Responsible Investor

UN PRI adds competitive edge to responsible investing

Can scoring move SRI to the mainstream?

In the last few days, 195 of the world’s largest institutional investors representing about $9 trillion (€6.6bn) in assets, have received the equivalent of an electronic ‘envelope’ containing a score that measures their success in implementing the UN Principles for Responsible Investment (UNPRI). Some will have taken their time to look inside, hesitant about the contents. Others will have ripped it open to see whether their hard work in implementing responsible investment standards has been rewarded with a good grade.
Launched a year ago in New York and Paris with 65 signatories, the UN PRI has grown rapidly, underlining investor interest.
Its aim is to mainstream responsible investment by giving investors six targets for integrating environmental, social and governance (ESG) issues into investment decisions.
Investors being scored are a who’s who of the world’s biggest pension funds: CalPERS and NYCERS in the US, ABP and PGGM in the Netherlands, Denmark’s PKA, the Universities Superannuation Scheme in the UK, France’s Fonds de réserve pour les retraites (FRR) and Sweden’s state pensions buffer funds, AP1, 2 and 3. Additionally, few of the world’s largest fund managers

are missing from the roster.
The scores, produced annually following a detailed survey by Mercer, the investment consultant, look set to become the benchmark against which investors assess responsible investment; a GIPS equivalent (Global Investment Performance Standards) for the SRI domain. The ranking is anonymous.
Investors taking their first steps in responsible investment might be relieved it is should they score low.
Each signatory will see performance compared to their peer group – either asset owner or asset manager – but with no classification by company. Signatories will be top, mid or bottom bracket performers against each of the principles. Neither will the results be made public by the UNPRI. Signatories may reveal the findings to their beneficiaries such as pension fund members. The PRI is recommending they do. Significantly, the survey asks investors and fund managers to look at ESG issues across all investment portfolios not just SRI funds. It says this should rebalance any bias towards specialist SRI managers. The aim of the scorecard is to introduce competitive incentives to the integration of responsible investment. It is by no means the meat of the UN review

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