NYHFR Survey: Sustainability Reporting Increasingly Important to Alternatives Industry

Jul 7 2017 | 6:00pm ET

Sustainability is steadily moving from a niche issue to being front and center in the minds of global alternative investors, according to a new survey by the New York Hedge Fund Roundtable. 

The New York Hedge Fund Roundtable recently held its second Sustainability Investment Leadership Conference, where attendees were surveyed about the topic. 

Key highlights:

  • 65% of respondents to this year’s survey indicated that they think sustainability reporting is worth the added costs to companies, compared with 60% of respondents who felt this way in 2016 and only 46% in 2015. 
  • 32% said they believe it is still too early to know whether investors will eventually hold it against companies that don’t report on their sustainability efforts. 
  • Only 3% think the focus on sustainability will be short lived and isn’t worth the effort, compared with 9% in 2016 and 5% in 2015. 
  • Asked whether their firms consider sustainability reporting when choosing where to invest, 51% of respondents said they do, while 49% do not. Comparatively, when asked the same question in 2016, 54% of respondents said it is a factor, while 46% said it wasn’t.
  • 70% of respondents said they believe sustainability reporting is equally important for all companies, while 30% believe it is far more important for large, international companies.
  • Asked if they believe sustainability reported could ever become a common practice among companies without regulatory involvement, 48% said regulatory involvement will be necessary to ensure high quality reports and consistency, compared with 26% of respondents in 2016 and 30% of respondents in 2015. 
  • 44% think that sustainability can have a big enough impact on a company’s ultimate profitability that companies have started to realize it is in their best interest to focus on the issue and produce reports, compared with 49% of respondents in 2016 and 46% in 2015.
  • 8% said regulatory requirements are the only thing that could ever bring about market-wide reporting, compared with 25% of respondents in 2016 and 24% in 2015.
  • When asked if sustainability reporting is likely to become more or less important within the next decade, 51% of respondents said that investors are starting to put enough emphasis on such reports that companies that fail to generate sustainability reports risk the loss of investor support, compared with 43% of respondents in 2016 and 61% in 2015.
  • 22% think there is still enough investor uncertainty about how such reports can translate to stronger long term performance for companies that it is still too early to know, and another 22% think sustainability reports will need to become more uniform and concise before they can become a critical factor.

Each NYHFR survey includes an interesting bonus question, which this month centered on Elon Musk’s SpaceX. With space tourism becoming a reality, attendees were asked whether they would assume the risks of flying into space if money weren’t an issue. Respondents were equally split, with 50% saying yes and the other 50% saying no.

Of the respondents to the NYHFR survey, 28% were fund managers, 17% were allocators, 24% were risk management or trading, 21% were service providers, and 10% were other industry participants.

"While it is clear that there is still a long way to go before companies produce consistent and high quality sustainability reports to measure themselves to their peer groups and to show their own progress over time, it would be impossible to ignore the growing importance of sustainability within the alternative investment industry,” said Adam Weinstein, president of the NYHFR. 

The New York Hedge Fund Roundtable is a non-profit organization focused on promoting ethics and best practices within the alternative investment industry. The membership consists of investors, fund managers and other industry professionals who regularly meet to discuss current issues within the industry and connect with peers.

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...