The global financial community needs to put more emphasis on social, environmental, and ethical issues in making investment decisions, and world political and economic policy-makers should focus more sharply on combating terrorism and eliminating extreme poverty and hunger as the most important global priorities for 2005, according to two surveys released yesterday by the World Economic Forum.

The surveys – done by the Geneva based forum with Gallup International, Weber Shandwick, and Account-Ability, a London-based think tank – captured the views of more than 60,000 world leaders in business, finance, politics, diplomacy, academe, and the print and broadcast sectors. About 2,000 of the respondents, drawn from 50 countries, will be participating in the forum’s annual meeting in Davos, Switzerland, from January 26 to 30. The Davos meeting, first organized by Prof. Klaus Schwab, a Swiss-German management educator, in 1971, is widely regarded as the international community’s leading venue for discussing global issues and, in effect, setting a global agenda on financial, social, and economic matters.

“The two surveys are illuminating for their similarities, as well as for their differences,” Professor Schwab, the forum’s executive chairman, said yesterday from Geneva. “It is interesting to see that both groups place eradicating poverty and hunger and helping the poor as their top priorities. What is perhaps more surprising is that global citizens – 27% of the respondents – felt that the war on terrorism and reducing war and conflict were the most important priorities for leaders in 2005. At our annual meeting in Davos, we will work towards setting the priorities on the global agenda for the coming year. This survey gives invaluable insight into where and on what global citizens and their leaders see the most effort is needed.”

One measure of how decision makers in business and finance view global priorities is what the surveys revealed about their attitudes concerning social issues. In the Forum-Gallup survey, only about 5% of those surveyed put greater emphasis on promoting full equality for women, improving human rights, and overcoming AIDS and other serious health issues. This finding is unlikely to cheer the dozens of representatives of nongovernmental organizations whom Professor Schwab typically invites each year to Davos. Nor is it likely to please international organizations such as the United Nations and the World Bank, whose mandarins attend the talkfest at the swank ski resort.

The Bush administration, however, is certain to be pleased with respondents’ emphasis on continuing the war on terrorism as a global priority. Top officials of the administration normally attend the Davos meeting, and there was a report yesterday that President Bush may deliver a keynote address. The last American president to speak at Davos was Bill Clinton, who in 1999 discussed the issue of sustainable economic development.

“Reducing wars and conflicts, encouraging economic growth, and improving the global economy in the world are also identified as important global priorities for world leaders, which echo the findings on issues where the public feels not enough progress is being made,” Professor Schwab said.

But the other survey, conducted by the forum in cooperation with Account-Ability, suggested that a company that profits while doing harm to the community is likely to suffer in the long run.

“Yet the mainstream financial community has so far placed little emphasis on social, environmental, and ethical issues in its investment decisions,” said Simon Zadek, chief executive of AccountAbility, adding that the survey’s findings and recommendations are based on perspectives of pension fund trustees and executives, portfolio managers of mainstream asset-management firms, as well as buy-side and sell-side analysts.

“The real owners of capital in today’s markets are you and me, the intended beneficiaries of the pension funds, mutual funds, and insurance companies,” Mr. Zadek said from London yesterday. “The responsibility of institutional investors must be to meet our intrinsic interests, which go far beyond near-term returns since we have long-term needs and depend on the long-term vitality and health of our societies’ economies, communities, and the natural environment. Our interests must be that trustees and fund managers acting on our behalf take into account material social and environmental aspects of corporate performance.”

That the financial community hasn’t exactly embraced social issues was acknowledged by the managing director of the World Economic Forum’s Global Institute for Partnership and Governance, Richard Samans. He said: “We found that the issue is decidedly not the personal values of these market participants but rather the framework of industry customs, structure, and regulation in which they operate. It is the combination of available information, participant competencies, and, most of all, institutionalized incentives that drive behavior.”

Such behavior was explained by fund managers in the AccountAbility survey as being the result of demands on short-term performance. One unidentified fund manager told the survey: “As long as client [e.g., pension fund trustee] mandates require us to deliver performance benchmarked against short-term market tracker indexes, we will, of course, remain short term in our outlook.”

Mr. Zadek said that analysts similarly argued that “they could rarely advance social and environmental performance issues as long as their clients, fund managers, are only concerned with drivers of short-term performance and market valuations.”

One analyst summarized his experience in this way: “Strategic research on future social and environmental risks and opportunities got me my five minutes of fame. But there were no buyers for the work, and this is what counts at the end of the day. Given the choice again, if I want to stay in business, I would not do such research.”

Pension funds came in for particular criticism in the Forum-AccountAbility survey. “A particular problem,” said Mr. Samans, “is that most pension funds fail to meet the bedrock governance standards they increasingly demand of companies, and trustees are often poorly equipped for their duties.”

The survey offered recommendations for change, including the creation of an international set of good-governance principles for pension funds akin to a corporate governance code, according to Mr. Samans.

The Forum-Gallup survey, on the other hand, “sends a very clear message to the leaders from all sections of society as they prepare to meet in Davos to discuss the issues that face the world, and to set the global agenda,” said Meril James, secretary-general of Gallup International. “While war, and specifically, the war on terrorism are important issues, it is still clear that eliminating poverty and hunger are the issues that the global citizenry want tackled by their leaders.”