A comprehensive survey of the world’s largest institutional investors released today shows that the global giants of investing are now actively integrating environmental, social and governance (ESG) issues into their investment policies and engagement strategies.
Eighty-eight per cent of investment manager signatories to the Principles for Responsible Investment (PRI) are conducting at least some shareholder engagement on ESG issues, while 82 percent of asset owners are doing so.
“These findings demonstrate that a sea change in global investing is underway”, says James Gifford, Executive Director of the PRI Initiative, which includes more than 200 institutional investors representing more than US $9 trillion in assets. “More and more mainstream investors understand that ESG issues can be material to long-term results and therefore must be factored into investment processes”.
‘PRI Report on Progress 2007’, released today at the PRI annual event in Geneva, highlights the results of a survey carried out to mark the first anniversary of the launch of the Principles by UN Secretary-General Kofi Annan at the New York Stock Exchange in April 2006. The PRI are a set of best practice voluntary guidelines for institutional investors to assist in the integration of environmental, social and corporate governance issues into investment management and ownership practices.
While the results reveal that signatories are taking their commitments to implementing the Principles seriously – with plans to increase their level of responsible investment activity over the coming year – it also shows that there is still much to do.
The goal of the survey is twofold: to provide a baseline for assessing the progress of the Initiative and to draw out best practices from leading signatories as part of the peer-learning process.
“This report is ground-breaking. Never before have the responsible investment practices of institutional asset owners and managers been evaluated in such a systematic way.” says, James Gifford, PRI Executive Director.
PRI Chair Donald MacDonald added, “While signatories are making significant progress in implementing the Principles, we recognise that there is still a lot to be done. What is especially pleasing is that signatories are committed to increasing their responsible investment activities considerably during 2007. This year’s assessment is the beginning of an ongoing annual process that will be improved over time”.
PRI signatories welcome the initiative, not only as a reporting tool but also to assist in the self-assessment process. “This reporting tool will be very helpful for us as a signatory,” says Nada Villermain-Lecolier, Head of Responsible Investment for Fonds de Rserve pour les Retraites (FRR) in France. “It provides a structured framework for contemplating and reporting our actions, and a mechanism for comparing our approach with that of our peers”. Ms Villermain-Lecolier is a member of the PRI Assessment Group, which oversaw the development of the process.