PRI unveils public policy strategy as its annual conference kicks off in Rio

Wolfgang Engshuber talks to RI from Brazil as PRI in Person conference starts.

More than 250 RI professionals will gather today in Rio de Janeiro for the PRI in Person conference, the annual meet of signatories, where they will hear the initiative outline a number of new programmes including a major step up into lobbying public policy globally on sustainable finance. Speaking to from Rio, Wolfgang Engshuber, PRI Chairman, says the organisation is currently recruiting for a professional: Link to lead the new strategy on public policy and research. At the Rio conference, PRI will take the first steps in consulting signatories on which policy issues to research and lobby. After the conference discussions, Engshuber says the PRI will carry out detailed investigations for policy responses on the key subjects identified for action. Engshuber says it has identified four kick-off subjects that it thinks need addressing and will be put forward for feedback at this week’s event. The first, he says, is better long-term investor awareness of the “cost and implications of externalities” on issues like climate change, which he says is not necessarily seen as financial in the short term but likely to be “very financial” over time. The second is the highly topical and contentious issue of short-term versus long-term compensation structures and how that drives market behaviour. The third, he says, is investor dialogue with companies. The latter, he believes, want to explain their long-term strategies to investors, who should in turn be interested. But, as he notes: “There’s but still too much value placed around quarterly corporate performance indicators. We need to get investor buy-in to long-term corporate vision and strategy.” The last is beta performance drivers across industry sectors. Engshuber says: “We need to look at sustainability in terms of market beta and the long-term stability of financial markets and be a reference for regulators on these kinds of issues.Keynote speakers at the event reflect the PRI shift into policy circles. They include Pavan Sukhdev, Founder and CEO, GIST Advisory Services and former Special Adviser and Head of UNEP’s Green Economy Initiative and lead author of their “Green Economy Report”, and Bernd Braasch, Director Financial Stability Department at the Deutsche Bundesbank, who will talk on 
long-termism and sustainability as elements of a new financial architecture. The PRI’s move into the policy arena, however, does not sit comfortably with the Social Investment Forums (SIFs) that operate regionally and already lobby national governments and regional bodies such as the EU on policy. At the recent SIO annual conference in Canada, Engshuber said the PRI would be exploring ways to work with the SIFs noting their local presence and additional retail market coverage outside of the PRI’s institutional sphere. On top of the policy initiative, Engshuber says the mainstay of the PRI in Person event will be to consolidate and showcase its work in terms of support for implementation of its six principles across asset classes. With PRI in Person coming on the back of the Rio+20 conference in Rio, Engshuber says the PRI’s presence around the Earth Summit and adjunct meetings indicates it is already becoming a serious influence in political sustainability discussions: “We’re now recognised, I think, as the place to go when the inevitable question comes up about what investors are doing and how to engage them in the sustainability debate.” Nevertheless, the reality of the political process for events like Rio is not lost on the PRI Chairman. In an interview with RI just prior to Rio+20 via a live-feed to the Canadian Social Investment Organisation (SIO) conference in Montreal, Engshuber was optimistic that an investor-backed proposal at Rio+20 ‘requiring’ all listed and large private companies to “consider sustainability issues and to integrate
sustainability information within the reporting cycle” would be adopted by governments. His comments came as ministers from four countries, Brazil, Denmark, France and South Africa, announced that they were banding together to back the commitment to back the proposal outlined in paragraph 47 of the UN Conference on Sustainable Development – Rio+20 – Outcome Document, subtitled: The future we want Except for many it wasn’t exactly that.
 In the final document of Rio+20, Paragraph 47 is there, but has lost its teeth to conditional disclaimers: “should”, “encourage”, “consider”, which as Engshuber notes, is “UN compromise language”. Talk post Rio+20 was that developed countries have started ‘soft boycotting’ the UN process in order to move sustainability issues into discussion at the G8 and G20 economic forums.
The full text for Paragraph 47 reads:

  • “We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle. We encourage industry, interested governments and relevant stakeholders with the support of the United Nations system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account experiences from already existing frameworks and paying particular attention to the needs of developing countries, including for capacity- building.“However, Engshuber believes there have been more radical and clear proposals put forward outside of the UN governmental process. The Rio+20 Corporate Sustainability Forum, he notes, produced a list of more than 200 business commitments. They include corporate commitments on better water management, frameworks to help business scale up its own role in reducing usage and restoring natural sources, and plans to place sustainable development at the heart of college and university curricula: Link
    Another big initiative, he says, is the Sustainable Energy for All initiative championed by Ban Ki-moon, UN Secretary General:
    Link, involving 50 countries and financial commitments from the private sector. It covers three main areas: Energy efficiency, renewables, and energy for the poor. Says Engshuber: “I think we saw much more positive work coming out of Rio+20 from the private rather than the public sector.”