Saturday, May 23, 2015
UN "The Six Principles for Responsible Investment" regarding Environmental, Social and Governance (ESG)
The United Nations-supported Principles for Responsible Investment (PRI) Initiative is an international network of investors working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of sustainability for investors and support signatories to incorporate these issues into their investment decision making and ownership practices.
In implementing the Principles, signatories contribute to the development of a more sustainable global financial system.
The Principles are voluntary and aspirational. They offer a menu of possible actions for incorporating ESG issues into investment practices across asset classes. Responsible investment is a process that must be tailored to fit each organisation’s investment strategy, approach and resources. The Principles are designed to be compatible with the investment styles of large, diversified, institutional investors that operate within a traditional fiduciary framework.
The PRI Initiative has quickly become the leading global network for investors to publicly demonstrate their commitment to responsible investment, to collaborate and learn with their peers about the financial and investment implications of ESG issues, and to incorporate these factors into their investment decision making and ownership practices.
If you have suggestions on the PRI work plan or strategy that you would like us to hear about, you can email them to firstname.lastname@example.org. We will review your suggestions and respond accordingly.
PRI fact sheet
Since its launch in 2006, the PRI Initiative has been instrumental in raising awareness about responsible investment among the global investment community, increasing the level of transparency around the activities and capabilities of its signatories and fostering collaboration between them, and supporting their engagements with companies and policymakers on ESG issues.
Growth of RI: Assets under management by PRI signatories now stands at more than $45 trillion, up from $4 trillion at the PRI’s launch in 2006.
RI Policy: 94% of signatories now have a responsible investment policy in place, covering an increasing range of asset classes. Many signatories publish these on their website.
ESG incorporation: Over half of the externally managed funds of its asset owner signatories are subject to ESG integration. Forty percent of these external assets are managed by investment manager signatories.
Collaboration: 90% of signatories have collaborated with one or more other investors on RI-related topics.
Transparency: Nearly 550 signatories completed the 2011 reporting survey and 44% publicly disclosed their responses, up from 25% in 2009. All asset owner and investment manager signatories will be required to complete the new PRI Reporting Framework in 2013/14 and a subset of mandatory indicators will be published on the PRI website for the first time.
Disclosure: 71% of signatories have asked companies to integrate ESG information into their financial reporting.
Private equity: PRI provided guidance for private equity companies on responsible investment. Today, it more than 150 private equity-focused firms as signatories, including some of the world’s largest and best known General Partners (GPs) and fund-of-funds.
Clearinghouse: Signatories engaged with more than 1,400 companies via the PRI Clearinghouse to encourage improvements in ESG disclosure and performance.
Example engagements include:
Environment: 10 signatories formed a working group to encourage sustainable palm oil production and 33 investors wrote to nearly 100 companies about their carbon emissions.
Social: Eight signatories are engaging with electronics companies in emerging markets on their health and safety performance.
Governance: 21 investors are engaging 21 companies on corruption and bribery risks.
Public policy: 28 signatories entered a dialogue with 30 stock exchanges to encourage enhanced ESG disclosure and performance among the exchanges’ listed companies. A number of exchanges have responded positively and dialogue is ongoing.
More information about these achievements can be found in the PRI Initiative Annual Report.
Examples of ESG issues
Examples of environmental issues include: biodiversity loss, greenhouse gas (GHG) emissions, climate change impacts, renewable energy, energy efficiency, resource depletion, chemical pollution, waste management, depletion of fresh water, ocean acidification, stratospheric ozone depletion, changes in land use, and nitrogen and phosphorus cycles.
Examples of social issues include: activities in conflict zones, distribution of fair trade products, health and access to medicine, workplace health safety and quality, HIV/AIDS, labour standards in the supply chain, child labour, slavery, relations with local communities, human capital management, employee relations, diversity, controversial weapons, and freedom of association.
Examples of governance issues include: executive benefits and compensation, bribery and corruption, shareholder rights, business ethics, board diversity, board structure, independent directors, risk management, whistle-blowing schemes, stakeholder dialogue, lobbying, and disclosure. This category may also include business strategy issues, both the implications of business strategy for environmental and social issues, and how the strategy is to be implemented.
Growth of the PRI Initiative
The graph above was generated from the data available in this Excel spreadsheet, updated annually in April. No further AUM breakdowns by asset class, country, region or signatory category is available.