Responsible Investor

UN PRI Seoul special: interview with Donald Macdonald, PRI chair

PRI signatories gather in Seoul for the annual progress meeting of the huge investor initiative.

Signatories of the United Nations Principles for Responsible Investment (UNPRI) – now one of the world’s largest investor initiatives with more than $14 trillion in assets – gather today (June 17) in Seoul, South Korea, for their annual progress conference. Donald Macdonald, chair of the PRI, whose tenure runs for another year, says holding the event in Asia is symbolic of a major reshaping of the global investment nexus: “In some ways, it is an indication and recognition by institutional investors that the economic geography of the world is shifting east. I see two big drivers for investors. The first is this move eastwards in terms of the production of goods and increasingly the development of finance. The second is climate change, and within that, issues of energy supply, water, food and waste. Institutions globally need to be aware of what these factors will mean for investments. There is also much new awareness on these questions from participants in emerging markets. The reason we are meeting in Seoul is to provide a framework for this debate. UNEPFI (The United Nations Environment Programme Finance Initiative) and the Global Compact are holding concurrent

events and we can tap into the important work they are doing.”
Macdonald says he would be surprised if commodities and the debate over soaring global food and oil prices is not high in signatories’ minds at today’s event: “It’s a very sensitive issue. It’s not absolutely clear to most people what is happening with institutional investment in commodities, hence pension funds in the US recently giving evidence to a Congressional committee. Demand is phenomenal, but it’s difficult to work out how investment plays in the equation: do commodity stock prices dictate the prices of commodity futures or the reverse? How much oil is there and who has it? Many pension funds, including the BT scheme (£38bn UK pension fund), of which I’m a board member, didn’t invest in commodities for high alpha but for long-term results, diversification and low correlation with equities. The problem is that if you look at the sub-prime meltdown, almost no-one saw that coming. The worry for investors and citizens is that in the very volatile area of global energy and the provision of food, for god’s sake, there’s a huge strategic and moral issue we need to get a hang on.”

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