As part of our 10-year Blueprint for responsible investment – looking at how to take responsible investment forward over the next decade – we committed to undertake an extensive review of our current reporting and assessment process between 2018 and 2021.
Aim of the review
The aim of the review is to ensure that the PRI’s reporting and assessment:
- has clear objectives of how it will contribute to driving change in the investment industry;
- is fit for purpose;
- remains relevant to evolving responsible investment practices;
- is useful for signatories and the responsible investment market.
A unique opportunity to shape the Reporting Framework over the next five to 10 years, the review covers the Reporting Framework itself, as well its various outputs and tools, within the broader context of the responsible investment and ESG reporting landscape, and the requirement to drive more meaningful data throughout markets.
We encourage you to listen to one of our webinars to hear more about how PRI Reporting is evolving. The recorded webinars serve as an update on the overall Reporting and Assessment review, outline the results from the second consultation phase, answer some important questions raised by signatories, and provide more detail on the ‘core’ and ‘plus’ module and the new Reporting Framework structure.
Signatories can watch the following recorded webinars:
For more recorded webinars visit BrightTalk.
As a first step of the review, the PRI undertook a signatory consultation between March and June 2019 to guide us on the future direction of reporting and assessment. In total, over 580 signatories participated in the consultation, representing 24% of our signatory base.
During the second consultation phase, signatories had the opportunity to indicate their level of support for the proposal of what a new Reporting and Assessment framework could look like. The second consultation paper identifies the main objective of the Reporting and Assessment Framework, presents three guiding points of how to develop the Framework in order to support the main objective, and details the PRI’s proposal. The proposal was heavily based on signatory feedback during the first consultation phase, with oversight from the PRI Board and support from the Reporting and Assessment Advisory Committee.
In total, 267 signatories participated in the consultation, representing 9% of our signatory base.
2021 investor reporting guidance
The PRI will launch the new investor Reporting Framework in November 2020 and it will be made available in the new Reporting Tool for the reporting cycle starting in January 2021. New investor reporting guides will be published below when they become available.
- The SAM module applies to investors who outsource some or all of their investment activities to external investment managers.
- The asset class modules only apply when a signatory has 10% or more of their AUM invested directly in that asset class; or directly invests less than 10% but US$10bn or more of their AUM in any particular asset class.
Frequently asked questions
About the review
How has feedback from the consultations been used in the development of the new Reporting Framework?
We analysed all consultation feedback to gauge its general direction, sense-check our approach, identify any red flags, exceptions, outliers or caveats. We’ve used the consultations to inform our decision-making; embedding and balancing them with the overall PRI mission when making decisions on how to develop the new Reporting Framework.
Why is ‘driving positive change in the investment market’ the ultimate objective of the new Reporting Framework?
While we saw equal support for almost all Reporting & Assessment objectives – as outlined in the first consultation phase – the PRI’s mission and Principles were formed to contribute to a more sustainable financial system. This is the positive change that we want to drive within the investment market through the Reporting & Assessment review, supported by other, highly rated objectives such as transparency, accountability and learning.
Will the Reporting Framework for service providers signatories change for the 2021 reporting cycle and will it be assessed?
The Service Provider Reporting Framework will remain the same. It will be made available in the new Reporting Tool for the 2021 reporting cycle, but we will not assess service provider signatories.
Will you keep the same asset class definitions?
We will be reviewing our definitions of key concepts, including asset classes, to determine whether any updates need to be made.
How will sustainability outcomes be incorporated in the new Reporting Framework in 2021?
There will be a limited number of ‘core’ outcomes questions which will cover processes used for identifying and understanding the intended or unintended sustainability outcomes from current investment activities. The majority of questions related to sustainability outcomes will be voluntary to report on and will start to capture what outcomes targets signatories may have set on ESG issues; how they are using levers of influence – like stewardship and asset allocation – to reach those targets and progress made on them.
The assessment process
Will signatories be assessed on their responses to the new Reporting Framework in 2021?
Yes, we will continue to assess signatories on their responses to the Reporting Framework. This will be based on the new assessment methodology, which will be confirmed later in the year.
Will the assessment methodology be public at the launch of the new Reporting Framework?
View the 2021 investor reporting guides for a summary of the assessment methodology and detailed guidance on the framework.
