Transcript Principles for Responsible Investment (PRI)

20, January 2009, Bangkok
James Gifford, PRI Executive Director
Narina Mnatsakanian, Project Manager, PRI/UNEP FI
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Agenda
1.
Initiatives mapping
2.
Emergence of responsible investment
3.
Why is responsible investment relevant for
companies?
4.
Principles for Responsible Investment
5.
Collaborative engagement
6.
Global Reporting Initiative
7.
Responding to the Crisis
Complimentary initiatives
Investors
Companies
PRI
Global
Compact
Reporting
Framework
ESG
Disclosure
(GRI, Sustainability
Reports)
Emergence of Responsible Investment
First there was:

Traditional negative/positive screened funds
The PRI is a culmination of:

Shareholder engagement

Corporate governance movement

Clean tech and sustainable venture capital

Materiality of ESG issues / enhanced analysis, e.g.
Climate change

Systemic issues (response to the crisis)
Why is RI relevant for companies?

Access to capital - appropriate ESG disclosure
can help companies to get access to funds

Equity pricing– investors integrate material ESG
issues it their stock selection

Shareholder engagement – long term investors
engage with investee companies on ESG issues

Access to markets, license of operate

Increasing demands for disclosure

Reputation
Investor perspective

ESG issues can impact investor returns especially
in the long-term and, therefore, deeper analysis
should result in better investment decisions

Companies that manage complex ESG issues well
tend to be well managed overall

Strong ESG performance by companies can result
in new opportunities and reduced risks

Investors can play an important role in promoting
good corporate practice within their portfolio
companies
Factoring of ESG issues into
investment decisions

Major global brokerage firms assessing impact of
ESG issues

Investors integrate these findings into their
mainstream investment decisions

Brokers with ESG assessment capabilities include
– Merrill Lynch, Morgan Stanley, Nomura, RBC Capital
Markets, Société Générale, Standard Chartered, UBS,
Vigeo, Wachovia Securities, WestLB, Credit Suisse,
Deutsche Bank, Dresdner Kleinwort, Goldman Sachs
HSBC, ING, Innovest, JPMorgan, ABN AMRO, Citigroup
Rising investor expectations

Investors are increasingly considering ESG issues
for a larger number of emerging markets
companies, including Thailand

Emerging market companies need to become world
leaders in CSR reporting and performance
About the PRI

PRI is a tool kit for integrating ESG issues into
mainstream investment practices and across asset
classes

PRI is a forum for discussion and concrete action on
long-term risk issues and value drivers

Signatories sign up to six aspirational best practice
principles which

reflect a broad and long term understanding
of materiality

are grounded within the bounds of fiduciary
duty

can be applied across mainstream portfolios
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Supported by the Secretary-General
“I applaud the leadership of the
institutions that have committed
themselves to this undertaking, and
urge other investors around the world to
join this historic effort.”
Ban Ki-moon
UN Secretary-General
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Number of Signatories
500
20000
450
18000
400
16000
350
14000
300
12000
250
10000
200
8000
150
6000
100
4000
50
2000
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Month
Number of signatories by latest sf data
AUM
AUM ($BN)
Over 470 signatories, US$18 trillion AUM
Growth in PRI signatories and AUM
Signatories include

CalPERS, USA

APG and PGGM, Netherlands

Norwegian Government Pension Fund

British Telecom and USS, UK

Government Employees Pension Fund of South
Africa

PREVI, Brazil

Mitsubishi UFJ and Sumitomo Trust, Japan

Government Pension Fund of Thailand

Colonial First State, Fortis Investments, Schroders
and HSBC
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The Principles
We aspire to
1 …incorporate ESG issues into investment analysis and
decision-making processes.
2 …be active owners and incorporate ESG issues into our
ownership policies and practices.
3 …seek appropriate disclosure on ESG issues by the
entities in which we invest.
4 …promote acceptance and implementation of the
Principles within the investment industry.
5 …work together to enhance our effectiveness in
implementing the Principles.
6 …each report on our activities and progress towards
implementing the Principles.
PRI Clearinghouse
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Principle 3: Corporate disclosure

–

–
Standardized reporting on ESG issues
Signatories are promoting Global Reporting
Initiative (GRI)
Enhancing investee company ESG disclosure
Singatories ask investee companies to disclose
performance around social, ethical and
environmental issues. Where reporting is
inadequate, they actively engage with companies
to seek improvement
Collaborative engagement

Corporate Governance remains the most common
topic for collaboration

Biodiversity Toolkit– a collaboration to assess
risks and opportunities relating to biodiversity and
ecosystem services in the food, beverage and
tobacco sectors in Brazil (e.g. clean water,
deforestation, regulated climates)

Singapore and Hong Kong Engagement
Initiative – encourages listed companies to
enhance their corporate responsibility. Opportunity
to be included in the FTSE4Good Index
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Emerging Markets Disclosure

Project encourages companies in emerging
markets to provide better information on their
management of ESG issues

Initial countries covered: Brazil, China, India,
Russia, South Africa, South Korea

Lead Investors: HSBC; Boston Common Asset
Management, Calvert, PREVI, Government
Pension Fund of South Africa

Current status: active engagement with companies
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Seoul Initiative

Seoul Initiative 52 signatories with USD 4.4 trillion
AUM launched an initiative to call on 9,000 listed
companies to participate in the United Nations
Global Compact

Government Pension Fund of Thailand was one of
the signatories to this initiative

Investors wrote to over 80 Thai listed companies
encouraging them sign to up to the Global
Compact. These letters will be followed up by
investors
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Global Reporting Initiative (GRI)

“Transparency, accountability, reporting and
sustainability. The GRI network is a meeting place to
converge and accelerate these issues”

GRI has pioneered the development of the world’s most
widely used sustainability reporting framework and is
committed to its continuous improvement and
application worldwide

This framework sets out the principles and indicators
that organizations can use to measure and report their
economic, environmental, and social performance

Investors are increasingly asking their investee
companies to use GRI as a reporting framework
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Responding to the crisis
A focus on governance and good corporate
practices will help build trust and confidence in
markets and ultimately generate better returns for
companies and investors
Enhance
transparency, accountability and disclosure
Deeper
analysis and better risk management by
companies and investors
Investors
Investor
will monitor companies more actively
will engage in public policy dialogue
Collaborative
investor action
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Web: www.unpri.org
Email: [email protected]
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