Briefngs and letters

Region Month Briefings and letters
US  October 2018 Securities and Exchange Commission (SEC) | Policy briefing on shareholder voting process, ESG integration and proxy advice in the US This briefing provides an update for signatories on legislative and regulatory proposals under discussion in the US regarding the shareholder voting process, ESG integration and the role of proxy advisory firms and is intended to support signatories in submitting comment letters to the SEC in advance of the roundtable. The Securities and Exchange Commission (SEC) will host a roundtable discussion on possible regulatory changes to the shareholder voting process on November 15.

See full briefing.
EU October 2018 European Parliament | Investor disclosure and duties The PRI strongly supports this proposal. Financial market reforms to promote a more sustainable European economy are necessary and urgent. We consider reform of investor duties and disclosure critical for the success of the EU’s overall sustainable finance objectives. 

See full position.
EU October 2018 European Council Investor disclosure and duties. The PRI strongly supports the key components of the proposal on investor disclosure and duties. A wide range of analysis – including the EU HLEG report on sustainable finance – recognise the urgent need to strengthen the investment sector’s contribution to sustainability outcomes.

See full position.
EU July 2018 Breifing: The European Commission Action Plan | Assessment of the reform areas for PRI signatories An assessment of the 10 reform areas of the EU action plan for financing sustinable growth. Version 2, published in July 2018, incorporates the European Commission’s regulatory proposals on Action Plan areas 1 (taxonomy), 4 (investment advice), 5 (sustainability benchmarks) and 7 (investor duties).

See full briefing.
US June 2018 Letter FAO: Committee on Financial Services | HR 5756 shareholder proposals resubmission thresholds The PRI has serious concerns that H.R.5756 would significantly weaken the role institutional investors play in the effective corporate governance of US companies. 

See full letter.
US March 2018 Letter FAO: Chicago City Treasurer’s Office | Legislation to amend allow ESG integration into investment policy The Principles for Responsible Investment (PRI) applauds you for putting forth legislation to amend the City Treasurer’s Office’s (CTO) investment policy to allow for the integration of environmental, social and governance (ESG) factors into your investment decision making and ownership practices as well as to become a signatory to the Principles for Responsible Investment.  

See full letter.
US March 2018 Letter FAO: Senate Banking Committee | S 2155 Economic growth, regulatory relief and consumer protection act We have serious concerns that H.R.4015 would significantly weaken the role institutional investors play in the corporate governance of U.S. companies.  

See full letter.
US January 2018 Briefing: US regulation and policy making on responsible investment DOL policies and Financial CHOICE Act This briefing discusses recent policy developments – particularly around fiduciary responsibilities, stewardship and financial disclosures – that could, or perhaps already have, impacted ESG integration in the US. 

See full briefing.

Consultations

Region Month Consultation PRI response
South Africa October 2018 Johannesburg Stock Exchange (JSE) |  Public input on possible improvements to its regulatory approach to new and existing listings on the JSE The PRI supports the introduction of mandatory training for members of the audit committee on their responsibilities prior to listing and as a continuing obligation post listing, including training on systemic issues, such as the urgent need to tackle climate change. The PRI supports the increased focus on the corporate governance report. The PRI recommends that JSE endorse the Task Force on Climate-related Financial Disclosures framework, and encourage its use through the corporate governance framework.

See full position
Brazil October 2018 PREVIC  | Public consultation of the investment rules in resolução CMN 4881/2018 Articles 27, VI and VII should be updated to require the consideration of ESG risks and opportunities, consistent with the timeframe of the investor.

See full response.
Australia September 2018 APRA | Review of the prudential framework for superannution funds The prudential framework could be improved by better alignment with the Principles for Responsible Investment, to be more effective in achieving its policy objective of achieving better risk management outcomes and managing material risks in the best interests of beneficiaries.