Will the assessment scores be confidential?
Yes, the assessment scores will remain confidential with the new Reporting Framework.
Will there be a firm-level score?
No, there will only be module-level scores for each module a signatory completes
Will we be able to compare our scores between 2021 and previous years?
The assessment methodology will evolve to reflect the changes in the Reporting Framework. Module scores will move from band scoring (A+ to E) to a new banding system and indicator scores will move from 0-3 stars to a more granular points-based system. Therefore, the 2021 reporting scores will not be comparable to previous years.
The reporting timeline
When will the new Reporting Framework be available to signatories for the 2021 reporting cycle?
The new Reporting Framework (including detailed assessment guidance and explanatory notes) will be available to signatories in November 2020 in PDF and Word format. We will provide continuous guidance throughout the year to help signatories prepare for the 2021 reporting cycle.
How can signatories start to prepare for the next reporting cycle?
We will provide continuous guidance throughout the year to help signatories prepare for the 2021 reporting cycle. These will be in the form of update webinars, guidance documentation and short ‘How-to’ video clips.
In which languages will the Reporting Framework be translated for the 2021 reporting cycle?
The Microsoft Word and PDF versions of the Reporting Framework will be translated into French, Japanese and Portuguese. However, the reporting tool will only be available in English.
Will the reporting deadline still be the end of March, as this is a pilot year?
Yes, the reporting deadline for the 2021 reporting cycle (and future reporting cycles) will still be the end of March.
The Reporting Framework structure
In the current Reporting Framework, a signatory can opt-out of the asset-class specific module where it invests less than 10% of its assets under management (AUM). Will this rule be applied to the new reporting framework?
Yes, it will only be mandatory to complete an asset-class module if a signatory has 10% or more of their AUM invested directly in that asset class. However, there will be an additional threshold established for mandatory reporting in 2021. Signatories who directly invest less than 10% but US$10bn or more of their AUM in any particular asset class will also be required to report on that asset class. If signatories instead use external managers for their responsible investment in an asset class, they will need to report on this in the external investment manager selection, appointment and monitoring (SAM) module.
Will signatories still be asked to provide a breakdown of investments by asset class, or will they be required to provide more granular disclosures?
We will continue to ask signatories for a breakdown of their investments by asset class, as this enables the online reporting tool to determine which reporting modules are relevant and material for each individual signatory. A new element of the Reporting Framework is that signatories will have the option to provide a more detailed breakdown by investment strategy. This is particularly beneficial for signatories that have multi-strategy investment approaches, or where their responsible investment approach differs significantly between investment strategies.
Which content elements from the former Reporting Framework will be included in the new Reporting Framework?
Overall, signatories will recognise many of the same themes in the new Reporting Framework that were covered in the former framework. For example, we will still ask signatories about their personnel and capabilities, their responsible investment policies, external communication and investment pre/holding/post activities. New areas include engagement with policymakers and outcomes themes. However, while the general themes are still quite similar in the ‘core’ section, the comparison between old ’mandatory’ indicators and the new ‘core’ indicators is quite hard to make. The new ‘core’ indicators have been upgraded to reflect best practice and reduce the scope for gaming and misinterpretation, by asking for details around how systematically an activity is being conducted and what assets under management it covers.
Why did you choose the ‘core’ and ‘plus’ model and what is the conceptual difference from the former model?
In the Reporting Framework which signatories reported on for the last time in 2020, there are five indicator types (Gateway, Peering, Core assessed, Additional assessed and Descriptive), and three different indicator characteristics (mandatory to report and disclose, mandatory to report and voluntary to disclose, and voluntary to report and disclose). By introducing the ‘core’ and ‘plus’ model, we are grouping some of the different characteristics of indicators - mandatory to report and disclose on, and voluntary to report and disclose on - into two simple categories: indicators are either ‘core’ or ‘plus’ respectively. This is to ensure simplicity and consistency in the overall framework.
How do you plan to tailor the new Reporting Framework for different types of investors?
Like the former Reporting Framework, the new Reporting Framework will be practice and activityrelevant, therefore only the relevant asset-class-specific modules and indicators will be unlocked and assessed, depending on the AUM distribution and practices of each signatory.
