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PRI signatory reports should be audited for integrity, says MN Services’ Douma

Leading industry figure calls for “logical next step”

Kris Douma, Head of Responsible Investment and Governance at Dutch fiduciary manager MN Services, has suggested that signatories to the Principles for Responsible Investment (PRI) should have their reporting to the PRI independently audited.

Under the PRI’s new Reporting Framework, signatories were asked last October to report to the organisation the extent to which they respect environmental, social and governance issues (ESG) when they invest.

The reporting period lasts to the end of March. There are currently 268 asset owners and 798 asset managers that are PRI members. Together, they represent more than $34trn (€24.9bn) in assets.

In an interview with Responsible Investor, Douma said that while it was positive that the ESG reporting was now mandatory for PRI signatories, this did not go far enough. To ensure the integrity of the responses, he thinks they should be independently audited – as they are at MN Services.

“I think it’s a logical next step. I mean: Would you accept the report of a company that is not audited?” he said, adding that this could be handled by international accountants such as PwC, Deloitte or KPMG.MN Services acts as the fiduciary manager for 15 pension funds, including two from the UK, which have €90bn in assets between them.

According to Douma, independent certification of the reports from would go a long way in helping the PRI to become the “global standard” for responsible investment. For the PRI’s part, the London-based organisation is encouraging signatory reports to be signed-off by third parties by having such reports count towards the overall score.

But Martine Menko, who oversees responsible investments at PF Vervoer, the €14.8bn Dutch private transport scheme, doesn’t feel that the audit suggestion is feasible right now. “It is something to strive for, but you have to learn how to walk before you can run. And quite frankly, the audit firms have not yet acquired enough relevant competence to audit responsible investment reports in a meaningful way,” she said.

Menko added that to further assess the quality of the reports, the PRI had to come up with a common methodology to ensure ‘apple-to-apple’ comparison of signatory responses.

Douma and Menko were speaking for a forthcoming RI Insight report on The Netherlands.