See full response.
UK  September 2018 OSCR | Charity investment guidance We welcome the OSCR’s guidance for Scottish charity trustees regarding rules and responsibilities associated with investing their assets, however, we recommend that the guidance makes a clear distinction between:
i) the consideration of ESG issues as a necessary component of making investment decisions to manage financial risk and return in the best interests of the charity, and;
ii) investment decisions which take ethical and other non-financial factors into account.

See full response.
US August 2018 SEC |  Enhancing investment adviser regulation The PRI recommends that the SEC clarify that economically-relevant ESG factors are part of a prudent investment decision, and a requirement of an advisers’ duty of care and duty of loyalty. The PRI recommends this is codified under section 206 of the Advisers Act. The PRI supports ILPA’s recommendation that the SEC rescind the Heitman Capital Management no-action letter

See full response.
EU August 2018 European Commission DG FISMA | May 2018 legislative proposals on investor dislcosure, taxonomy and benchmarks The PRI strongly supports all four of the Commission’s recent regulatory proposals. Theproposals are strongly aligned with the Six Principles that investors agree to implement when theybecome PRI signatories. The PRI believes the Commission’s approach is comprehensive. Wewelcome the opportunity to contribute to the Commission’s work through the High Level ExpertGroup (HLEG) and The Expert Group (TEG) on Sustainable Finance.

See full response.
UK August 2018 CMA | Comments on the investment consultants market investigation provisonal deicison report The PRI welcomes the publication of the CMA’s Provisional Decision Report (18 July 2018). Our comments are largely restricted to chapters 1, 2 and 13 on remedy package and provisional decision on remedies: how proposed remedies fit with financial and other regulatory requirements on providers.

See full response.
US August 2018 SEC | Transaction fee pilot The PRI notes concerns that rebates can detrimentally impact long-term institutional investors, including U.S. and international retirement plans.

See full repsonse.
Italy August 2018 MEF, directorate IV | Transposition of IORPii (directive EU2016/2341) Il PRI accoglie l’iniziativa del Dipartimento del Tesoro del Ministero dell’Economia e delle FinanzeItaliano per la trasposizione della direttiva UE 2016/2341. In particolare, lodiamo l’ambizione dellatrasposizione della direttiva che include in molteplici articoli le tematiche ESG e che continua illavoro cominciato con il Dlgs.252/2005. Siamo certi che la trasposizione della direttiva creerà uncontesto d’azione positivo in attesa della proposta legislativa UE sulle investors disclosures.

See full response.
China July 2018 AMAC | Guidelines to green investing The proposals in the draft guidelines are consistent with the recommendations of the recent PRI and UNEP FI report, Investor Duties and ESG Integration in China, published with the IIGF and The Generation Foundation in March 2018.

See full response.
Australia July 2018 ASX Corporate Governance Council | 4th edition corporate governance principles and recommendations The PRI welcomes the proposed amendments to Recommendations: 1.5, 1.6, 3.3, 3.4, 4.4 and 7.4. The PRI strongly supports the revision of Principle 3 including; the focus on corporate culture, and recognition that social license to operate is one of the most valuable assets of any listed entity. In addition we recommend extending some parts of the Code’s the proposed commentary to recommendations 1.5, 1.6, 4.4. and 7.4.

See full response.
US July 2018 SEC | 2018-2022 strategic plan The PRI welcomes the opportunity to comment on the U.S. Securities and Exchange Commission’s (SEC) Draft Strategic Plan for 2018 – 2022. The PRI strongly recommends the SEC facilitate enhanced financially relevant ESG disclosures, in particular on climate change, as an additional initiative under Section 1.

See full response.
UK July 2018 DWP | Pension trustees’ investment duties (Investment Regulations) The PRI strongly endorses the proposed amendment to the Investment Regulations to clarify that the consideration of ESG factors is a core part of prudent investment decision-making.

See full reponse.
EU June 2018 European Commission DG FISMA | MiFID II suitability requirements The PRI notes that under the existing MiFID II framework, firms providing investment advice and portfolio management are required to obtain information about the client … to provide services and products that are suitable for the client (suitability assessment). Without considering the client’s ESG preference, this process is incomplete.

