Daily ESG Briefing: PRI signatories may face third-party assurance rules under latest strategy

The latest developments in sustainable finance

The Principles for Responsible Investment is mulling the possibility of requiring signatories to have third-party assurance on their reporting. The UN-backed body launched its three-year strategy today, setting out 21 objectives and 22 initiatives it plans to undertake between now and 2024. It said it wanted to “enhance the credibility” of reporting data by “exploring a range of new measures, from basic internal control mechanisms to third-party assurance”. It will now consider the quality of internal review processes when selecting ‘leaders’ and will “explore ways to introduce PRI-coordinated assurance reviews of selected signatory reports”. 

The Spanish government has proposed that large companies in the country should have to publish climate transition plans under its upcoming Climate Change Law. The law, which is going through its final stages, could force companies to set five-year climate strategies. According to local reports, voluntary carbon offsetting will be accepted as a means of decarbonisation under the plans. 

Asset managers and financial advisers may be underestimating retail investors’ appetite for ESG investing, according to Cerulli Associates, which found a disconnect between adviser perceptions of ESG sentiment, and the reality. In a 2020 survey conducted by Cerulli, 72% of advisers said that lack of investor demand for ESG investments was a factor preventing their adoption of ESG strategies, but 44% of households said they would prefer to invest in an environmentally or socially responsible manner. 

Investments in companies that comply with Islamic finance rules outperformed both an equal-weighted index and non-compatible companies over one, three and five years, according to research by ISS ESG. Outperformance was driven by sector exposure and individual stock performance, it concluded.

The UK’s Charity Commission has launched a consultation on new draft guidance for charity trustees on adopting a ‘responsible’ approach to investment. The revised guidance aims to make clearer the duties that trustees have when making financial investments, and the limits of trustee discretion on adopting a responsible investment approach. The consultation closes on the 20th of May.

Schroders has joined the Global Impact Investing Network – a group of more than 350 entities that focuses on reducing barriers to impact investment and driving capital into solutions and investments in impact investing.