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September 30, 2010
Principles for Responsible Investment Publishes 2010 Report on Progress
    by Robert Kropp

Most signatories report having an investment policy addressing environmental, social, and corporate governance, and assign responsibility for the policy to senior executives.


Since its launch in 2006, the United Nations' Principles for Responsible Investment (PRI) has grown to include over 800 signatories with a total of $22 trillion in assets under management. The number of new signatories since July 2009 now stands at 268, "evidence," the PRI states, "of the increasing recognition by institutional investors worldwide of the need to consider environmental, social and corporate governance (ESG) issues when investing."

The rapid increase in signatories indicates that mainstream institutional investors have responded to the financial crisis by adopting the Principles in their decision-making, and not, as had been feared by some, by postponing doing so. In fact, among the 433 respondents to the PRI's
Report on Progress 2010, 73% of investment managers considered themselves to be mainstream investors.

The 433 respondents to the 2010 version of PRI's annual report represent 80% of those who were eligible to complete the survey. Ninety-seven percent of those required to respond did so; after a one-year grace period, all signatories except service providers are required to complete the PRI survey. By not responding, two Australian organizations were delisted, and eight—including the US-based Natural Investments—left voluntarily.

Because the Principles are voluntary and prescriptive, the fact that 95% of asset owners and 87% of investment managers now report having an investment policy addressing ESG issues indicates a commitment that goes beyond the mere fact of PRI membership. Furthermore, 80% of respondents now state that ESG issues are the responsibility of the CEO or CIO. In 2009, 73% of 287 respondents had executive-level management of ESG issues.

Seventy percent of senior managers have undergone training in sustainable investment, according to the report. In an effort to provide signatories with an educational program that is more systematic than conferences and seminars, the PRI announced this year a collaboration with the Australia-based
Responsible Investment (RI) Academy. An initiative of the Responsible Investment Association Australasia (RIAA), the RI Academy provides structured learning, professional development, and opportunities for collaboration and research.

While Europe, with 199 respondents, continues to represent the largest regional block, the number of North American respondents grew the most in 2009, increasing from 48 in 2009 to 81. At the country level, Australia had the most respondents, with 70, followed by the US with 64. In 2009, the number of US-based respondents was 36.

Without transparency, not only by companies but by investors as well, the full implication of ESG incorporation into long-term investment decision-making cannot be consistent or comparable, and the fact that 166 signatories chose to publish their responses in 2010 suggests that the commitment to improved reporting on ESG issues is growing. As James Gifford, Executive Director of the PRI, stated, "This represents a real and significant increase in investor transparency on responsible investment activities."

In 2009, 70 respondents agreed to publish their responses. The 2010 responses can be found at
Responses to the 2010 PRI Reporting and Assessment survey.

 

 
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