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This week marks one year since the start of the global credit crisis, yet this period has also seen a dramatic increase in responsible investment activity. While investors are clearly concerned about the current market, there is a growing recognition that over the longer term, environmental, social and governance issues are where the drivers of value lie.
As evidence of this the United Nations-backed Principles for Responsible Investment (PRI) initiative announced today that over 400 global investment institutions, managing over $15 trillion of assets, have now signed up to the six principles -a set of global best-practices for implementing responsible investment.
In the year since the start of the credit crisis, the number of institutions signing the Principles has grown by 65%, and the rate of growth since the start of 2008 has continued at 37%.
The PRI initiative believes that one of the positive effects of the global credit crisis has been to convince an increasing number of mainstream investors of the value of taking factors such as climate change, environmental and social disclosure and corporate governance into account when making their investment decisions and exercising their ownership obligations.
Donald MacDonald, chairman of the BT Pension Scheme and chair of the PRI said,
“The tough environment for investors has increased interest in responsible investment as a driver of long term value. For many investors, and particularly institutional investors such as the BT Pension Scheme, our duty is to endeavour to ensure stable long-term returns whether markets go up or down. We believe that proper consideration of environment, social and governance issues is the way to deliver those returns.
“I think the increasing support for the PRI despite the credit crisis shows that investors in general have taken a long hard look at the credit crunch, and some of the practices that caused it, and decided they can benefit from more comprehensive analysis of investment risk, one which incorporates environmental, social and governance issues into decision-making and ownership practices.
“It may be cold comfort at the moment, but the credit crisis could be the catalyst for a switch to more sustainable market practices with benefits for both investors and society at large”.
Roland van den Brink, chairman of Stichting OPF, the company pension fund of Mn Services which recently became the symbolic 400th signatory to the PRI added,
“The current volatile financial climate only makes it more important that our investments support the sustainable development of societies. We believe this is the only way to ensure good long term results.
“Signing the UN PRI gives us an opportunity to be responsible asset owners, not in splendid isolation, but in a joint effort with other asset owners. We hope this joint effort will eventually lead to more sustainable financial markets, both to the benefit of our pension fund and to the benefit of society”.
For more information visit unpri.org
United Nations Environment Programme Finance Initiative (UNEP FI): www.unepfi.org
UNEP FI is a unique global partnership between UNEP and the private financial sector that works closely with approximately 180 financial institutions to develop and promote linkages between sustainability and financial performance. Through regional activities, a comprehensive work programme, training and research, UNEP FI carries out its mission to identify, promote and realize the adoption of best environmental and sustainability practice at all levels of financial institution operations.
UN Global Compact: www.unglobalcompact.org
The United Nations Global Compact is the world’s largest corporate citizenship initiative, encompassing nearly 3,000 companies and stakeholders from 90 countries. Participating companies commit to advancing ten principles in the areas of human rights, labour conditions, environmental stewardship and anti-corruption. The objective of the Global Compact is to help achieve a more stable and inclusive global economy by rooting markets and societies in universal principles.
A full list of signatories to the Principles for Responsible Investment is available from unpri.org/signatories/
The Principles themselves can be found at unpri.org/about-pri/the-six-principles/