Specific environmental, social and corporate governance (ESG) factors can have a positive impact on portfolio returns, according to a growing body of academic research. In its new report, Shedding Light on Responsible Investment: Approaches, Returns and Impacts, Mercer analyses 16 academic studies – the majority of which (ten) show a positive relationship between ESG factors and companies' financial performance, four show a neutral relationship and two show a neutral to negative relationship.

"The idea that responsible investment does not have to come at a cost to performance is becoming well established in the institutional investment industry. In fact, the Shedding Light report further builds the already strong case that considering ESG factors can add real and measurable value to an investment portfolio," said Tim Gardener, global chief investment officer for Mercer's investment consulting business.

Helga Birgden, Mercer's Asia-Pacific head of responsible investment, adds: "As such evidence mounts, institutional investors are finding that environmental, social and governance issues are becoming part of mainstream asset allocation and make good investment sense."