Towers Watson, Oxford University and a number of industry partners have launched a project that examines the practical impediments to adopting more sustainable and long-term investment strategies.
The study looks at mandate construction, performance measurement models and fiduciary duty in an effort to lift some of the barriers to long-term investing.
"We just launched a collaborative study to really try and move the debate on a bit," London-based Towers Watson consultant Jane Goodland, who visited Sydney last week, said.
"We sense there is some degree of frustration out there, whilst even if an investor might believe in sustainability and the need to be a long-term sustainable investor, there are some impediments to making those changes."
Apart from industry pressures on performance and remuneration, she said there was also still much uncertainty about how far trustees were able to take their approach to sustainability.
"The project will look at issues around fiduciary interpretation. The concerns from trustees are whether it is legitimate to incorporate those things," she said.
"The legal structure is very different from region to region, but there has been reluctance from trustees to be proactive on ESG (environmental, social and governance) issues, because the uncertainty around there being some recourse on them implementing it when, for example, performance suffers and there is evidence it was the ESG pursuit to blame."
Although some research has been published in this field by, among others, international law firm Freshfields Bruckhaus Deringer, there is still some concern about how the law applies in this area.
Goodland said the impediments to sustainable and long-term investing still prevented most fund managers and asset owners from embracing the strategy.
"This is an area where there is a lot of discussion around, but when you look at practice on the ground you think: 'Really? Is this all that is going on?'" she said.
"But we are seeing positive signs of the direction in which it travels. We think this is going to be nothing other than more important for investors going forward."
Bringing down the barriers to long-term investing was not going to happen overnight, she said.
"It is going to be a slow march, but there will be critical points along that path. The introduction of regulations post-GFC (global financial crisis) is an interesting development," she said.
"Around the world we are seeing regulators making a clear signal to institutional investors that they have a role to play in maintaining a healthy and robust investment industry and that includes exercising their role and duties as shareholders and being an engaged owner of assets."
