Signatories more committed than ever to responsible investment

March 20, 2017

PRI signatories are more committed than ever to driving responsible investment, but more must be done to ensure it becomes systematically integrated into decision-making process. That’s according to Responsible investment market update: a snapshot of signatory action.

Using data PRI signatories have submitted via the Reporting Framework, the report shows how US$62 trillion in AUM are moving towards the incorporation of ESG factors in investment decision making through screening, integration, thematic investments and active ownership.

It also features insight from 11 leading responsible investment practitioners across asset classes from hedge funds to credit ratings.

2016 highlights include:

-90% of asset owners and investment managers report active ownership policies.

-85% of reporting signatories said that ESG factors have helped them to identify risks and opportunities in property investments.

- Over 100 investors with AUM $15trn signed the PRI credit rating agencies statement.

-80% of reporting signatories incorporate ESG factors into their listed equity investments.

-In just two years, investment has risen among the PRI’s signatories in environmental and social themed investing from 267 signatories with US$808m in AUM in 2014 to 465 signatories with US$1.29trn in AUM in 2016.

Progress points

Despite this progress, the report also identifies areas for improvement. For example, although 90% of asset owners and investment managers have active ownership policies, the outcome of the voting process on relatively clear ESG-related shareholder resolutions in 2016 was disappointing. A more proactive approach could have more impact.  Reporting data also shows that while many signatories frame ESG factors as part of their risk perspective approach, few view it in terms of value creation.

However, the report shows the real-world impact PRI signatories have and serves as an encouraging milestone in the responsible investment journey.

“We are seeing some traditional investors, who have no ideological motives or member pressure to act using ESG consideration, begin to look at its integration as an area of differentiation they can use to enhance their risk-adjusted rate of return.” 

Alex van der Velden, Partner & CIO, Ownership Capital

“We can chart strong progress in the integration of responsible investment practices in real estate through clear buy-in from institutional investors, and the development of detailed methodologies and best practice for integration of ESG factors into investment processes.” 

Tatiana Bosteels, Director Responsibility & Head of Responsible Property Investment, Hermes Investment Management

“The growth of responsible investing has been accelerating and the acceptance by the capital markets to include matters of sustainability in investment discussions and decisions has been progressing.” 

Mary Jane McQuillen, Managing Director, Portfolio Manager, Head of ESG Investment, ClearBridge Investments