Responsible Investment Signatories double in number
The meeting in Seoul brought together asset owners and managers, financial market actors, business leaders and civil society representatives, representing the interests of the PRI. The PRI is an initiative between global investors and UN agencies to help investors improve their analysis of environmental, social and governance (ESG) issues and exercise responsible ownership.
Paul Clements-Hunt, head of the UN Environment Programme’s Finance Initiative, said the meeting was "pivotal". "[The] Asia-Pacific [region] will be the economic engine of the 21st century. As such, the region’s economic opportunities and environmental challenges will be immense. Sustainable finance and responsible investment allow economic, environmental and social actions to be aligned effectively. This meeting will dig into the details of what financial institutions in the Republic of Korea and broader Asia can do on climate change, water, biodiversity and social issues."
The organizers issued a ’Seoul Declaration’ that called on participants to: join forces around efforts to address climate change; promote the application of labour and human rights values; put greater emphasis on improving governance structures; increase the transparency of business transactions and prevent corruption; push for a sustainable economy; and promote ways in which investors, financiers and business leaders can engage constructively with policy-makers on these issues.
PRI Report on Progress 2008 demonstrates that signatories are "going to the next level" in implementing the six principles backed by UN Secretary-General Ban Ki-moon. The principles are:
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.
The comprehensive report from the PRI shows some of the world’s largest institutional investors are making significant progress in integrating environmental, social and governance (ESG) issues into their day-to-day business.
It reveals a 31% increase this year in the number of asset owners (such as pension funds and insurance companies) who have signed up to the initiative and now publish specific reference to how they integrate responsible investment or ESG issues within their investment or ownership practices.
Among the Canadian signatories to the PRI are Caisse de dépôt et placement du Québec, BC Investment Management Corporation, The Ethical Funds Company, GLOBE Award winner Jantzi Research Inc, Growthworks Capital, and Shareholder Association for Research and Education (SHARE).
"The increasing percentage of PRI asset owners that are looking at ESG issues when selecting mainstream investment managers should be sending a clear signal to the market that responsible investment capability is becoming core to the way investment is done", said PRI Executive Director James Gifford.
According to the survey 32% of respondents said they would now revisit relationships with service providers in light of RI/ESG issue-related capabilities. A dramatic 68% increase on the number of signatories willing to do this last year.
Approximately 76% of signatories report engagement in dialogue with policy makers and industry regulators on ESG issues. A sizable 29% increase in such activity among asset owners compared to last year.
Seventy percent of signatories ask companies to produce standardized reporting on their environmental, social or governance policies, practices or performance, the same figure as in 2007, although with a further 10% planning to do so in 2008.
Signatories are also becoming more collaborative. The number of asset owners involved in collaborative engagement to a medium or large extent rose from 38% to 47% this year. The PRI’s online Engagement Clearinghouse is proving an increasingly popular tool for such collaboration with nearly half of the respondents using it, up from 40% last year. Approximately 26% of investment managers and 13% of asset owners are planning to use the Clearinghouse for the first time during 2008.
Levels of disclosure reported by signatories in the 2008 survey were generally high. Among investment managers, 75% of respondents are systematically reporting their RI/ESG related engagement activities to at least some extent and a further 18% plan to do so in 2008. For asset owners, the corresponding figures are 76% already reporting, with 6% planning to do so in 2008.
"The issues of climate change and corporate governance have converged to provide a solid business case for mainstream financial institutions to apply responsible investment approaches to their core activities," said James Gifford, executive director of the PRI initiative. The growth of the PRI, now representing $14 trillion in assets after just two years, is evidence that consideration of ESG issues are becoming ‘the way business is done’."