Major Investors Take On Responsible Investment Strategies

25 07 2007

GENEVA, July 10, 2007 — A survey of the world’s biggest investors conducted by U.N. agencies has found that environmental, social and governance issues are now a key feature of investment policies and engagement strategies in global finance.

The Principles for Responsible Investment’s 2007 progress report is the first-ever global study to capture in great detail the ways that investors are integrating ESG issues within investment decision making practices. It found that 88 percent of investment managers who have signed the Principles for Responsible Investment are conducting at least some shareholder engagement on ESG issues, while 82 percent of asset owners are doing so.

“These findings demonstrate that a sea change in global investing is underway,” said James Gifford, Executive Director of the PRI Initiative, which includes more than 200 institutional investors representing more than $9 trillion in assets. “More and more mainstream investors understand that ESG issues can be material to long-term results and therefore must be factored into investment processes.” He added, “This report is ground-breaking. Never before have the responsible investment practices of institutional asset owners and managers been evaluated in such a systematic way.”

The PRI, which were created as a joint effort of the United Nations Environment Program’s Finance Initiative and the U.N.’s Global Compact, are a set of best practice, voluntary guidelines for institutional investors, helping them integrate ESG principles into daily operations.

PRI Chair Donald MacDonald said, “While signatories are making significant progress in implementing the Principles, we recognize that there is still a lot to be done. What is especially pleasing is that signatories are committed to increasing their responsible investment activities considerably during 2007. This year’s assessment is the beginning of an ongoing annual process that will be improved over time”.

Among the report’s other findings are:

  • 67 percent of asset owners and 83 percent of investment managers have adopted a formal policy on responsible investment – typically this is integrated within core investment policy statements. A further 15 percent of asset owners and 5 percent of investment managers plan to develop a policy in 2007.
  • Signatories have performed best in implementing Principle 2 (active ownership), followed by Principle 1 (integration of ESG issues into investment processes). Implementation of the other Principles is not as progressed.
  • 80 percent of asset owners report that they have communicated responsible investment issues and the PRI to their beneficiaries.
  • More than half of asset owner signatories made some reference to PRI-related requirements in requests for proposals, with another 23 percent planning to add PRI-related requirements in 2007. 18 percent of asset owner signatories are planning to ask their service providers to sign the PRI in 2007.

Source: GreenBiz.com

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