Global Investors Serious on Enviro, Social & Governance Issues
30 July 2007 at 12:01 pm
A comprehensive survey of the world’s largest institutional investors shows that the global giants of investing are now actively integrating environmental, social and governance (ESG) issues into their investment policies and engagement strategies.
Eighty-eight per cent of investment manager signatories to the Principles for Responsible Investment (PRI) are conducting at least some shareholder engagement on ESG issues, while 82% of asset owners are doing so.
Executive Director of the PRI Initiative, James Gifford says these findings demonstrate that a sea change in global investing is underway which includes more than 200 institutional investors representing more than US $9 trillion in assets.
Gifford says more and more mainstream investors understand that ESG issues can be material to long-term results and therefore must be factored into investment processes.
‘PRI Report on Progress 2007’ was released in Geneva as part of the UN Global Compact discussions and highlights the results of a survey carried out to mark the first anniversary of the launch of the Principles by UN Secretary-General Kofi Annan at the New York Stock Exchange in April 2006.
The PRI are a set of best practice voluntary guidelines for institutional investors to assist in the integration of environmental, social and corporate governance issues into investment management and ownership practices.
While the results reveal that signatories are taking their commitments to implementing the Principles seriously with plans to increase their level of responsible investment activity over the coming year it also shows that there is still much to do.
Key results include:
– More than half of signatories have asked investee companies for standardised environmental, social and governance (ESG) reporting, while 10% plan to start in 2007. The Carbon Disclosure Project attracted the greatest participation.
– 83% of investment manager signatories have specialist staff dedicated to responsible investment issues.
– 60% of asset owner signatories are involved in at least some form of collaborative engagement, with another 12% planning to become involved in the coming year.
– 66% asset owner signatories currently consider responsible investment issues to some extent in their investment manager selection processes, with another 13% planning to do so in 2007.
The goal of the survey is twofold: to provide a baseline for assessing the progress of the Initiative and to draw out best practices from leading signatories as part of the peer-learning process.
PRI Executive Director James Gifford says tho this extent the report is ground-breaking.
He says never before have the responsible investment practices of institutional asset owners and managers been evaluated in such a systematic way.
PRI Chair Donald MacDonald adds that what is especially pleasing is that signatories are committed to increasing their responsible investment activities considerably during 2007.
The full report is available on the PRI website at: www.unpri.org/report07