June 25, 2011
PRI to Revamp Reporting Framework
by Robert Kropp
The Principles for Responsible Investment will introduce in 2013 a new reporting framework for
signatories that is aimed to improve transparency and produce key performance indicators.
Asset owners are increasingly acknowledging the need for the incorporation of long-term
environmental, social, and corporate governance (ESG) risks and opportunities into both their
portfolios and their contracts with fund managers. Furthermore, incorporation by investors of ESG
factors in their decision-making has expanded beyond public equities in recent years, and now
includes such alternative asset classes as fixed income, private equity, and commodities.
Addressing the need for improved transparency in a space that is growing increasingly
complex, the United Nations' Principles for
Responsible Investment (PRI) announced recently the launch of a redesign of its Reporting and Assessment framework.
The framework has been in place since 2006, and the intervening years, according to the initiative,
has seen "new developments and challenges within the industry, particularly with the growth of
responsible investment across different asset classes and the much greater diversity of
organizations signing the Principles."
As a result, PRI now proposes to provide "a
comprehensive transparency and accountability framework for signatories," whether they are
specialists in sustainable investment or mainstream investors, and regardless of asset class.
Until now, PRI's reporting framework has focused primarily on how signatories are implementing
the six Principles. Acknowledging that the traditional framework is insufficient for capturing the
growing differences between signatories, PRI hopes to develop a new framework that captures
investment activity across asset classes, differentiates between direct and indirect investment,
and generally demonstrates with greater transparency the investment activities of signatories.
According to a scoping document,
the new framework will also produce key performance indicators (KPIs), and help stakeholders better
assess the investment activities of signatories.
PRI expects to launch a voluntary pilot
of the new framework by 2012. The framework will become mandatory for reporting by signatories in
In 2011, over 500 of the more than 800 PRI signatories completed the organization's
survey, and 44% of respondents agreed to have their responses posted online. The new framework will
require public disclosure of responses to the survey.
James Gifford, the Executive
Director of PRI, stated, "From our discussions with investors, we believe there is a real need for
a reliable process to assess responsible investment activity, and like all other areas of business,
there needs to be clear indicators of progress and success."