Economy

The principles of responsible investment – a short series. Principle four – promotion.

Published

12 years ago

August 11, 2012

The fourth principle states that signatories will “promote acceptance and implementation of the Principles within the investment industry.”

At time of publishing the following UK asset owners are UNPRI signatories:

Alliance Trust PLC, BBC Pension Trust Limited, BP Pension Fund, BT Pension Scheme, CDC Group plc, Environment Agency Pension Fund, Joseph Rowntree Charitable Trust, London Borough of Haringey, Pensions Committee, London Pensions Fund Authority (LPFA), Lothian Pension Fund, Marks & Spencer Pension Scheme, Merseyside Pension Fund, National Employment Savings Trust (NEST), North East Scotland Pension Fund, Northern Ireland Local Government Officers’ Superannuation Committee, Old Mutual plc, Pension Protection Fund, Polden Puckham Charitable Foundation, Railways Pension Trustee Company Limited, Royal Mail Pension Plan, Shell Contributory Pension Fund, Strathclyde Pension Fund, The Church of England National Investing Bodies, The LankellyChase Foundation, The Pensions Trust, UNISON Staff Pension Scheme, Universities Superannuation Scheme – USS, West Midlands Pension Fund.

The following UK asset managers are UNPRI signatories

3i Group plc ,Aberdeen Asset Management, Actis, Alquity Investment Management Limited, APAX PARTNERS LLP, Aureos Capital Ltd, Auriel Capital Management, Aviva Investors, Baillie Gifford, Baird Capital Partners Europe Limited, BC Partners, Bedlam Asset Management plc, Berkeley Partners LLP, Bridges Ventures, Cantillon Capital Management, CapVest Partners LLP, Cazenove Capital Management, CCLA, Charlemagne Capital, Cinven, Climate Change Capital, Craigmore Sustainables LLP, Culross Global Management, Doughty Hanson & Co, Earth Capital Partners LLP, Epworth Investment Management, Equitix, F&C Asset Management, FourWinds Capital Management, Generation Investment Management LLP, Genesis Asset Managers, GFI Consultants Ltd, Governance for Owners, Growth Capital Partners LLP, Henderson Global Investors, Hermes Fund Managers Limited, Hermes GPE, HEXAM CAPITAL PARTNERS LLP, HgCapital LLP, Highclere International Investors LLP, HSBC Global Asset Management, Impax Asset Management, InfraRed Capital Partners Limited, Insight Investment, Investindustrial Advisors Limited, J O Hambro Capital Management Group, Jupiter Asset Management, Kames Capital, LaSalle Investment Management, Legal & General Investment Management Limited, Lloyd George Management, Longview Partners, Man Group plc, Martin Currie Investment Management, Montanaro, MSS Capital, Munros Capital Management LLP, Newton Investment Management, Orion Capital Managers LLP, Pampa Capital Management LLP, Panoramic Growth Equity, Pantheon Ventures, Par Equity LLP, Parish Capital Advisors LLP, PRUPIM, Rathbone Brothers Plc, Rexiter Capital Management Limited, Rockspring Property Investment Managers LLP, Royal London Asset Management, S C Davies & Company Ltd, Sarasin & Partners LLP, Schroders, Scottish Widows Investment Partners, Silk Invest Ltd., Silverfleet Capital Partners LLP, Stafford Timberland Limited, Standard Life Investments, Temporis Capital LLP, Terra Firma Capital Partners, The Co-operative Asset Management, The Environmental Investment Partnership LLP, Threadneedle Asset Management Ltd, Triton Advisers Limited, Truestone Impact Investment Management, WHEB Group

If they’re not on the list then they’re not signatories and you should probably ask why. If they are on the list, take a closer look at how seriously they report ESG issues

They should certainly be doing some or all of the following:

Including Principles-related requirements in requests for proposals (RFPs)
Aligning investment mandates, monitoring procedures, performance indicators and incentive structures accordingly (for example, ensure investment management processes reflect long-term time horizons when appropriate)
Communicating ESG expectations to investment service providers
Revisiting relationships with service providers that fail to meet ESG expectations
Supporting the development of tools for benchmarking ESG integration
Supporting regulatory or policy developments that enable implementation of the Principles

While 1 and 3-6 are relatively straightforward and process-based, number 2 is perhaps the most interesting and challenging for asset managers and owners. It makes the alignment of long-term ESG implications core to everything in an investment – its mandate (the purpose and limits of the fund), monitoring, performance indicators and incentives.

Many signatories would struggle to say that all of their assets are structured along those lines, but it is gratifying that so many have signed up to UNPRI regardless.

While this principle concerns intra-industry promotion, we would like to see how strictly these principles are adhered to and, as we argued yesterday, for even greater promotion of the principles themselves and their adherents.

Tomorrow we sail for the happy seas of collaborations or principle five.