By Cathrine Armour – Chief Reporting Officer, PRI
On 8 September PRI released our signatories’ public Transparency Reports and private Assessment Reports from the 2021 reporting cycle in the PRI Data Portal. The 2021 reporting dataset was finalised in April 2022, and these reports are based on this finalised dataset.
PRI’s 2021 reporting outputs offer several important insights which inform how our signatories are currently approaching the reporting process. Notably, the signatory base grew by 30%, with 2,800 signatories participating in the 2021 reporting cycle, answering more than 400 indicators across 35 strategies which reflect ESG incorporation in various asset classes and management styles.
These outputs have helped us gain a deeper understanding of our diverse signatory base. This insight is hugely important, as it will inform further optimisation of both the upcoming reporting process for 2023 and PRI’s output across the board. With that said, it should be noted that, due to the adjusted methodology utilised for this reporting process, the results from 2021 are not comparable to previous years.
We recognise that our signatories base is increasingly specialised. Based on their investment practices, 49% of respondents reported three strategies or less, compared to less than 4% who reported on more than 13 of our 35 strategies. PRI’s signatory base then reflects the makeup of an increasingly specialised and focussed investor landscape. We believe these figures support our decision to provide signatories with more granularity in the reporting process, allowing them to present detailed findings on indicators which are most relevant to their day-to-day operations. 96% of reporting indicators this year are new or modified, and the distribution of responses across these indicators seems to indicate that this decision to afford signatories the opportunity to report with a previously unavailable level of specificity was appropriate.
The 2021 assessments show that there remains a gap between signatories that score highly and those that score less highly. To reiterate, the results in this regard are not directly comparable – in previous years, PRI used a banded approach (A+ to E) to grade reporting. In 2021 (and going forwards) we will utilise a 1-5 star scale. Given these discrepancies in methodology, any comparison of trends should be treated carefully, but in general we can see that majority of signatories that scored towards the higher end of the spectrum in previous years (A-A+) have largely maintained this high score – though some variation across means that some signatories have received lower scores too. For example, when comparing the scores of about 2,000 common signatories in 2020 and 2021, we can see 63% of signatories who scored an A/A+ previously have achieved a rating of either four or five stars, while 83% of signatories who scored a B or lower in previous years are rated with 3 or fewer stars in 2021.
The normal distribution in scores of new reporters gives us confidence in our assessment methodology and the framing of our content. With that said, there remains work to be done to bridge the gap between sector leaders and those signatories still at an earlier stage in their responsible investment journey. PRI’s approach here is to actively support these signatories to improve their processes and shift these scores in the right direction. PRI remains committed to this goal – and to the long-term aim of achieving positive, systemic change across the spectrum of responsible investment issues.
This reporting window has been deeply informative for us and, we hope, for our signatories. Our aim going forwards is to utilise the insights this process has afforded us to further optimise the reporting process and deliver a framework that works for our signatories. We are conscious of the demand, for example, to implement greater consistency with global regulatory reporting requirements where possible, to minimise duplication and create greater commonality across the sector. Likewise, we know that reporting outputs should continue to meaningfully inform our wider outputs as an organisation – including our thought leadership, research, and events.
With the release of the 2021 outputs, our focus now turns fully to the reporting process for 2023, and we look forward to sharing further information on this reporting process in due course.