The UN-supported Principles for Responsible Investment (PRI) has launched a new three-year strategy.
This network of international investors says this latest is part of its 10-year blueprint to encourage more responsible investment (RI) practices.
Launching the strategy the PRI said this comes at a time when there has been a “tangible acceleration in the uptake of ESG investing” with with RI practices maturing and becoming more mainsteam.
It adds: “Today, we’re facing interrelated crises: the Covid-19 pandemic, environmental challenges and deepening social inequalities. In the wake of the pandemic, the private sector along with many governments and regulators are maintaining a focus on sustainability issues and commitments to ESG activities are only continuing to grow.”
The PRI says it has devised this latest strategy with its signatories, who now number almost 4,000 and represent more than half of the world’s institutionally-managed funds.
The strategy looks at four key areas:
Maintaining inclusivity and increasing accountability
The PRI says it aims to remain a ‘big tent’ organisation at its heart, open to all potential signatories. It says while welcoming a diverse signatory base, this means not every resource or programme that we produce will be relevant to every signatory.
The PRI says it will strengthen our minimum requirements and complete the reform of the Reporting and Assessment Framework, aiming to improve practice over time. “This year we’re piloting the new Reporting Framework and are encouraging signatory feedback.”
It says improving standards across the board and increasing the accountability of the signatory base will be key to tackling risks of greenwashing.
Driving ESG incorporation and outcomes
The theme of the PRI’s new strategy is ‘building a bridge between financial risk, opportunities and real-world outcomes.’ At its core, this will focus on ESG incorporation and the PRI will continue to develop resources for those new to responsible investment as well as to respond to industry developments with work on asset classes and strategies where incorporation continues to progress.
To complement its work on practices and frameworks, the PRI will support the evolution of the industry. It says: “Increasingly we see investors recognising feedback loops between the real economy and financial markets, where the outcomes they shape directly impact the risks and opportunities they face. So, in this strategy, we will help those signatories seeking understand what this looks like in practice, how to integrate and measure outcomes, while remaining firmly grounded in fiduciary duty and the broader role of investors in society.”
ESG issues and priority areas
This strategy begins against the backdrop of the Covid-19 pandemic as well as longer-term environmental emergencies and social equality failures. To help signatories navigate the next three years, the PRI says it will prioritise two areas within our ESG incorporation work.
“Firstly, climate mitigation, as the most urgent existential challenge facing society, including focus on net-zero as well as biodiversity. And secondly, human rights, as both an immediate source of protection for individuals from harm and discrimination and as a necessary foundation for lasting social equality, stability and productivity.”
Strengthening a shared vision
In the creation of this strategy, the PRI says it became clear that the external environmental has evolved significantly since its purpose and mission were originally conceived. “Since then, we’ve seen the adoption of the Paris Agreement and the Sustainable Development Goals, as well as an evolution in terminology, investor expectations and practices. So, to ensure our mission and purpose remain relevant, during this strategy period we will take the opportunity to consult with signatories on these cornerstones. Any possible changes will be put to signatory vote in 2022.”
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