Signatories delisted for not meeting the minimum requirements

Why are signatories being delisted for not meeting the minimum requirements?

What it means to be a PRI signatory has changed significantly since the PRI began. What started as a small group of self-identified leaders in the responsible investment space has now grown to be a global 3000+ signatory movement. We listened to signatory feedback and recognised that whilst the PRI welcomes everyone at any point on their responsible investment journey, we also had the responsibility to ensure that PRI membership continued to hold value and meaning. Introducing minimum requirements for PRI membership that a) are applicable to everyone and b) even more importantly are impactful when signatories are looking to kick-start their RI efforts. 

Delisting a signatory for not meeting the minimum requirements for PRI membership is a last resort after two years of engagement with the PRI. In typical circumstances, the board will only delist a signatory if: 

• No contact has been made with the PRI during the two-year engagement process;

• There are clear indications that engagement has failed; 

• Progress has not been made;  

• There is no communication from the signatory that they are undertaking improvements.  

Further information can be found in the signatory accountability rules. 

What is the delisting process for signatories that didn’t meet the minimum requirements?

Signatories that, after two full years of engagement, still do not meet the minimum requirements enter the delisting process. They are informed confidentially and provided with the opportunity to appeal the decision if they believe that the PRI has misunderstood or not accurately assessed their position. Submitted appeals are reviewed by a Committee of the board, and a summary of the appeal, along with the Committee’s recommendations, are reviewed by the board. The board makes a final decision on whether to delist, and the affected signatories are informed shortly after.   

Once the board has confirmed a signatory will be delisted for not meeting the minimum requirements for PRI membership, it will be publicly disclosed on the PRI website. 

Are signatories able to appeal the decision to delist for not meeting the minimum requirements?

Yes, if a signatory believes that the PRI has misunderstood or not accurately assessed their position, they can refer the case upwards in the form of a written statement to: 

• The Executive; and 

• a Committee of the board. 

Are signatories able to re-join the PRI after being delisted for not meeting the minimum requirements?

Yes, signatories that have been delisted and wish to relist will need to wait one calendar year and then provide evidence that they meet the minimum requirements for PRI membership. Organisations that are re-joining after having been delisted will be required to participate in the most immediate PRI reporting cycle. These signatories will be required to report in the next reporting cycle. Signatories that revert back to not meeting the minimum requirements for PRI membership after any relisting, will be required to meet the requirements in a one-year timeline.

Do we publicly announce the signatories that are delisted for failure to meet the minimum requirements?

The PRI does not name the signatories that do not meet the minimum requirements for PRI membership during the two-year confidential engagement period. Signatories that are delisted at the end of the engagement period will be publicly disclosed on our website following board approval. Signatories’ responses to the minimum requirements indicators are always publicly available in their Transparency Reports.  

Are signatories delisted from the PRI for reasons other than not meeting the minimum requirements?

Yes, signatories can be delisted for failing to report or not paying their annual fee. A signatory can choose to voluntarily delist at any stage of the process. 

What efforts have the PRI taken to ensure signatories meet the requirements within the two-year engagement period?

Since the consultations on accountability in 2015 and 2017, the PRI has increased its efforts to ensure the wider signatory base are aware of the minimum requirements for PRI membership and the implications of not meeting them within a two-year period. Guidance and explanatory notes have been incorporated into the Reporting Tool to support signatories while reporting on the indicators relating to the minimum requirements for PRI membership, and signatories are required to confirm that they have read and understood the requirements before submitting. In addition to providing signatory support via email and phone to answer signatories’ questions about the minimum requirements for PRI membership, we have also organised annual accountability webinars with Q&As to further explain the minimum requirements for PRI membership. Signatories that are identified as not meeting the requirements after each reporting cycle are contacted confidentially to engage with the PRI. An engagement plan will be agreed for the two-year period and signatories are supported through the process with the appropriate resources to implement necessary changes to meet the requirements within the two-year engagement period. 

Why are so few signatories delisted for not meeting the minimum requirements?

The PRI has committed to extensively engage with signatories not meeting these minimum requirements for PRI membership, and to provide them with the support needed to implement necessary changes to meet them within the two-year engagement period. We see the low number of signatories as indication of a successful engagement process and that we have achieved our goal of getting signatories to meet a basic standard of responsible investment. 

Did the PRI set the minimum requirements for PRI membership bar too low?

The minimum requirements for PRI membership were introduced to increase accountability of the PRI as an organisation which is one of the focus areas of our 10-year Blueprint for responsible investment. The PRI’s consultation on strengthening signatory accountability in September 2017 showed strong signatory support for using reporting and assessment data to delist signatories whose progress in implementing the Principles is not sufficient to meet basic criteria of being a signatory, as defined by the PRI. 2018 was the first time we implemented the minimum requirements for PRI membership and 2020 is the first year signatories are delisted for not meeting these after a two-year period. The three minimum requirements for PRI membership were widely supported by 90% of participants in the 2017 consultation as a first method of increasing accountability of the PRI signatory base. We acknowledge that we are now at a place where most of our signatories are meeting these standards and the potential for increasing accountability further. 

As this is based on self-reported data, is it easy for signatories to report to be doing more than they are?

While the information is self-reported, it should be noted that the indicators relating to the minimum requirements for PRI membership (SG 01 and SG 07) are mandatory to report on and made publicly available as a way of increasing transparency of RI practices. Public scrutiny, therefore, incentivises signatories to report correctly. The PRI has several steps in place to reduce reporting errors and enhance the credibility of PRI data and the Transparency Reports.

How many signatories are at risk of being delisted for failure to meet the minimum requirements in 2021?

There are currently 15 signatories at risk of being delisted for failure to meet the minimum requirements for PRI membership in 2021. 

Why is there an inconsistency between the 50 signatories reported to be at risk of delisting in the Financial Times in June 2019 and our final delisting 2020 numbers?

The 50 signatories reported to be at risk of being delisting for not meeting the minimum requirements for PRI membership in the Financial Times in June 2019, comes from the PRI’s data of the number of signatories that entered their second and final year of engagement with the PRI in 2019. These were at-risk of having their signatory status reviewed by the PRI Board in 2020 if engagement in 2019 proved unsuccessful later. Since this number was disclosed following the end of the 2019 reporting cycle, many of the at-risk signatories have worked to implement what is required to meet the minimum requirements for PRI membership through the engagement process with PRI and the provided resources. The improvements made by signatories on the at-risk list in the last year is the reason why we see such a low number of signatories delisted for failure to meet the minimum requirements for PRI membership in 2020.  

Why are the minimum requirements not part of the sign-up process?

The PRI has a wide variety of signatories at different stages of their responsible investment journey; therefore, we do not want to discourage signatories that are early on in their  journey, but instead provide them with sufficient time to advance and implement the processes required to meet the requirements. New signatories have a one-year grace period before required to report on the PRI Reporting Framework, after which signatories that do not meet the requirements enter into the two-year engagement process. 

Why is the engagement process for the minimum requirements for PRI membership two years?

At the time of implementation, the PRI thought that two years was a sufficient time for signatories to implement the changes necessary to meet the requirements. This was supported by the 2017 consultation on accountability.

How does the PRI plan to increase minimum requirements accountability in the future?

Increasing accountability is part of PRI’s Blueprint for Responsible Investment and the PRI is currently reviewing the minimum requirements for PRI membership in 2020 to ensure they are fit for purpose and continue to increase standards among our signatory base in an evolving responsible investment market. The PRI will consult signatories on possible ways of increasing the minimum requirements as part of the PRI strategy consultation. Any changes made to the minimum requirements criteria will require approval of the board.