How are the Organisational Overview and Strategy and Governance modules changing in the new Reporting Framework? Will these modules be similar to the former version of the Reporting Framework?
The new Reporting Framework will have a section capturing basic organisational information, such as number of staff and AUM size, very similar to the Organisational Overview module in the former Reporting Framework. Like the old Strategy & Governance module, there will also be a firm-level section to capture a signatory’s overall approach to responsible investment.
What will be the approximate ratio of voluntary ‘plus’ and mandatory ‘core’ indicators in the new Reporting Framework in 2021?
Most questions (around 70%) will be mandatory ‘core’ indicators. The voluntary ‘plus’ indicators, including those related to sustainability outcomes, will be limited. How many of the former Reporting Framework indicators are included in the new Reporting Framework?
How will the ‘core’ and ‘plus’ indicators fit into the new Reporting Framework structure and flow?
The ‘core’ and ‘plus’ indicators are integrated throughout the structure of the new Reporting Framework. The process-focussed, closed-ended ‘core’ indicators are questions about responsible investment practices that the PRI would reasonably expect most signatories to have a position on. The mostly open-ended, descriptive ‘plus’ indicators include groups of questions exploring ESG themes and sustainability outcomes. Quite often, ‘plus’ indicators follow on from ‘core’ indicators to allow signatories to give more context to their closed-ended responses.
Why is stewardship or active ownership integrated in the asset class modules and no longer a separate module?
We believe that stewardship good practice is conducted for one of two main objectives: as a core part of ESG incorporation, and to drive outcomes on systemic issues that may go beyond individual companies or an investment portfolio. The new Reporting Framework structure reflects this, by including questions about stewardship usage as a core part of ESG incorporation practices in the asset class modules, and separately asking signatories to describe how they use a range of stewardship tools to shape outcomes on their most important/salient issues, including collaboration and related mechanisms.
While questions on stewardship linked to ESG incorporation may be process oriented, in other areas of the framework and particularly in the outcomes section, we expect leading answers to focus on the role of stewardship in shaping outcomes in the context of specific targets and be aligned strongly to the PRI’s Active Ownership 2.0 framework.
How will responses to ‘plus’ indicators support the identification of signatories for the annual PRI Leaders’ Group?
As with the former Reporting Framework, we will be looking at responses to the ‘core’ (assessed and mandatory) questions for identification of signatories for the Leaders’ Group. Currently, we consider governance, responsible investment implementation and transparency to identify leading signatories. The new Reporting Framework will continue to capture this, but the ‘core’ questions and assessment will be more challenging overall, which will support us to identify more advanced practices. We will then use selected ‘plus’ indicators (depending on the Leaders’ Group theme) as additional screening criteria.
The PRI hopes to capture untested or more advanced practices through the ‘plus’ indicators. However, completing ‘plus’ questions does not by default mean that a signatory is leading; it will also be used to capture additional, contextual information on more established responsible investment practices that are not necessarily leading.
Will TCFD-aligned climate questions be considered ‘core’ or ‘plus’ indicators?
The questions that were mandatory to report on during the 2020 reporting cycle will be considered ‘core’ indicators (i.e. mandatory to report, publicly disclosed and assessed). Signatories will no longer be able to submit a private response to the PRI for these indicators, which relate to the TCFD recommendations around strategy and governance.
Some ‘plus’ questions aligned with the TCFD recommendations around risk management and metrics and targets will remain voluntary and non-assessed, with a view to making them ‘core’ in 2022. More detailed information about the TCFD-based climate indicators will be released in October 2020.
How will signatories be able to report on private debt?
Signatories will be able to report on private debt in the Fixed Income module. They will be able to differentiate their private debt practices throughout the module by selecting this asset type when responding to the applicable indicators. The module will also include one indicator specifically focused on private debt.
Why did you decide to gather several themes in the Investment and Stewardship Policy (ISP) module instead of dispersing them throughout asset-class specific modules?
To reduce repetition across asset modules, we analysed the key themes that would be applicable to most asset classes and collected them in this module. However, signatories will still be able to indicate activities that differ by asset class, where relevant.
How will you advance minimum requirements with the new Reporting Framework?
