Investors using socially responsible criteria hit $12 trillion in U.S. assets under management in 2018, according to US SIF data.
And yet, whether responsible investing means taking a hit to performance is still the number one question Alex Bernhardt gets today.
Bernhardt leads Mercer’s Responsible Investment team in the U.S. market, a position he’s had since 2015. In this position, Bernhardt is constantly talking to people about responsible investing strategies and how to use them.
Mercer’s Responsible Investment team, which was established in 2004, facilitates the integration of environmental, social and corporate governance considerations into investment management processes and ownership practices in the belief that these factors can have an impact on financial performance.
In a session at the Global Responsible Investing Forum in New York, Bernhardt discussed with Bloomberg’s sustainable finance editor, Emily Chasan, the myth of the performance penalty that’s been attached to responsible investing for years.
“It is absolutely a myth, unequivocally,” Bernhardt said.
According to Bernhardt, each of the approaches to responsible investing — which he differentiated as socially responsible investing (SRI), ESG investing and impact investing — has a strong research base that shows there is not a performance penalty and there may be a performance premium in some cases.
In particular when it comes to SRI, which Bernhardt describes as largely involving exclusionary approaches and active ownership-type approaches to creating change, there can be apprehension from investors.