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UNPRI and Enhanced Analytics Initiative join forces

Joint group creates “single, powerful voice within international investment markets”.

The United Nations Principles for Responsible Investment has merged with the Enhanced Analytics Initiative (EAI), the association of investors and brokers that promotes the inclusion of so-called “extra financial” factors (EFIs) into company and sector research, in what it says will be a major step towards integrating environmental, social and governance factors (ESG) into institutional investment. The two groups, whose joint members represent assets under management of more than $15 trillion, said their amalgamation would “internationalise” the call for better investment research. It said the new group would represent a “single, powerful voice within international investment markets” and continue to encourage ESG integration and long-term research, which both say can impact the performance of investee companies but are lacking from mainstream investment research. The joining of the two groups goes some way to revealing how the PRI will prompt its members to further actively integrate ESG factors into investment after making the initial commitment to sign up to the principles. The PRI/EAI tie-up also suggests that organisations with similar goals in the SRI field could increasingly merge where they see overlaps with others’ activities. The EAI said that joining with the PRI would mean changing its existing bi-annual evaluation of investment research providers, which identifies a recommended shortlist of those producing high-quality extra-financial research.Buy-side members of the EAI, which numbers 25 organisations and includes pension funds, asset managers and brokerage arms of investment banks, direct a portion of their research commissions towards the list of best sell-side ESG research providers. Critics of the EAI have said that the shortlist can discourage some brokers from investing in extra financial research if they think they have little chance of making the grade. A working group of EAI members and representatives from the PRI will now review how it supports research providers that include assessment of long term intangibles on company performance and will report its findings by the end of December. The EAI will also shortly issue a report reviewing its work over the past four years. Donald MacDonald, chairman of the UNPRI, said: “PRI was created in part to encourage the development and use of extra-financial research by a broader group of investors. The availability of quality, integrated research is critical to this effort and EAI has played a crucial role over the past four years in awakening the investment community to the importance of research that considers EFIs. This extension of the existing collaboration agreement will offer PRI the opportunity to make use of EAI’s experience in order to translate its principles into execution. This will enable us to build on the significant work EAI has done since inception, allowing us to gain further traction in continuing to encourage the lasting integration of EFIs into the investment decision making process on an international basis.”