Investment institutions in 50 countries managing US $34 trillion to be covered by the world’s most comprehensive reporting regime for investor responsibility, accountability and sustainability from October 1. Signatories that fail to report will be delisted from the PRI in the second half of 2014.
LONDON, 30 September 2013 – The Principles for Responsible Investment (PRI), a United Nations-supported global investor initiative, today announced the launch of a new Reporting Framework designed to greatly enhance the level of transparency around the investment activities of its asset owner and investment manager signatories.
Reporting and assessment of signatory activities has been a core part of the PRI’s work since 2007 and the new PRI Reporting Framework, developed following an extensive two-year consultation process, marks a major step forward from the PRI’s previous reporting survey. For the first time, signatories who collectively manage US $34 trillion in assets will be required to report publicly on their progress towards implementing the PRI’s six Principles each year across a wider range of asset classes and investment activities, including voting and engagement; manager selection, appointment and monitoring; and the integration of environmental, social and governance (ESG) factors into investment decision-making processes and ownership practices.
By mid-2014, the PRI expects nearly 800 of its signatories to have used the Reporting Framework to disclose their policies, processes and performance in these areas in an objective and systematic way, using a common language to describe what they do. This transparency will enable investment managers, asset owners, beneficiaries and the broader public to make their own judgements about the degree of each signatory’s commitment to responsible investment.
Commenting on the launch, Wolfgang Engshuber, Chair of the PRI Advisory Council, said: “Calls for the global investment community to be more transparent about how it is responding to the governance and sustainability challenges that define our era have grown louder since the financial crisis. The PRI has responded with the launch of this new Framework, which will enable institutional investors to demonstrate how they are embedding material ESG factors into their processes and working to strengthen the governance of companies and the market as a whole.”
Fiona Reynolds, Managing Director of the PRI, said: “Responsible investment is one of the fastest growing investment trends of the 21st century and robust reporting on ESG integration, voting and stewardship activity is essential if the financial services industry is to win back the trust of its stakeholders. This information will improve the dialogue between companies and investors about the real drivers of long-term performance, risk and return, and help asset owners more effectively evaluate and select managers, ensuring the investment chain functions effectively for clients and beneficiaries.”
The Reporting Framework consists of more than 220 indicators across 12 modules and seeks detailed information from signatories about their policies and practices in new asset class-specific modules for the first time: listed equities, fixed income, private equity, property, infrastructure, and inclusive finance. An average PRI signatory will need to complete 5 modules and 75 indicators. Signatories will begin reporting from 1 October and have until 31 March 2014 to submit their responses. Signatories that do not report will be delisted from the PRI.
“The first five years of our reporting and assessment process showed that while many of our signatories are making good progress, much deeper implementation of the Principles will be necessary if the PRI is to fulfil its mission and help foster the development of a more sustainable financial system,” added Lorenzo Saa, Head of Reporting and Assessment at the PRI. “A new layer of public transparency built into the Framework will allow each signatory to evidence how its activities and interests are aligned with those of its clients, and help the market recognise and reward those investors that have truly embraced responsible investment. An annual assessment of each signatory’s progress implementing the Principles, year-on-year and relative to their peers, will act as a learning tool and help them determine which areas and activities they need to improve.”
Note to editors:
The PRI Reporting Framework was launched today by members of the PRI’s Advisory Council at an event in Cape Town, South Africa, on the eve of the PRI’s annual signatory conference, PRI in Person. The Advisory Council is made up of representatives from the United Nations (UNEP FI, UN Global Compact) and signatory organisations including Aviva Investors (UK), CalPERS (US), Cbus (Australia), CPPIB (Canada), EIRIS (UK), GEPF (South Africa), Hermes EOS (UK), Bâtirente, (Canada), PGGM (The Netherlands), PREVI (Brazil), Santander (Brazil) and Unipension (Denmark). Photos from the launch event are available on request from the media contact below. The PRI will publish the first aggregated results of signatory responses to the framework in a “Report on Progress” in the second half of 2014. Further information about the Reporting Framework is available on the PRI website.
Head of Communications, PRI
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About the Principles for Responsible Investment
The United Nations-supported Principles for Responsible Investment Initiative (PRI) is a network of international investors working together to put the six Principles for Responsible Investment into practice. The Principles were devised by the investment community. They reflect the view that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios and therefore must be given appropriate consideration by investors if they are to fulfil their fiduciary (or equivalent) duty. The Principles provide a voluntary framework by which all investors can incorporate ESG issues into their decision-making and ownership practices and so better align their objectives with those of society at large.