Collaborative engagements coordinated by the PRI

Through consultation with signatories and the Investor Engagements Steering Committee, the PRI Executive has developed a list of priority collaborative engagements which it coordinates. These engagements, organised by environmental, social and governance (ESG) themes, can be found below.

Environment – managed by Paul Chandler and Gemma James

Water risks

Population growth, economic development and changing weather patterns are increasing the demand and competition for global water supplies. This poses a risk to companies and their supply chains in both the short and long term. As agriculture is the largest user of water, this engagement focuses on improving the management of water risks within companies’ agricultural supply chains. Global listed companies in the food, beverage and textiles sectors, who are reliant on agricultural inputs from water-scarce regions, have been identified as engagement targets. More information for signatories.

Fracking

Hydraulic fracturing (“Fracking”) operations can have significant environmental and social impacts on water resources, greenhouse gas emissions, and local communities, which are often not managed adequately by companies. This has resulted in a number of bans and moratoriums on fracking in several regions around the world, increasing the risk to companies’ license to operate and future earnings. The project focuses on global energy companies, including exploration & production, and oilfield service companies, operating in existing and developing markets for fracking operations, such as North America, Europe, and China. More information for signatories.

Sustainable palm oil

The palm oil industry has faced significant challenges – including allegations of forest clearing and social injustice by plantation companies, and the low uptake of Certified Sustainable Palm Oil by palm oil purchasers. These difficulties have prevented the sector from adequately tackling its GHG emissions and its contribution to deforestation, and also pose reputational risks for palm oil producers and purchasers. Global investors have formed a working group which is pushing for improvements in company practices across the value chain, in order to support the development of a more sustainable palm oil industry. More information for signatories.

Corporate climate lobbying

Lobbying by companies against adequate climate policy is seen by many long-term investors as incongruous with maximising long-term portfolio value. Despite supporting climate policy more broadly, many listed companies are involved in such lobbying indirectly – for example, via trade and industry associations. The engagement will focus on this inconsistency and will aim to improve transparency of companies listed in the US, Canada and Australia. It will also work with partner organisations including CDP, Ceres/INCR and IIGCC throughout. More information for signatories.

Social – managed by Felicitas Weber

Labour standards in the agricultural supply chain

Working conditions in agricultural supply chains have come under increased scrutiny following the attention received in the apparel and electronic sectors. Field versus factory working conditions are characterised by different ground rules, owing largely to the less formalised nature of agricultural employment – a characteristic which presents heightened social and long-term investment risks, such as child labour, forced labour, lack of worker benefits, and health and safety issues. The engagement seeks dialogue with food and beverage companies, including producers, processors and retailers. More information for signatories.

Employee relations

Recent studies support a correlation between strong human capital practices, such as investment in employee training, and future shareholder returns. This engagement prioritises dialogue with global retail companies on issues material to company productivity and financial performance, including employee retention and training, high-performance work systems, and employer-employee relations. More information for signatories.

Human rights in the extractive sector

This project intends to understand how human rights policies get implemented by global extractive companies in the context of specific business relationships such as joint ventures. The UN Guiding Principles on Business and Human Rights and the UN Global Compact/PRI Guidance on Responsible Business in High-Risk and Conflict-Affected Areas serve as key resources for dialogue with target companies. More information for signatories.

Governance – managed by Athanasia Karananou and Olivia Mooney

Director nomination process

Over the last few years, there has been increased focus on corporate boards. There is clear scope for improvement in how directors are nominated to the board, to ensure boards are working most effectively to protect and create long-term shareholder value. This initiative focuses on engaging with companies located in the US and France to seek more disclosure, and improve overall effectiveness of the director nomination process. More information for signatories.

Anti-corruption

Bribery and corruption are incompatible with good corporate governance and are harmful to the creation of value. Investors expect companies to have robust programmes to manage financial, operational and reputational risks linked to corruption in their firm and supply chains, especially as legal enforcement of bribery and corruption continues to build globally, and as companies face increasing potential regulatory liabilities. A coalition of investors is engaging with companies across sectors and regions that face bribery and corruption risks, to better understand their ability to manage and reduce those risks, and their capacity to improve practices and transparency. More information for signatories.

Integrating environmental, social and governance (ESG) issues into executive pay

In 2012, a group of PRI signatories developed guidance to support dialogue between shareholders and investee companies on how to identify appropriate ESG metrics, link them meaningfully to executive pay, and provide sufficient disclosure to investors. Using data and guidance provided by the PRI, investors are now engaging individually on this issue, primarily with companies in the utility and extractive industries. More information for signatories.