Responsible Investor

RI interview: Global Compact chief points the way for UNPRI

Georg Kell, executive director of the corporate forerunner of the UNPRI talks about the issues the $14 trillion investor initiative may have to face.

When the $14 trillion United Nations Principles for Responsible Investment (UNPRI) initiative announced earlier this month it was preparing to expel fund managers for failing to integrate its six principles for environmental, social and governance factors into investment, it clearly recalled the experience of the Global Compact, the corporate forerunner of PRI. The Compact, launched in 2000 by Kofi Annan, former UN general secretary, commits companies on ten principles ranging from upholding union rights to the abolition of child labour.
The Compact has been criticised by campaigners for inaction when companies fail to progress on commitments – to the point of sparking opposition websites attacking its shortcomings. It has since toughened its act. Earlier this month it removed 630 companies from its list of participants for failure to communicate progress. Nonetheless, during the first half of 2008, 701 new companies joined, increasing the total number of business participants to 4,619.
Anticipating any similar backlash, Donald Macdonald,

chairman of the PRI, recently said it did not want to be a ‘brand image’ to signatories and that all would need to comply with its reporting and assessment framework within their second year of membership. He said the issue had come up for a “very small number of fund managers.”
Speaking to Responsible Investor, Georg Kell, executive director of the Global Compact, says the comparisons are “instructive” for the future success of the PRI.
While such delistings, Kell says, are “regrettable” they are essential for protecting the integrity of the initiative. Both the Compact and the United Nations Environment Programme (UNEP) were instrumental in the creation of the PRI. Both Kell and Achim Steiner, executive director of UNEP, sit on the PRI board, contributing to what he calls a “positive, active, relationship.” Notably, all three groups combined their annual meetings last month in Seoul, South Korea, demonstrating the increasing overlap between investors and corporations in delineating a global view of responsible business and investment practices.

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