Principles for Responsible Investment
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PRI to focus on Accountability, Sustainable Development Goals in Next Decade
Investors with more than $60 trillion in assets under management combined have signed up to United Nations-supported sustainable investment principles over the last decade. They are now being told a signature is not enough.
The Principles for Responsible Investment this week set out a blueprint for new priorities, which will have a greater focus on investor accountability and other activities, such as achieving the UN's sustainable development goals on zero hunger, gender equality and clean energy.
"We're bringing in a minimum standard of activity to become a member of the PRI," managing director Fiona Reynolds said in a May 22 interview. "We are going to be removing those who are doing nothing and then rewarding those who are doing a lot."
The principles, first signed by investors and asset managers in 2006, encourage companies to incorporate environmental, social and governance factors into investing. The principles currently have over 1,700 signatories globally. Signatories include large investors like Blackrock Inc., the California Public Employees' Retirement System and Norges Bank, as well as family offices and pension funds. Fidelity Investments said last week that it had signed onto the principles.
The PRI is still working on its accountability plan and will consult further with members, but says it wants to "protect" the organization from firms who may just see it as a marketing label.
"Our aim is not to delist people, our aim is to get everybody doing something about responsible investment," Reynolds said. "But we are prepared to take drastic measures; we are prepared to delist people." Theoretically, about 10 percent of the organization's current members today would be placed on the organization's private watchlist for insufficient action", Reynolds said.
The blueprint has nine goals encouraging accountability, climate finance and investment tools to support the sustainable development goals.
Focusing on sustainable development goals are also a way to create "ESG Investing 2.0," Reynolds said. "There are actions investors can take on issues such as gender equality — for example they can vote against boards that have no women or ask companies about their gender pay gap," Reynolds said. "It's about the world that we want to see and how to actually make a better world."
The blueprint's goals will be developed further with investor feedback over the next decade, Reynolds said.
By Emily Chasan