30 trillion in AUM¹. In 2011, 545 investors had completed the annual PRI assessment survey to outline how they are putting the six Principles for Responsible Investment into practice. Of these, 94% of asset owners and 93% of investment managers now have a formal RI policy. The report also revealed that over half of asset owner respondents’ externally managed funds are now subject to ESG integration, while 40% of the assets are managed by fund managers that have also signed the PRI. In terms of their relationships with investee companies, 71% of PRI signatories now ask companies to integrate ESG information into their financial reporting, while 61% of asset manager signatories now publicly disclose their voting policies, up from 55% in 2010¹.

These developments have put a strong emphasis on understanding the financial, not only the values, dimension of ESG and its systematic use in the mainstream investment process. ESG factors can have a material impact to the long-term risk and return profile of investment portfolios. Managing investment risk, including ESG risk, is part of an integrated portfolio construction and management process.

But what’s really involved in incorporating ESG factors into investment decisions? Can they make a material difference to investment performance? And just how do investors go about holding their investment managers to account for integrating ESG strategies into the investment decision process?

MSCI ESG Research aims to address questions and runs a range of thought leadership activities to evaluate how ESG factors can potentially add financial value or mitigate risk across an institutional investment portfolio:

• Click here to read MSCI’s Research Insight and RCM’s Whitepaper on effective ESG Integration
• Click here to read our Blog on How the Asset Management Industry Integrates ESG 
• Watch the FTfm video interview with Remy Briand, Global Head of Index and ESG Research, at MSCI   
• Click here to watch and listen to the MSCI, PRI, Towers Watson and RI webcast on ESG Integration strategies
• Click here to find out more about how MSCI ESG IVA facilitates ESG integration

Click here for an overview of upcoming ESG events.

⁽¹⁾ Source: Annual Report of the PRI Initiative 2011