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December 08, 2008
New Global Database Will Extend ESG Investment Research
    by Robert Kropp

The UN's Principles for Responsible Investment plans to create a tool to help asset managers and investors incorporate ESG issues into long-term investments.


Two months after its merger with Enhanced Analytics Initiative (EAI), an international collaboration between asset owners and asset managers that encourages investment research taking into account the impact of extra-financial issues on long-term investment, the United Nations' Principles for Responsible Investment (PRI) has announced plans to launch the first global database dedicated to investment research which focuses on environmental, social and governance (ESG) issues.

The PRI consists of over 450 signatories, together representing more than US$18 trillion in assets, who recommend actions for incorporating ESG issues into mainstream investment decision-making and ownership practices. The launch of the global ESG database is the first move from PRI to extend the work of the EAI.

The EAI considers ESG to include extra-financial issues that it describes as fundamentals having the potential to impact a company's financial performance or reputation in a material way. These issues include climate change, corporate governance, employment standards, human resources, executive remuneration, environmental and social areas and reputation risk.

James Gifford, Executive Director of the PRI Initiative, said, "PRI signatories will gain a definitive catalogue of the best ESG research searchable by sector, region and ESG issue."

PRI has established an independent working group to moderate the content from research providers to ensure eligibility for posting in the database. To be considered eligible, investment research must integrate ESG related issues to inform long-term investment decision-making.

Asset owners and asset managers, as well as research providers, will be consulted as the database is developed, to ensure that it is practical and easy to use.

The mission of PRI is based on the premise that consideration of ESG issues is proven to be a successful method of delivering superior risk-adjusted returns. While PRI is not designed to be relevant only to socially responsible investment (SRI) products, its integration of ESG issues into investment analysis is compatible with the practices of SRI fund managers.

 

 
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