PRI Governance Review


The PRI Advisory Council and PRI Association Board agreed at their joint meeting in Cape Town on 30 September 2013 to carry out a formal review of the PRI’s governance structure and processes.

The aim of this review is to assess what governance structure the PRI should adopt to fulfil its Mission. Its recommendations must balance the interests of different signatories and ensure that decisions about the PRI’s mission, direction, strategy, finances and operations are transparent, accountable to signatories, efficient and fit-for-purpose. The governance structure and processes determine – internally and externally – how effectively the organisation operates, and how it is perceived by signatories and stakeholders.

The governance review is expected to include, but will not be limited to, an evaluation of the rights of each category of signatory, the roles and responsibilities of the governing bodies and their committees.

The review will not consider whether asset owners should remain predominant in the PRI’s governance structure, nor whether non-asset owner signatories (investment managers and professional service providers) should be excluded from being signatories or from being involved in the PRI’s governance. However, it will review the extent to which asset owners should predominate and how this predominance is best enshrined and exercised to ensure broad representation for other categories of signatory.

The PRI is committed to ensuring the review is consultative and is carried out to the highest standards of independence, impartiality, transparency and accountability. Further, the review’s findings and recommendations – along with any subsequent changes to PRI governance that may result from the review – must be clear, practical and well communicated to signatories.

The PRI Advisory Council has established six principles to guide the review:

  • Mission. The governance structure should facilitate the engagement of all signatories in the PRI’s mission to advance the development of a more sustainable global financial system for the benefit of society.
  • Simplicity. The governance structure must be straightforward to administer and easy to describe, with clearly articulated roles and responsibilities.
  • Transparency. The requirements and process for communicating governing body decisions to signatories and stakeholders must be transparent.
  • Accountability. Lines of responsibility must be clear and those within the governance structure must be answerable to signatories.
  • Practicality. The governance structure must meet the practical requirements of the organisation.
  • Representation. The governance structure must retain an asset owner-majority and must include all categories of signatory.

PRI governance review consultation  (17 July – 5 September 2014)

In July the PRI asked for feedback on the PRI Governance Review, ten initial recommendations for change from the independent consultant Carnstone Partners, and the Advisory Council Chair cover note, reflections from the Advisory Council on the initial recommendations.

The level and quality of engagement in the governance review consultation process was encouraging, with signatories from every region of the globe providing feedback either through in-person meetings, workshops, webinars, or the online questionnaire. The feedback received has been constructive and positive. The main areas where signatories provided constructive criticism were the rights of signatories and the delegation of authority from signatories to the Board. Some signatories had lost trust in the PRI’s governance and it is critical that the new PRI governance model has mechanisms in place to encourage a structured dialogue with the Board, keep the Board accountable and ensure transparency of decision-making, for the future success of the initiative.

The Carnstone Recommendations Following Consultation Feedback report sets out the aims of the governance review; the consultation participation; a summary of the feedback received; and the final independent recommendations. Some signatories chose to make their feedback open to the public and interested stakeholders can access the feedback here.

Proposed PRI Governance Structure

At the 2014 Signatory General Meeting (SGM) in Montreal on 24 September the PRI Chair outlined the proposed changes to the PRI governance structure, detailed in the Advisory Council Chair Cover Note – Proposed PRI Governance Structure. These final proposals followed extensive consideration by the PRI Advisory Council of the Carnstone final recommendations. The PRI encourages signatories and interested stakeholders to read the final proposals and the reasons for the decisions the Advisory Council has taken.

Following the signatory communication on 2 October outlining the proposed PRI governance structure, the PRI has worked with its UK lawyers Bristows LLP to draft the revised Articles of Association for PRI Association (the Company). These revised Articles reflect the 10 recommendations that the Chair presented at the SGM and subsequently communicated to all signatories.

The PRI invites all signatories to review the revised Articles of Association for PRI Association. The accompanying Advisory Council Chair Cover Note, sent to signatories on 18 December, provides a high level key to the transcription of the 10 recommendations, highlights the rights of signatories and sets out the voting process.

