Signatories double in one year; institutional investors 'taking implementation to the next level'
Seoul, 17 June 2008
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The Principles for Responsible Investment (PRI) Initiative, a partnership between global investors and two UN agencies surpassed a new milestone today. At an official ceremony in Seoul it was announced that the number of signatories more than doubled in 2008 to 378, representing USD 14 trillion in assets under management.
At the same time, a comprehensive survey 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. Though there is also still much to do.
PRI Report on Progress 2008 (unpri.org/report08), released at the PRI’s second annual conference, demonstrates that signatories are “going to the next level” in implementing the six principles backed by UN Secretary-General Ban Ki-moon. 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.
“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 chair Donald MacDonald.
Key results from the survey include:
• 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.
• 76% of signatories report engagement in dialogue with policy makers and industry regulators on ESG issues. A sizeable 29% increase in such activity among asset owners compared to last year.
• 70% 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 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. A further 26% of investment managers and 13% of asset owners 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.
• Principle 1 of the PRI, which focuses on incorporating ESG issues into investment analysis and decision making was ranked the most difficult to implement.
In January 2008 PRI signatories were asked to complete a questionnaire intended to assess progress on implementing the six Principles during 2007. The questionnaire was completed by 78 asset owners and 78 investment managers. The overall response rate was 67% for both asset owners and investment managers who were signatories at the end of 2007.
The PRI Reporting and Assessment Tool was developed for the PRI by Mercer’s responsible investing group with extensive input from the PRI Secretariat, the PRI Assessment Working Group, and a range of experts from signatory and other organisations.
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com
For more information, contact:
Donald MacDonald, Trustee, British Telecom Pension Scheme And Chair of the PRI
James Gifford, Executive Director of the PRI
Garrie Lette, Mercer
Full name of report: PRI Report on Principal Progress 2008