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September 04, 2012
PRI Signatories Prioritize ESG Issues for Engagement
    by Robert Kropp

A survey of frequent users of the PRI Clearinghouse indicates that executive compensation, climate change, and labor standards in corporate supply chains will be the top areas of engagement for institutional investors during the coming year.

The Clearinghouse facility of the United Nations' Principles for Responsible Investment (PRI) is a forum through which PRI signatories collaborate on corporate engagement activities. Because the costs associated with effective corporate engagement can be considerable, the PRI Clearinghouse provides a forum in which resources and influence can be shared among institutional investors.

Some of the active collaborative engagements include the CEO Water Mandate, the Emerging Markets Disclosure Project, and Sustainable stock exchanges, to name but a few of the nearly 400 engagements facilitated through the PRI Clearinghouse.

In a recent survey, the PRI asked frequent users of the Clearinghouse to prioritize issues for corporate engagement during the next year, so that the PRI Secretariat could begin coordinating them. Institutional investors with more than $2 trillion in assets under management responded, identifying executive compensation, climate change, and labor standards in corporate supply chains as priority areas for engagement with companies in their portfolios.

Additional areas for engagement identified by the investors include water, unconventional resource extraction such as hydraulic fracturing and deepwater drilling, human rights, and political spending and lobbying activities.

"It is clear that a company's management of ESG (environmental, social, and corporate governance) issues does play a role in its ability to deliver sustainable returns to its investors," James Gifford, Executive Director of the PRI, said. "Users of the Clearinghouse recognize that exercising the rights associated with ownership of the assets in their portfolio is a fundamental part of managing, protecting and enhancing the value of those assets for their clients and beneficiaries."


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