The Advisory Council recommends that all signatories approve the draft Articles. Voting commences on 8 January and closes on 30 January. On 8 January 2015, the main contact within each signatory organisation will be invited, via email, to vote to approve the revised Articles on behalf of their organisation via an independent voting platform. Three further emails reminding this contact to vote will be sent. If you are unsure who your main contact is please email

The PRI will make every effort to address any queries on the draft Articles and will encourage signatories, through multiple communication channels, to cast their vote. Questions should be directed to Alternatively signatories can participate in one of two webinars that will outline the most important elements of the Articles and provide an opportunity for signatories to ask questions. Sign up to a webinar here.

The PRI will communicate the voting results in mid-February and with signatory approval, the new governance structure will commence on 1 April 2015.

Signatory voting rights

Under the Company’s current Rules, changes to the Articles and / or Administrative Rules require the support of asset owner representatives of the Advisory Council and a simple majority of the asset owner signatories voting in an electronic poll. However, the PRI will also consider the votes of non-asset owners. If a majority of non-asset owners express significant discontent with the draft Articles, the PRI will seek to address, within reason, any concerns.

  • PRI Association’s Articles of Association may only be amended by a special resolution of PRI Association’s members (being the asset owner members of the Advisory Council and the Chair of the Advisory Council), as required by the UK Companies Act 2006, and subject to fulfilment of the additional conditions imposed by Article 42.1 of the Articles, if applicable, as mentioned in the next sub-paragraph.
  • By virtue of Article 42.1, changes to the Articles affecting the composition of the Advisory Council (Article 23.3) and the Principles (as set out in the Schedule to the Articles) may only be made (i) with the consent of a simple majority of signatories who are asset owners voting on the amendment in question, such consent to be given by way of an electronic poll held in accordance with the rules and byelaws made pursuant to Article 41, and (ii) in accordance with any other requirements specified in those rules and byelaws.
  • The Administrative Rules Relating to the Advisory Council and signatories may only be amended (i) by a special resolution of the PRI Association members, or (ii) by a resolution of the Advisory Council passed by a majority of the asset owner elected members, the Chair of the Advisory Council and the UN members of the Advisory Council, taken together as one group. (Article 41.2 of the Articles and Rule 9 of the Administrative Rules.)



Pre Governance Review: September 2013 – April 2014

30 September 2013 PRI Advisory Council and PRI Association Board agree to carry out a formal review of the PRI’s governance structure and processes.

1 October 2013 PRI governance review announced at the Signatory General Meeting in Cape Town.

28 October 2013 Letter from the Advisory Council Chair to all signatories announcing the PRI governance review.

20 December 2013 PRI responds to signatory concerns on the delisting of eight Danish signatories.

6 February 2014 PRI governance review – draft scope for consultation released to signatories for comment by 28 February.

April 2014 Signatory feedback to draft scope published on the PRI website.

Governance Review: May 2014 – March 2015

2 May 2014 Announcement of the appointment of an independent consultant, Carnstone Partners LLP, to conduct the governance review.

May-June 2014 Governance review phase 1: Review. PRI governance structure review and preparation of a signatory consultation paper.

2 July 2014 Advisory Council discussion of the signatory consultation paper.

July-September 2014 Governance review phase 2: Signatory Consultation. Publication of the PRI Governance Review signatory consultation paper that includes the review and ten initial recommendations, plus an Advisory Council Chair Cover Note, the reflections of the PRI Advisory Council on the initial recommendations. To gather signatory feedback during phase 2 there will be regional face-to-face signatory workshops, two webinars and an opportunity to provide feedback online.

24 September 2014 PRI Signatory General Meeting (“SGM”) presentation of the governance review and recommendations. There will be opportunities to provide feedback on the recommendations after the SGM.

October-November 2014 Governance review phase 3: Implementation. Final recommendations on the PRI governance structure and how to implement those recommendations.

November 2014 onwards Implementation of the recommendations and transition to revised governance structure.

December 2014 Communicate to signatories the revised Articles of Association for PRI Association, together with the explanatory Advisory Council Chair Cover Note.

January 2015  Signatory vote on the revised Articles.

February 2015 Communication of the voting results.

March 2015 Formal adoption of the revised governance structure and associated articles and rules at the Advisory Council meeting.


