Collaborative engagements by PRI signatories

One of the ways PRI signatories put their principles into practice is by joining collaborative engagements that seek to improve company behaviour, policies or systemic conditions. 

These investor collaborations are optional for all signatories and can take the form of a wide-range of actions, from writing a joint letter to a specific company to holding detailed discussions about challenges facing the global financial system.

The PRI Clearinghouse is specifically designed to facilitate these joint initiatives, and supports over 50 collaborative engagements each year.  

Samples of ongoing or recent collaborative engagements by PRI signatories are below:

• Joint engagement on the iron and steel industry
• The Seoul Initiative
• Engagement on UN Global Compact reporting
• Sudan Engagement Group
• Emerging Markets Disclosure Project
• CEO Water Mandate

Joint engagement on the iron and steel industry

In late 2006, allegations surfaced about slave labour practices in the iron and steel industry in Brazil. The operations involved were potentially part of the supply chains of the largest manufacturers and users of iron and steel in the world, companies in which, jointly, the signatories had sizeable holdings. The allegations were that these large global users of steel were inadvertently supporting the use of forced labour at charcoal plants in Brazil. Charcoal is an important raw material used in the manufacture of pig iron.

PRI signatory Hermes used the Clearinghouse to bring together a group of fellow signatories for a collaborative engagement. The investor group identified a list of target firms, and then jointly wrote to those companies setting out their concerns, focussing on the negative impact on reputation due to any association with inappropriate labour practices. Follow up telephone calls and meetings were also conducted with the companies.

There was a wide range of responses. A number of companies had already put into place an audit system to ensure they were not sourcing steel from these operations. However, there were also companies that had not considered the impact of such allegations on their business and were surprised by shareholder interest in this area. These firms undertook to examine the investors’ concerns, and the group had further conversations with these companies to ensure they had addressed the issue.

The Seoul Initiative

The UN Global Compact is a set of ten principles promoting corporate responsibility and an important tool for supporting companies’ commitment to sustainability and corporate citizenship.

In October 2008, a group of 52 signatories launched an initiative to call on all listed companies in the MSCI World, FTSE All-World and IFC Emerging Markets Indices to participate in the UN Global Compact. The investors were based in four continents and managed around US$ 4.4 trillion in assets.

By November 2009, 108 of these listed companies subsequently joined the UNGC. This constitutes one in four of all the publicly listed companies that signed up to the UNGC from November 2008 to October 2009. Another 135 companies also have it under consideration. Major companies that joined the UNGC due to this initiative include: General Electric, PepsiCo, Inc., JCPenney, Merck & Co., Inc., Sharp Corporation, Campbell Soup Company, Hitachi, Ltd., Intel Corporation, A.P. Moller – Maersk and Sumitomo Corporation.

A follow-up plan which will focus on country-specific strategies is being discussed with the steering committee. Meetings between signatories and companies based on geographic region will be organised by the PRI Clearinghouse staff and hosted by signatories.

Engagement on UN Global Compact reporting

For three consecutive years Aviva Investors has led a collaborative engagement with participants of the UN Global Compact (UNGC) regarding their Communication on Progress (COP). Aviva Investors and other signatories send a letter to the Chief Executives of listed UNGC signatories, in order to either: (1) welcome particularly good practice (‘leaders’), or, conversely, (2) challenge non conforming companies to regain full participant status (‘laggards’).

In 2009, the second annual engagement resulted in 47.6 per cent (50 out of 105) of ‘laggard’ companies subsequently submitting their reports. The 2010 engagement includes 130 companies in total (44 leaders and 86 laggards) and was launched on 12 February 2010.

Sudan Engagement Group

Please click here for more details of the group.

Emerging Markets Disclosure Project

Please click here for news on the project and associated documents.

CEO Water Mandate

In many parts of the world, population growth, urbanization, and climate change are combining to place significant pressure on water supplies for companies in all industries. According to the UN, nearly two-thirds of humanity is expected to live in water-stressed regions by 2025.

A US$1.5 trillion alliance of signatories has asked 100 of the world’s biggest companies to join an initiative called the ‘CEO Water Mandate’, which will improve their policies and practices around use of water. The companies include global giants such as Starbucks Coffee Company, GlaxoSmithKline and Carlsberg Group.

The letter sent to the companies states the investors’ belief that it is those companies that are best managing the risks and opportunities presented by limited global water availability that are more likely to be considered as viable long-term investments. See press release for more details.

For more information on these or any other collaborative shareholder engagements by PRI signatories, contact info@unpri.org. PRI signatories can view more by logging in to the Clearinghouse.