Policy and Research

Policy sets the rules of the game and critically affects the ability of investors to generate sustainable returns and create value. Public policy engagement aligns with principles 2,3 and 4.

Principle 2 states:

“We will be active owners and incorporate ESG issues into our ownership policies and practices”

possible actions include:

  • Develop and disclose an active ownership policy consistent with the Principles.
  • Exercise voting rights or monitor compliance with voting policy (if outsourced).
  • Develop an engagement capability (either directly or through outsourcing).
  • Participate in the development of policy, regulation, and standard setting (such as promoting and protecting shareholder rights).

Principle 3 states:

“We will seek appropriate disclosure on ESG issues by the entities in which we invest”

possible actions are:

  • Support shareholder initiatives and resolutions promoting ESG disclosure.
  • Support initiatives on disclosure standards, such as Sustainable Stock Exchanges.

Principle 4 states:

“We will promote acceptance and implementation of the Principles within the investment industry”

a possible action is:

  • Support regulatory or policy developments that enable implementation of the Principles.

The policy work-stream was set up to address the barriers to ESG integration.

Current projects:

LONG-TERM MANDATES

The PRI launched a discussion paper on Long-Term Mandates, building on existing research, in particular, the International Corporate Governance Network’s (ICGN) model mandate. The paper presents a range of potential ways in which investors can ensure a long-term investment horizon.

A consultation was opened to identify leading investor practice in mandate design, and seeks to accelerate the shift from analysis to implementation, in order to achieve long-term sustainable returns and improve system-wide capital allocation.

Download a copy of “Long-term mandates: a discussion paper”

For further details contact Will Martindale (PRI).

FIDUCIARY DUTY

Fiduciary duties exist to ensure that those who manage other people’s money act in the interests of beneficiaries.

Ten years after the original Freshfields report into fiduciary duty, many investors have made positive steps to incorporate sustainability risks as part of their fiduciary duties.
Despite significant progress, challenges remain. Many large investors have yet to sign the PRI or make equivalent commitments to responsible investment. Even among PRI signatories, most investors have yet to fully integrate ESG issues into their investment processes.

The central objective of this project is to understand why investors are not systematically integrating ESG as part of their fiduciary duty. The report will propose practical actions for institutional investors and policy-makers to address these barriers.Download a copy of “Complying with your Fiduciary Duty: A Global Roadmap for ESG Integration”

For further details contact Elodie Feller (UNEP FI) or Will Martindale (PRI).

PUBLIC POLICY

Public policy affects the sustainability and stability of financial markets, as well as social, environmental and economic systems. Based on interviews with an international group of investors and policymakers, this report analyses how and why investors can engage with policy. This report offers practical, effective recommendations, proposing a five-step approach to better integrate investor perspectives on environmental, social and governance (ESG) factors in the public policymaking process.

Download a copy of “The case for investor engagement in public policy”

For further details contact Will Martindale (PRI).