PRI reporting overhaul to refocus on practices
The UN Principles for Responsible Investment has made a fundamental shift in its reporting framework, with a mixture of mandatory disclosure and streamlined questioning aimed at increasing transparency and accountability.
Under the new set-up, it will be compulsory for signatories to publish 40 per cent of the information given, known as the “reporting” element, with the 60 per cent “self-assessment” element remaining optional. In 2011, just 13 of the 30 UK-based asset owners opted for public disclosure.
The number of mandatory questions, or ‘indicators’, have been reduced by a quarter since last year’s pilot, and the process “now recognises a broader range of practices”, according to PRI chief executive James Gifford.
The organisation has carried out a comprehensive consultation among the global investment community following the pilot and has since addressed many of the concerns raised, Gifford said.
“There have been significant changes proposed based on the feedback, including a 25 per cent reduction in the number of indicators [questions] and an increase in the minimum thresholds above which reporting is required across various asset classes.”
The PRI was launched in 2006 to encourage engagement on environmental, social and governance issues among investors. It currently has around 1,200 signatories globally, of which 30 are UK asset owners largely comprising pension schemes.
While the pilot was broadly welcomed, a fifth of participants cited concerns about the new model, including the effort of gathering data, prescriptiveness and the mandatory disclosure requirements.
Gifford added: “The goal is to create a reporting framework… for the whole industry. It now focuses much more on asset classes and responsible investment practices; the old framework [was] focused by PRI principle.”
Aled Jones, head of responsible investment at Mercer, said the PRI has been a driver in increasing awareness of ESG issues among investment managers.
“We get a lot more questions from investment managers these days,” he said, “because what’s happening is pension schemes, for example, are asking questions in manager selection processes.”
But he added it is still just a minority of managers and said it is more common for local government pension schemes to be pushing for answers on responsible investment.
See also: Schemes welcome greater flexibility in PRI reporting