The current minimum requirements will stay the same for the 2021 reporting cycle. The PRI will be reviewing the minimum requirements as planned and will therefore consult with signatories in October 2020 on a proposal for how to increase the requirements from January 2022. Signatories will be notified of the consultation via email and social media.
Will there be any changes to the reporting outputs (public and private Transparency Reports and Assessment Reports)?
The reports will look different to what signatories are currently used to, but the concept will remain the same. The PRI will continue to provide signatories with reporting outputs, such as private and public reports of their PRI responses and Assessment Reports, as these are the main tools they use for learning and internal communication, as well as benchmarking. Assessment Reports will continue to be completely confidential and shareable at the signatory’s discretion.
Will signatories still get their reporting outputs in July for the 2021 reporting cycle?
Yes, the PRI will still aim to make reporting outputs available during July for the 2021 reporting cycle.
Will the reports from previous years be available in the new reporting tool?
Reports from previous years will be made available on the new outputs platform.
Can signatories select their own peering groups?
Yes, signatories can select their own peering groups. This functionality should be available on the new outputs platform.
Will I be required to re-register to use the new reporting tool?
To avoid disruption, users of the reporting platform should check that they have access before the start of the reporting cycle in 2021. If you were able to access the platform during the 2020 reporting cycle, you will have access to the new reporting platform with the same login details. Each signatory’s main contacts will have access to a portal where they can approve, deny or revoke a user’s access. Any new users will be approved by their main contact before they are able to access the reporting tool.
Will there be any pre-filling of previous responses for the 2021 reporting cycle, if these questions did not change compared to last years’ reporting?
As the Reporting Framework is being completely overhauled, including the indicators and the reporting platform, the pre-filling of previous responses will not be available for the 2021 reporting cycle. Pre-filling will be possible from the 2022 reporting cycle onwards.
How does the PRI define ‘sustainability outcomes’?
All investor actions – investment decisions and the use of tools of influence (stewardship, policy engagement etc.) – shape positive and negative outcomes in the world. Sustainability outcomes can be identified and measured at the level of a particular asset, economic activity, company, sector, country or region. We describe ‘impact’ as a change in outcome (i.e. an outcome shaped by an investor, in line with the SDGs – refer to PRI’s paper Investing with SDG outcomes: a five-part framework). Progress can be assessed against recognised global sustainability performance thresholds and timeframes – including the SDG targets and indicators.
The voluntary ‘plus’ Sustainability Outcomes module is based on three sections aligned with the paper:
- Part 2B: Set targets on sustainability outcomes (including the SDGs, the Paris Agreement, human rights, targets set for increasing positive outcomes, and for decreasing negative outcomes).
- Part 3: Investors shape sustainability outcomes, through investment/asset allocation, stewardship with investees, stewardship undertaken with other stakeholders (e.g. policymakers, businesses, governments, NGOs, media, academia), any collaborative activities (e.g. collaborative engagements).
- Parts 4 and 5: Investors’ collective and collaborative actions to shape sustainability outcomes.
What type of questions on sustainability outcomes are included in the new Reporting Framework?
There will only be a few select ‘core’ indicators on outcomes in the 2021 reporting cycle These indicators are process oriented, assessed and, by default, disclosed.
The majority of the outcomes-related content can be found in the ‘Sustainability Outcomes’ module, which is voluntary to report on. It consists only of ‘plus’ indicators that are not assessed and voluntary to disclose. The mandatory ‘core’ outcomes indicators cover two sections aligned with the PRI’s paper Investing with SDG outcomes: a five-part framework:
- Part 1: Identify sustainability outcomes
- Part 2A: Set policies on sustainability outcomes
How will the PRI continue to add questions on additional SDG or ESG themes to the Reporting Framework?
The PRI report on “Investing with SDG outcomes: a five-part framework” was open for consultation with signatories from March 9th to April 24th 2020, and is the starting point for a deeper and ongoing body of work on the subject.This will act as the basis for future guidance and support in the Reporting Framework and will help shape how we add questions on other SDG/ESG themes.
How will inclusive finance be captured in the new Reporting Framework?
There will not be an Inclusive Finance module in the new Reporting Framework, but sustainability outcomes will be considered throughout, specifically in the organisation-wide modules on responsible investment and sustainability outcomes.
Reporting for signatories
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Reporting & Assessment review