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Mercer announced today that its proprietary environmental, social and governance (ESG) ratings will be included in client reports related to manager searches and performance. This inclusion reflects Mercer’s view as to the importance of ESG factors for long-term investors and increased client interest in ESG issues. A global leader in responsible investment consulting, Mercer assigns ESG ratings across investment styles, asset classes and geographies as part of its manager research process.
“ESG factors have the potential to become more important risk-return drivers for our clients,” said Andrew Kirton, Mercer’s Global Chief Investment Officer. “A growing number of institutional investors are expressing an interest in ESG assessments; however, relatively few managers integrate these factors into their investment processes. Incorporating ESG as a key aspect of the search process will promote constructive dialogue with managers on ESG related issues and result in better overall outcomes.”
“The list of UN PRI1 signatories continues to climb, yet only 9% of the more than 5,000 investment strategies we have rated achieve our highest ESG scores,” said Jane Ambachtsheer, Mercer’s Global Head of Responsible Investment. “By including ESG ratings in our most frequent deliverables, we are further enhancing Mercer’s due diligence and our clients’ ability to include ESG and active ownership considerations in the selection and monitoring of managers.”
Mercer will implement the new ESG reporting process globally by the end of 2012.
About Mercer’s ESG ratings
Mercer’s approach to evaluating ESG integration into core investment processes is not to encourage ‘box ticking’ or a ‘one size fits all’ model. Instead, Mercer looks for an indication that managers have made an effort to integrate ESG factors into their alpha generation process as well as beta enhancement through behaving like long-term investors. To learn more about Mercer’s ESG ratings scale and process, please visit http://www.mercer.com/articles/ESG-ratings-update.
Mercer is a global leader in human resource consulting and related services. The firm works with clients to solve their most complex human capital issues by designing and helping manage health, retirement and other benefits. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.
1 The United Nations-backed Principles for Responsible Investment Initiative (UN PRI) is a network of international investors working together to put the six Principles for Responsible Investment into practice. The Principles were devised by the investment community. They reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfill their fiduciary (or equivalent) duty. The Principles provide a voluntary framework by which all investors can incorporate ESG issues into their decision-making and ownership practices and so better align their objectives with those of society at large Learn more at http://www.unpri.org.