Institutional investors and superannuation fund managers rate the integration of sustainability factors into investment programs as a low priority when ranking the most important challenges over the next 10 years.

Delegates at a Towers Watson conference for institutional investors were asked to rate eight challenges according to their level of importance.

These challenges included the possible fallout from increased developed market sovereign debt, the balance between strategic and dynamic asset allocation, improving risk management practices and allocating according to risk drivers.

Out of the eight given challenges, institutional investors ranked sustainability last, while they rated the challenges of asset allocation and risk management as the most pertinent.

Towers Watson Asia-Pacific head of investment Naomi Denning said Australian institutional investors were not unique in this view, with fund managers across the Asia-Pacific region having similar ideas about sustainability.

"Sustainability is kind of viewed as nice to have at the moment," Denning said.

"Korea seems to be the one exception. They seem to be very interested."

However, Towers Watson global head of investment content Roger Urwin argued that fund managers should develop a view on sustainability because it was increasingly becoming an investment theme.

"From the point of view of a world where basically resource limits are kicking in big time - we have situations with resources security and water security, we have climate stresses seemingly building up - I think we have to recognise that as investment agendas," Urwin said.

"From that view, we really have to start thinking differently about sustainable development and that is going to be one of the big agenda points over the next 10 years. You need to think about it as funds."