Of the investment managers and service providers that the Principles for Responsible Investment (PRI) has engaged so far in its review, most would like to see more representation of non-asset owner signatories on the PRI board.
Nathan Fabian, chief responsible investment officer at the PRI, noted this during a signatory consultation webinar on Thursday regarding the network’s consultation.
Launched in September, the wide-ranging review aims to explore issues around “the future of responsible investment”, the PRI’s “vision, mission and purpose”, and the value it provides to signatories.
Dubbed “PRI in a Changing World”, the approach by the investor network has been divided into two stages: in-person workshops and a signatory general meeting (September to December), and an online formal consultation survey and webinars (open November to January).
David Atkin, who took over as PRI CEO in December last year, told Responsible Investor at the launch of the review: “The world looks markedly different since the PRI was set up back in 2006. The board and I recognise that the responsible investment landscape has similarly undergone considerable change since the PRI’s mission statement was originally developed. This includes the adoption of the Paris Agreement and the Sustainable Development Goals, and the evolution of investor expectations and practices, among others.”
During Thursday’s session, Fabian detailed key themes that had come out of the first consultation round, as well as flagging some of the questions that will feature in the second survey and ideas the PRI is considering.
Among the topics were the network’s “strategy-setting approach and governance”. So far, most investment managers and service providers have said they would like to see more representation of non-asset owner signatories on the PRI Board.
In response, the PRI’s survey will ask asset owners whether they agree with the current balance or would prefer “greater representation of non-asset owner signatories on the PRI board, while maintaining the overall asset owner majority”.
Defending the decision, Fabian said: “The investment managers and service providers have already told us what they think, and we think its representative globally.”
According to the PRI’s articles of association, asset owners must vote in majority on any changes to the organisation’s rules, which include the composition of the board.
Another key issue highlighted in the first phase of the consultation surrounded “expectations about signatory progression”.
Fabian said signatories expect to progress their practices over time, are seeking more support to do so and want to demonstrate their progress in terms relevant to them. This would include consideration of mandates, regulatory contexts, operating conditions and investor type.
“We propose that the PRI, together with signatories, develops a framework for signatory progression that enables signatories to opt into areas that describe objectives and actions that are relevant to their organisation,” Fabian said.
The survey will ask signatories whether they would choose to demonstrate progress in terms of responsible investment objectives, approach to sustainability issues, progress in investment activities and/or progress in asset class.
Fabian made it clear that any changes would be principles-based. “Opting into any progression area would have to be voluntary,” he said. “There will be no PRI-imposed consequences. Signatories may choose to participate in many areas and choose and change them.”
He added: “We recognise that you describing what you’re doing and us assessing are two different things, so we would not assess signatories unless they wanted any additional commitments or statements of intent assessed.”
The PRI’s new survey will also seek feedback on how the organisation handles its diverse signatory base, how it supports investors’ specific needs (depending on type, region or experience level), whether it should adapt its mission statement, and whether it should play an “even more” active policy engagement role.
Fabian said the survey will be published “in the coming days” and will be open for submissions until the end of January.