Applying Principle 4

Investors can act to promote acceptance of the Principles. They can encourage peers, clients, fund managers, service providers and other industry influencers to implement the Principles. Some of the ways investors can implement Principle 4 include are outlined below.

• Indirect investors. Include requirements to PRI in requests for proposals (RFPs). Ask for access to fund manager PRI assessment reports as part of due diligence, and encourage fund managers to improve responsible investment practices during the investment period. Set and communicate ESG expectations to asset consultants, placement agents and other investment service providers.
• Direct investors. Engage co-investors and sponsors on the rationale for responsible investment and the development of good practices. Communicate responsible investment expectations to portfolio companies and special purpose vehicle (SPV) managers. Communicate ESG expectations to investment service providers.
• Policy and regulatory developments. Support regulatory or policy developments aligned with the Principles. Public authorities such as the US Department of Labor, the UK Law Commission and the Japanese Financial Conduct Authority have adopted regulation or guidance promoting the inclusion of material ESG factors into a fiduciary fs analysis. At the time of writing, the European Commission High Level Expert Group on Sustainable Finance is examining the integration of sustainability into EU legislation.