SGM Report: PRI Chair Martin Skancke outlines priorities for 2016

PRI SGM 2015 report

September 09, 2015

Strengthening signatory accountability, improving incentives for investors to deepen their implementation of responsible investment, and revisions to the Principles themselves were highlighted as priorities for the PRI as it approaches its 10-year anniversary in 2016.

Addressing more than 500 signatories attending the PRI’s 2015 Signatory General Meeting (SGM) in London on 8 September, PRI Board Chair Martin Skancke said that the organisation was stronger than ever, enjoying another year of record growth in its signatory base and with a signatory survey showing very high levels of satisfaction with the PRI’s work overall.

Mr. Skancke said the PRI would never be satisfied with the status quo and would use its 10-year anniversary next year to both look back and look ahead to identify where more work must be done to fulfil the PRI’s mission.

More work must be done to ensure signatories are accountable to the PRI, and the PRI must better differentiate between signatories that are at an early stage from those who are leaders.

In late 2015, the PRI will publish a discussion paper outlining options for increasing signatory accountability and promoting progress in the implementation of responsible investing practices. This will include options to increase the transparency of PRI’s signatory Assessment Reports, which are currently only publicly available if signatories choose to publish them, and other means to differentiate membership.

Mr. Skancke also flagged plans to revisit the Principles themselves.

“The six Principles are an important starting point but they only cover part of the challenge facing investors today. Drafted before the financial crisis, they focus primarily on the relationship between companies and investors, but we know that responsible investment is about much more than this.”

He noted that the PRI is already doing a lot of work to address market-wide, systemic issues relating to the investment chain, such as outdated interpretations of fiduciary duty and supporting asset owners to put long-term mandates into place. The PRI is also working on externalities such as climate change and issues relating to the micro-structure of markets, via the Sustainable Stock Exchanges initiative.

“These are important systemic issues that lie beyond the relationship between companies and investors and we need to establish whether appetite exists among our signatory base to update the Principles, for example by adding a seventh Principle on systemic risk, to reflect the increased importance of these issues for investors and the PRI.”

Mr. Skancke concluded by thanking signatories for their patience and participation over the last year, saying that signatory engagement and interaction was now more important than ever.  He said that consultation with signatories on matters such as this is enshrined in the PRI’s new Articles of Association to ensure that the organisation does not operate in a vacuum and remains responsive to signatory needs.

“The PRI has asked a lot of you over the last year and we will be asking for more of your time and insights over the coming year to ensure the PRI remains responsive to your needs.”

Mr. Skancke said that this will potentially lead to far-reaching changes for the PRI, but that in the view of the Board, they are necessary changes.

“We must create increased incentives to adopt responsible investment practices by identifying leaders in the field. At the same time, we must provide a good home for those at the start of their journey. The PRI is not a regatta set up to get a few leaders over the finish line first. It’s a convoy where we will bring the slower moving ships with us as well, but those who have no intention of starting their journey at all should not be able to fly the PRI flag.”

Delivering a management and financial report covering the work of the Executive over the last year, PRI Managing Director Fiona Reynolds said the theme of the PRI’s new strategic plan, developed through an extensive consultation process over more than 12 months, was moving the industry from awareness to impact, and this sits at the heart of everything the PRI does, including this year’s PRI in Person conference.

Ms. Reynolds said that to mark its 10-year anniversary, the PRI would be producing an independent evaluation of the organisation’s achievements over its first decade, and a blueprint that would help shape the future of the industry, and the PRI’s priorities, over the next decade.

“We want to put together a vision for the future of our industry more broadly and create a statement about the purpose of the financial system: what is it for, how we can make it more sustainable, what role the PRI should play, what impact our signatories should be seeking to have, and how we should measure this.

A consultation paper in December will be seeking signatory views about how PRI should take all of these issues forward.

Ms. Reynolds said that the PRI measures success based on a broad range of measures, and is not looking for growth for growth’s sake. Defining what success looks like and making sure the organisation has measurable impacts that it can report back on is very important, she added.

“Some of our signatories think the PRI measures its success only by the number of signatories it has and their collective assets under management. This couldn’t be further from the truth. We are looking for growth in new and strategic markets, and growth in our asset owner base, and have set targets that we will be reporting on our progress on annually.”

Mr. Skancke said that the Board has been working with the Executive to establish a broad set of performance metrics to measure the impact that the PRI is having. Going forward, the PRI will publicly report progress against these metrics annually. “This will further increase transparency and accountability and give you greater assurance that the PRI is on the right track.”

Signatories can watch a full recording of the SGM here.