The principles for responsible investment: a round-up

You may have seen our recent series about the UN-backed Principles of Responsible Investment (PRI). If you didn’t, you now have a chance to browse through our thoughts about each of the six principles individually, as well as what we think the future should hold.

Preluding our pieces on the PRI was an interview with its executive director, Dr James Gifford, in July. He talked to Jamie Mckenzie about the work being done in his organisation, the good news to come out of Rio+20, and what is required of investors and governments to accelerate the transition to a sustainable global financial system.

So, onto our PRI series.

We began with an introduction, examining how and why the PRI was set up. It’s an incredibly important organisation, uniting some of the world’s biggest investors, and Blue & Green Tomorrow has an awful lot to thank it for. Indeed, if the PRI didn’t exist, the chances are we wouldn’t either.

We summarised the values of the principles using a sentence that Dwight D. Eisenhower said in his opening address as US President in 1953: “A people that values its privileges above its principles soon loses both”. 

Moving onto the opening clause of the PRI now, which talks about the “duty to act in the best long-term interests of our beneficiaries” and outlines how “environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios“, before leading onto the first principle.

The first principle of the PRI is, “We will incorporate ESG issues into investment analysis and decision-making processes“. These issues are vital in our search for a sustainable economy, but the reality is, investments that meet ESG criteria are often amongst the most lucrative in the market. Clean energy, recycling and sustainable transport are just three examples of areas that continue to be pumped with investment, much to the benefit of the three Ps – people, planet and prosperity.

Principle two is, “We will be active owners and incorporate ESG issues into our ownership policies and practices“, whilst principle three states, “We will seek appropriate disclosure on ESG issues by the entities in which we invest“.

The latter is all about an institution declaring the nature of its investments. Organisations such as the Carbon Disclosure Project don’t simply name the companies that have disclosed their ESG activities; they shame those that don’t, thus leaving the impression that these particular firms have something to hide. We wrote about how it is only in an environment of complete knowledge that investors can make the informed choice they have a right to.

Moving on to principle four now, which reads, “We will promote acceptance and implementation of the principles within the investment industry“. We published a complete list of asset owners and managers in the UK that are signatories of the PRI. If a firm is not on the list, this means they’re not signatories, and we wholly encourage you to challenge them over why this is.

Principle number five is, “We will work together to enhance our effectiveness in implementing the principles“. We explained how there is no environmental or societal problem that we cannot solve collectively and that we face some massive challenges in both areas. Business and investment must play their role and work together to address these challenges.

The sixth and final principle states, “We will each report on our activities and progress towards implementing the principles“, and this is where Blue & Green Tomorrow’s role comes in. With the right kind of leadership and message, the investment industry might just create a sustainable tomorrow for future generations.

Bookending out series on the PRI was a look to the future, and we’ll round off this piece with our founder Simon Leadbetter’s final paragraph in his lookahead piece:

Six years ago, a brilliant global statesman, Kofi Annan, established UN PRI. We have a framework that has hundreds of signatories representing trillions of pounds worth of investment. The principles are necessarily aspirational and voluntary to encourage the widest participation and engagement. That is just the beginning. The next six years represent an exciting new chapter for UNPRI. The opportunity exists to create a rapidly-growing and inclusive rather than exclusive movement that informs and educates as wide an audience as possible of the possibilities of responsible investment.

Before it is too late.