The objective of the report is to assess the integration of environmental, social and governance (ESG) issues into investment

policy (including asset allocation, portfolio construction and stock-picking or bond-picking). It examines whether integaration

is voluntarily permitted, legally required or hampered by law and regulation primarily as regards public and private pension

funds, and secondarily as regards insurance company reserves and mutual funds. The jurisdictions which have been examined are:

France, Germany, Italy, Japan and the US.

The report concludes that:

       Conventional investment analysis focuses on value, in the sense of financial performance but the links between ESG factors

and financial performance are increasingly being recognised

       Upon that basis, integrating ESG considerations into an investment analysis so as to more reliably predict financial

 performance is clearly permissible and is arguably required in all jurisdictions

       It is also arguable that ESG considerations must be integrated into an investment decision where a consensus (express or

in certain circumstances implied) amongst the beneficiaries mandates a particular investment strategy and may be integrated into

an investment decision where a decision-maker is required to decide between a number of value-neutral alternatives.

     In all jurisdictions, investment decisions will not be assessed with the benefit of hindsight, but against reasonable

standards of decision-making taking into account the information available to the decision-maker at the time of the decision.

Provided that all relevant considerations have been taken into account, the weight that the decision-maker gives to each

consideration or category of consideration is left to the discretion of the investment manager alone.[adapted from author]

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