About Carnstone Partners LLP

On May 2, the PRI it had appointed Carnstone Partners LLP to act as an independent advisor to its governance review. The criteria used to select Carnstone is outlined in a Request for Proposal published by the PRI in March 2014. Further information about Carnstone’s credentials, prior work with the PRI and how it will manage conflicts of interest throughout the review process is outlined below. More information is available at

Carnstone’s Expertise with Governance Reviews

Carnstone is an independent management consultancy with extensive experience of working with clients on the review, development and implementation of governance structures – whether these clients are large corporations, not-for-profit companies and charities, or global membership organisations like the PRI.
Their recent governance review advisory work has included the following projects:

  • Media CSR Forum. The Forum is a self-created group of over twenty large media companies working together to address sustainability issues.
  • Prostate Cancer Charter for Action / Cancer 52 / UK Lung Cancer Coalition. These charities are some of the foremost cancer charities in the UK, each with a large group of signatory members.
  • Insight Investment. Carnstone worked with Insight Investment to produce an extensive piece of research on the governance of corporate responsibility.
  • The Connection at St-Martin-in-the-Fields. The Connection is the UK’s biggest provider of specialist services to homeless people:  a unique organisation with a diverse set of stakeholders.

Carnstone’s previous work with PRI

Carnstone has worked on the review of the PRI Reporting Framework, an important part of which centred on engagement with the signatory membership to achieve support and buy-in. More recently, it has worked on a research project identifying the most appropriate indicators to assess the impact of human capital management practices among listed retailers for an engagement.

Managing Potential Conflicts of Interest

Carnstone is independent and fully owned by its six Equity Partners. It is not part of a larger firm or organisation and does not have any outside investors. It does not undertake any investment activities nor does it provide investment services to any PRI signatories.
Carnstone’s approach to managing conflicts during the course of the governance review is as follows:

  • Carnstone will not attempt – directly or indirectly – to sell its services to signatories during the course of the governance review. It will not target signatories for specific products or general support or advice.
  • Carnstone will disclose at the outset and at regular intervals thereafter, subject to the agreement of the clients concerned, any consultancy relationships it has with PRI signatories (a list of relationships as at the appointment date of 2 May is below)
  • In the event of a PRI signatory approaching Carnstone about the possibility of undertaking consultancy work, it would notify the PRI at the earliest opportunity. Should it secure this work, it would be carried out by individuals who had no direct involvement with the PRI’s governance review (unless the PRI was prepared to waive this exclusion).
  • With the exception of existing clients, its lead partner on the review, Peter de Graaf, will not personally undertake work for any PRI signatory unless otherwise agreed.

Carnstone’s project team for the review of PRI’s governance will be led by Peter de Graaf,Senior Partner, who leads much of Carnstone’s work in the area of responsible investment and financial markets. For six years, he was a Managing Director with FTSE Group, and involved with FTSE4Good, the responsible investment index, and he served as MD and a member of the board of Trucost Plc, an environmental investment research organisation.  At Carnstone, his clients have included the Pension Protection Fund (PPF), MSCI / RiskMetrics and the UN Development Programme. He was the lead partner for the work with the PRI on the development of the new signatory Reporting Framework. Recently, he has provided pro-bono support to the newly elected CEO and the Chairman of UKSIF around the formulation of their new three-year strategy. A Dutch national, Peter has worked across Europe and has a solid understanding of the European and global investment industry.

Additional Relevant Experience

Working with the financial services industry
Carnstone has extensive experience of working with the investment industry.  Their assignments have included the UK Pension Protection Fund (PPF), Aviva, Insight Investment, HBOS, the Financial Services Authority (FSA), MSCI, the UN Development Programme and UKSIF.

Working with membership organisations.
Carnstone has a track record of advising membership organisations and have set up, run or currently act as the secretariat for several organisations, including:

  • the Institute for Corporate Responsibility and Sustainability (ICRS), a network of senior CR practitioners within corporations;
  • several global industry groups for leading publishers;
  • several European media membership organisations.

Familiarity with UK Legal Framework for Not-for-Profit Companies.
Carnstone has longstanding experience working with not-for-profit companies and many of its senior team have been involved in both the running of and governance of not-for-profit and mission based organisations. It is therefore familiar with the UK legal framework in this field.

Existing relationships with PRI signatories

Carnstone does not have currently a paid relationship with any PRI signatory.