WW Watson Wyatt Worldwide

WASHINGTON, Oct. 1 /PRNewswire-FirstCall/ -- Interest in sustainable investment projects is on the rise as institutional investors look for alternate investment structures after the collapse of the markets in 2008. However, Watson Wyatt, a leading global consulting firm, warns that investors could face additional risk if they invest in these projects without educating themselves or determining whether they align with their investment beliefs. Sustainable investment (SI) is a broad term encompassing a variety of approaches that incorporate environmental, social, or corporate governance (ESG) factors in investment processes and ownership activities. Examples include investing in environmental infrastructure, clean energy or sustainable transportation. "SI has taken off for many reasons. The United Nations-backed Principles for Responsible Investment (PRI) gave it considerable support globally, and more recently, in light of the economic crisis, investors and shareholders have been more open to reassessing their role within the financial system and the broader economy," said Carl Hess, global head of investment consulting at Watson Wyatt. "Similar to any burgeoning investment viewpoint, as SI moves into the mainstream it is important that investors test the waters before diving in." Watson Wyatt investment experts advise that the first step investors should take is to define their investment beliefs. Most investors will fall into one of three categories -- advocate, neutral or dissenter -- depending on how they feel sustainability factors influence asset class returns, whether sustainability risks are incorporated into share prices in general, and so on. Next, an implementation approach can be determined, ensuring that the previously-determined beliefs align with the governance required for each approach. The firm identifies a number of implementation strategies for various asset classes, including: -- The Integration approach, which typically involves equity fund managers incorporating sustainability factors into investment analysis to identify risk and opportunities outside the limits of conventional analysis. -- Sustainability-themed mandates, which, when included alongside core investments, could further diversify the portfolio and cushion against sudden shocks. Examples include climate change funds, "green" real estate funds and clean technology funds. -- Engagement, a strategy that encourages shareholders to influence company management around ESG issues and affect the firm's performance and future prospects. "Many sustainable investment projects are able to keep up with or even outperform the market because they fall into so many diverse asset classes. However, each must be evaluated on its own merits according to investors' investment philosophies," said Sarah Cleveland, senior investment consultant at Watson Wyatt. "The smartest investors determine their capacity for risk before embarking on a sustainable investment strategy." For more information, please visit: http://www.watsonwyatt.com/europe/topics/htrender.asp?ID=16471. About Watson Wyatt Investment Consulting Watson Wyatt Investment Consulting, a division of Watson Wyatt, is focused on creating financial value for institutional investors through independent, best-in-class investment advice. We are specialist investment professionals who provide coordinated investment strategy advice based on expertise in risk assessment, strategic asset allocation and investment manager selection. Watson Wyatt Investment Consulting provides investment advice to some of the world's largest pension funds and institutional investors, and has more than 550 associates in Europe, the Americas and Asia. In the U.S., investment advisory and investment consulting services are provided by Watson Wyatt Investment Consulting, Inc., which is a subsidiary of Watson Wyatt Worldwide Inc. Watson Wyatt Investment Consulting, Inc., is a registered investment adviser with the Securities and Exchange Commission. About Watson Wyatt Watson Wyatt (NYSE:WWNASDAQ:WW) is the trusted business partner to the world's leading organizations on people and financial issues. The firm's global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 33 countries and is located on the Web at http://www.watsonwyatt.com/. DATASOURCE: Watson Wyatt CONTACT: Ed Emerman for Watson Wyatt, +1-609-275-5162, ; or Steve Arnoff of Watson Wyatt, +1-703-258-7634, Web Site: http://www.watsonwyatt.com/

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