See full response.
South Africa May 2018 FSB | Draft directive on sustainability reporting and disclosure requirements The Draft Directive provides a comprehensive check-list of items that should be covered by investment policy statements. It also requires the reporting of such information through pension funds’ financial statements and annual trustee report to beneficiaries. The Draft Directive provides practical guidance to pension funds that should further help implement Regulation 28 and increase accountability to beneficiaries.

See full response.
France  April 2018 AFEP MEDEF | Corporate governance code for listed companies The PRI’s overarching recommendation is that the incorporation of sustainability considerations is further developed and strengthened in the Afep-Medef Code. We make two further overarching recommendations regarding this consultation process.

See full response.
Japan April 2018 FSA/TSE | Guidelines for investor-company engagement The PRI recommends that the Code makes explicit reference to ESG issues in Board decision making and long-term value creation. This will ensure consistency with expansion of the Stewardship Code guidance to explicitly reference the importance of ESG factors.

See full response.
Japan April 2018 FSA/TSE | Japanese corporate governance code We particularly welcome emphasis on companies’ sustainable growth to increase value over the long-term. We recommend strengthening the incorporation of sustainability considerations, with explicit reference to the need for company boards to consider ESG issues for long-term value creation. This will ensure consistency with the Council’s previous expansion of its guidance under the Stewardship Code to explicitly reference the importance of ESG factors.

See full response.
UK March 2018 CMA | Comments on the investment consultants market investigation first working paper We believe that the competition and customer issues identified in the Working Paper are limiting the extent to which ESG issues are part of consulting advice and investment strategies. The PRI’s findings to this effect, including the barriers and potential solutions, are explained in our Investment Consultant Services Review. We believe the Working Paper’s remedies would help address these barriers.

See full letter.
UK February 2018 FRC | UK corporate governance code The central recommendation of the PRI’s response is that the FRC should pay more attention to ESG issues throughout the UK Corporate Governance and the UK Stewardship Code. In particular, the UK Stewardship Code should explicitly state that environmental and social issues are important drivers of long-term investment value, and are part of the fiduciary duty that investors owe to their clients and beneficiaries.

See full response.
UK February 2018 CMA | Investment consultants market investigation The PRI’s recent Investment Consultant Services Review finds that most investment consultants and their asset owner clients are failing to consider ESG issues in investment practice – despite a growing evidence base that demonstrates the financial materiality of ESG issues to portfolio value. Neglecting ESG issues can lead to asset owners mispricing risk and making poor investment decisions. This is why effectively managing ESG issues is a core part of the fiduciary duties owed by asset owners, and their advisers, to beneficiaries.

See full repsonse.
EU January 2018 European Commission DG FISMA | Institutional investors and asset manager duties Many of the world’s largest institutional investors have made public commitments to integrate ESG issues in investment decision making, for example, by signing the Principles for Responsible Investment (PRI). Many policy makers have also acknowledged the financial materiality of ESG factors, for example, by requiring pension funds to disclose their approach to ESG issues. However, as discussed later in the PRI’s consultation response, the PRI finds policy and regulatory effectiveness is hampered by weak implementation and weak signals.

See full response.
UK January 2018 Parliament Environment Audit Committee | Green finance inquiry The UK green finance taskforce and EAC’s inquiry is an opportunity leverage capital markets to support the delivery of UK policy goals and consolidate UK leadership in developing new green financial markets. In order to capitalise on this opportunity and better align financial markets with the UK’s carbon reduction and green finance objectives, PRI recommends measures on: fiduciary duty, TCFD and policy frameworks.

See full response.
UK January 2018 Parliament Work and Pensions Committee | Defined ambition pensions inquiry We believe that the proposed CDC funds could play a role in addressing the inadequacy of provisions for retirement income that currently exists across the UK. The PRI offers the following recommendations to enable and encourage the integration of ESG factors into investment
decision-making in the UK capital market, to benefit the UK pensions market and proposal for CDC pension funds.

See full response.

See policy consultations, briefings and letters for 2017, 2016 and 2015.