GLOBAL - The overwhelming majority - 96% - of institutional investors view rising interest rates as a risk to their ability to reach their financial goals.

That is according an Allianz Global Investors survey of more than 150 European institutional investors with €926.1bn assets under management, the majority of which are pension funds.

Almost one in four respondents regards increasing interest rates as the biggest risk over the next 12 months.

Because long duration is no longer a guarantee for a return in such an environment, investment strategies have to be adapted.

Approaches by survey respondents include a more active asset management with shorter duration, as well as investments in equities, commodities and real estate.

Thomas Wiesemann, chief market officer at Allianz Global Investors Europe Holding, said: "These asset classes show a positive performance during times of rising base rates.

"In the short term, equity markets admittedly retreat during periods of rising interest rates, but studies by Allianz Global Investors have found that, over the last 40 years, equity markets have shown a significantly positive performance 12 months after an interest rate hike."

Commodities performed even better, gaining on average more than 20% in the first year after such hike.

However, it was a mixed scenario on the bond markets. While government bonds were often confronted with losses, corporate bonds often showed a positive development.

The survey took place in March and April before the European Central Bank raised interest rates to 1.25%.

In other news, a KPMG survey has revealed that sustainability is gaining in significance among companies.

The number of companies with a sustainability strategy has increased by 50% since 2008 to 62%.

Among those with a turnover of at least $1bn (€685m), the number was even higher, with close to 80% having one in place.

Around 61% of respondents believe the implementation of sustainability programmes will pay off, either through a reduction in risks or through increased profitability.

The main barriers to the implementation of a sustainability strategy are a lack of criteria to measure the effect of the strategy; a lack of capital to integrate it equally with other, more short-term projects; and the absence of international regulations.

KPMG interviewed 378 companies in Europe, the US, Canada and Asia-Pacific for the survey.