November 15, 2012
Assets of PRI Signatories Exceed $32 Trillion
by Robert Kropp
With 254 new signatories to the Principles for Responsible Investment, the number now exceeds
1,100, even as 61 former signatories are delisted.
The United Nations' Principles for Responsible
Investment (PRI) is surely one of the largest sustainable investment initiatives in the world.
Earlier this year, PRI announced that the number of institutional investors committing to the six principles had exceeded 1,000.
PRI recently published its annual lists of new and
delisted signatories. Despite a handful of delistings, the number of signatories now stands at
more than 1,100 with assets under management in excess of $32 trillion.
US-based organizations are among the signatories added over the past 14 months, bringing the total
from the US to 156. Twenty-one are asset owners, while 110 are investment managers and 25 are
professional service partners.
"Being a PRI signatory has become critically important—and
some would argue a license to operate—in key markets," the Boston-based State Street Global Advisors (SSgA) announced when it joined the
initiative earlier this year. "PRI has pushed the ESG (environmental, social, and corporate
governance) agenda to the forefront, and as the initiative builds to a critical mass, it is likely
that PRI will cement its place as the global standard for sustainable and responsible investing."
In 2011, SSgA launched a High Quality Green Bond strategy to invest in green bonds issued
by supranational or multilateral development banks. The fixed income investment product focuses on
green bonds issued primarily by institutions such as the World Bank and the European Investment
Bank (EIB), that allocate their proceeds to fund environmentally beneficial development projects.
Goldman Sachs Asset Management (GSAM), the fund management division of Goldman Sachs, is
another new US-based signatory. "We are committed to responsible and sustainable investing and are
working to further integrate ESG principles into investment strategies and client solutions
globally," the firm stated. "We believe responsible and sustainable investing extends beyond the
evaluation of quantitative factors and traditional fundamental analysis. Where material, it should
include the analysis of an entity’s impact on its stakeholders, the environment and society."
There are those who question the effectiveness of PRI's aspirational approach to the uptake by
its signatories of the principles. In a recent article, Matthew Kiernan, the founder of Innovest Strategic Value Advisors,
wrote, "Major investors do not, in practice, pay much attention at all to companies’ environmental
performance. As a result, the entire argument falls apart, and excellent work by organizations
including the UN Environment Program Finance Initiative and the UN Principles for Responsible
Investment falls well short of its considerable potential impact."
For example, while GSAM
has signed onto the principles, its parent company continues to finance mountaintop removal (MTR)
coal mining and coal-fired power generation projects. Goldman Sachs does business with the two
largest MTR companies, and "is both the owner of a coal plant operating utility company and a
significant financer of the majority of utility companies on our risk list," according to the
authors of the most recent coal finance
report card .
And while one of the principles specifically addresses the importance of
corporate engagement on ESG issues, two US-based signatories—BlackRock and
AllianceBernstein—supported fewer than five percent of the climate resolutions on which they voted
in 2011, according to an assessment by Fund
PRI delisted 61 signatories in the past year, but it is unclear to what extent
failing to implement the principles had a role. "Signatories are delisted if they do not pay the
mandatory annual membership fee or participate in the annual reporting and assessment process, or
if they choose to voluntarily leave the Initiative," PRI stated. "However, no signatory was
delisted during the period for failing to report, as this process was voluntary this year."
Reporting by signatories is expected to become mandatory with the implementation of the new PRI