How does the PRI ensure reported data is credible?
The PRI has several steps in place to reduce reporting errors and enhance the credibility of PRI data:
Reports are made public.
PRI uses various validation mechanisms in the survey tool depending on the question type which reduce misreporting.
The survey contains gateway questions to prevent signatories seeing questions that do not apply to them, hence reducing conflicting responses.
When the data is comparable with the previous year, some indicators containing key AUM figures are checked.
Signatories can access their Transparency Reports using the Data Portal.
Learn more about the Data Portal here and access the Data Portal here.
How can signatories increase the credibility of their reported data?
Signatories can demonstrate or improve the credibility of the information they report through any of the following measures:
soliciting third-party independent assurance of selected processes and/or data related to their responsible investment processes, resulting in a formal assurance conclusion.
undergoing a third-party readiness review and making changes to internal controls/governance or processes in preparation for an external assurance review.
conducting an internal audit of selected responsible investment processes/and or data reported to the PRI.
having the board, CEO, other C-level equivalent and/or investment committee signing off on the PRI report.
some or all funds undergoing an audit as part of the certification process against a sustainable investment/responsible investment label.
undergoing an external ESG audit of their ESG/sustainability marketed funds or products (excluding ESG/responsible investment-certified or labelled assets).
undergoing an external ESG audit of holdings:
to check compliance with responsible investment policies (e.g., exclusion lists, ESG ratings or thresholds).
as part of risk management, engagement identification or investment decision making.
reviewing PRI reporting responses internally before submission.
These measures span two areas: governance and internal controls; internal audit and external assurance, with the latter representing advanced practice (see below). Therefore, we do not expect signatories to undertake all these measures and understand that their capacity to undertake any of them will depend on various factors, including organisational structure, resources, and location.
Governance and internal controls
Developing robust internal controls is the first step for signatories wanting to improve the credibility of their reported information. An organisation’s confidence in its reporting is a direct result of the quality of its internal control environment.
Internal audit and external assurance
Signatories can use internal audit to verify that their internal control mechanisms on ESG reporting, and those specific to responsible investment processes are working as intended. This helps organisations prepare for external third-party assurance of ESG information and should result in a more efficient assurance process. External assurers can provide guidance on best practices.
Processes typically audited/assured
Based on 2017 analysis, signatories who reported they conduct third-party assurance of their internal controls did so for the following RI processes:
Strategy and governance: policies and main overarching RI processes
Active ownership: voting policy and processes, engagement processes
ESG incorporation strategies: screening processes (e.g., to prevent breaches)
Assurance standards for the review of ESG information and processes are an emerging field. ISAE 3000 is the most widely used standard for information, while ISAE 3402 can be used for ESG processes (overlaps with SSAE 18) by service organisations.
PRI signatories have signalled support for increased signatory accountability, including measures related to improving the credibility of their reported data, which could be part of a revised set of minimum requirements. The measures outlined above are based on findings and recommendations developed through several consultations and discussions with signatories, the Board and PRI Assurance Working Group. Read more about this work here.
The reporting process
- 7Currently reading
Validation and credibility of reported data