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.
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