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Socially Responsible Investment Practices Becoming Mainstream Mercer Survey Finds

Mercer Investment Consulting News Release

7 April, 2005

Most investment managers see SRI practices becoming mainstream
But there is some disagreement on precisely how this will work, survey finds

New York, NY, 7 April 2005

The majority of investment managers worldwide expect that socially responsible investing (SRI) practices will become a common component of mainstream investment processes within 10 years, according to a survey by Mercer Investment Consulting (Mercer IC).

More than 190 regional investment management organizations responded to Mercer IC's 2005 global Fearless Forecast survey. Surveyed organizations cover a wide spectrum of professional investment management firms, from small regional boutique equity specialists to larger national firms.  As part of that survey, Mercer IC asked managers for their views on whether certain SRI practices would become a common component of mainstream investment processes in the near and long terms. In total, 195 managers responded to the SRI questions; these respondents manage in excess of US$30.5 trillion in assets.

Managers in Asia, Australia, Canada, Pan-Europe, and the US were asked for their predictions on whether the following SRI practices would become common components of mainstream investment processes: active ownership (shareholder engagement/activism, proxy voting); positive or negative screening for social and/or environmental factors; and the integration of social and/or environmental corporate performance indicators.

Findings show that, on average, investment managers are becoming more convinced that the adoption of SRI practices and strategies will become commonplace: 89% predict that active ownership will be a mainstream practice within 10 years; 73% predict that the incorporation of social and/or environmental corporate performance indictors will become mainstream within 10 years; and 65% predict that positive or negative screening will be mainstream within 10 years.

"In the past, it was just a small group of organizations that were interested in SRI, but there are a growing number of mainstream investors who believe these issues can have an impact on long-term investment performance," says Tim Gardener, global leader of Mercer IC.
"Investment managers' views are clearly changing."

Regional views vary

On a regional level, the managers' responses varied widely. US managerswere the most skeptical, with more than 60% saying they believe that screening and the integration of social and/or environmental factors will never become a mainstream investment practice. Among Asian and Australian managers, on the other hand, more than 8 in 10 (85%) predict that all three SRI-related practices will become mainstream within 10 years.

European managers predict the most short-term activity will be seen in relation to the integration of social and/or environmental criteria, and positive and negative screening.

"We see a range of investor approaches to SRI across regions," says Jane Ambachtsheer, Mercer IC's global head of SRI, "and although managers' views do vary, it is interesting to note that nearly all predict that SRI practices will become mainstream."

Full survey findings are available on Mercer's website www.mercerIC.com.(see
http://www.merceric.com/knowledgecenter/reportsummary.jhtml/dynamic/idContent/1155130)

Mercer's approach to SRI

Mercer IC has a dedicated SRI consulting capability, and its manager research will now include assessing the approaches that investment managers are taking towards these issues within their traditional or mainstream investment practices. The head of this business area, Ms. Ambachtsheer, works actively within the global SRI network to remain abreast of developments and best practices.

Mercer Investment Consulting is a leading global provider of investment consulting services, and offers customized guidance at every stage of the investment decision, risk management, and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and work with the fiduciaries of pension funds, foundations, endowments, and other investors in some 35 countries.

Throughout most of the world, Mercer Investment Consulting is an autonomous unit within Mercer Human Resource Consulting LLC, a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (MMC). MMC lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific, and London stock exchanges. In the US, the investment consulting practice is operated through Mercer Investment Consulting, Inc., a wholly owned subsidiary of Mercer Human Resource Consulting, Inc., the US operating unit of Mercer
Human Resource Consulting LLC.

Stephanie L. Poe
Mercer Human Resource Consulting
1255 23rd St. NW, Suite 500
Washington, DC 20037
USA

phone: +1 202 331 5210
mobile : +1 202 669 8863
fax: +1 202 331 2615
assistant: Dawn Folwell (Hoboken, NJ)
assistant phone: +1 201 284 6144

mailto:stephanie.poe@mercer.com
www.mercerHR.com
www.mercerIC.com

Contacts:
Stephanie L. Poe
+1 202 331 5210
stephanie.poe@mercer.com

Jane Ambachtsheer
+ 1 416 868 2659
jane.ambachtsheer@mercer.com