Investment managers’ ability to deliver alpha — that is, non-market-driven investment returns — is ever diminishing, as illustrated in Institutional Investor’s September cover feature “ Is Alpha Dead?” But at least one hedge fund manager thinks it has a fresh edge. New York–based hedge fund and alternative investment firm Mariner Investment Group believes there is value to be found in monitoring how companies handle issues relating to ESG: the environment; social responsibilities, such as human rights and employee diversity; and corporate governance.

ESG metrics have traditionally been viewed by the institutional investment community as nonfinancial factors not directly relevant to companies’ bottom lines. Whereas institutional investors are starting to pay more attention to ESG, with environmental-related concerns getting particular notice, it is still rare for money managers in general and hedge fund managers in particular to make ESG integral to their investment process.

Most money management firms that practice so-called socially responsible investing tend to focus on equities. Mariner is among a handful of firms that are starting to view the investment landscape very differently and see opportunities in using ESG analytics not just in equities but also across the entire investment universe.

Mariner partner and CEO Bracebridge Young Jr. says he believes that including ESG considerations in his firm’s investment process will improve results. “Our portfolio managers will have this additional information, which includes a security-by-security evaluation of ESG,” he says. “I believe this will give us better risk-adjusted returns.” But, he adds, “we are an investment-driven firm.”

In September Mariner, which together with its associated advisers has $10 billion in assets, announced it was becoming a signatory to the United Nations–endorsed Principles for Responsible Investment (PRI), one of the few hedge fund managers to have signed onto the principles, which commit signatories to integrate consideration of ESG factors and sustainable investing practices. In addition, Mariner is working with New York–based indexing and investor analytics company MSCI, using the ESG-related research, ranking and screening tools MSCI has developed. Notably, Mariner, which has the majority of its assets in fixed income, will be using MSCI’s research not just for equities but across all asset classes and investment strategies, including credit and short selling.

Young says that as the quality of ESG data improves, so does its value to fund managers. He has found that investors — especially those based in Europe and the U.S. — have shown particular interest in responsible asset allocation. “At conferences I’ve been to and with clients I talk to, this has become part of the dialogue,” Young says. As investors increasingly place value on those corporations that are perceived as being good actors in areas like climate change, funds assembled with ESG principles in mind should show better performance, he contends, creating a first-mover advantage, and an information edge, for firms like Mariner.