From Unaware to Dedicated: Assessing Hedge Funds’ ESG Credentials

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Managers’ beliefs about the merits of RI analysis in their investment process are wide-ranging.

Tom Stoppard’s play, Rosencrantz and Guildenstern Are Dead, explores minor characters from a much larger story. Managers of hedge funds focused on responsible investment (RI) may feel similarly overlooked and deserving of greater attention.

Estimates of the extent to which RI practices are incorporated in hedge-fund strategies vary, but most indicate that RI-focused managers are still very much in the minority. In 2019, as little as 29% of hedge-fund managers were reported to have even the bare minimum of an ESG policy in place.1 A year later, a survey found just 15% of hedge funds had integrated ESG in their investment strategies.