The Principles for Responsible Investment (PRI) has proposed introducing questions on the “real-world outcomes” of signatories’ responsible investment policies within its annual assessment.
The bulk of these questions will be optional for signatories – they are to be included in a new voluntary component dubbed ‘Plus’ which will not count toward assessment scores – but a “limited set” would be mandatory questions on the tracking and measurement of real-world outcomes. These will fall under a scored, mandatory component – dubbed ‘Core’.
The new proposals form part of the PRI’s response to the first signatory consultation phase – which took place between March and June 2019 – itself the first stage of a wider two-year review to decide the strategic direction of the body's annual assessments.
According to the first consultation, two-thirds of respondents supported “showcasing real-world outcomes through PRI reporting”.
“Signatories expressed more support for the gradual introduction of open, voluntary SDG/outcomes related questions,” the PRI reported [SDG refers to the UN Sustainable Development Goals].
If the latest proposals are endorsed by signatories in the upcoming consultation phase, the PRI will depart from the assessment’s process-based focus for the first time since the current Reporting Framework was launched in 2012.
"But at this stage of the review, the PRI is not considering a reversal of its policy of non-disclosure with regards to assessment scores."
The membership body has faced down criticism for suggesting similar moves in the past. Last year, the manager of Norway’s NOK8.9trn (€919bn) sovereign wealth fund said the PRI should have given signatories a vote on the inclusion of a chapter on “real-world impact aligned with the SDGs” as it was a “de facto new principle”.
The giant investor already warned the PRI in a previous consultation that “including outcome-based reporting in the PRI Reporting Framework is drifting away from the PRI’s founding principles”.
But at this stage of the review, the PRI is not considering a reversal of its policy of non-disclosure with regards to assessment scores. The body said that there was “little appetite” among signatories for such a move.
Critics have argued that keeping the scores confidential is at odds with transparency best practices, and allows signatories with low-tier scores to escape scrutiny.
Other proposed changes centred around making the assessment “more challenging” and “simpler and more consistent”. The latter was key to better reflect the “current state of the responsible investment market” and showcase leading RI practices, the PRI said.
However, once the new changes have been adopted, signatories will no longer be able to compare previous scores with those under the revised methodology due to changes in how the scores are calibrated.
Signatories have until February 28 to offer feedback to the proposals. Non-signatories such as other reporting bodies, standard setters and NGOs will also be invited to contribute to the consultation, according to the PRI.
The updated PRI Reporting Framework is due to launch by January 2021 in what would be considered a pilot year. Signatories would be able to provide feedback and there will be scope for further refinement to the assessment. It comes as the 2020 reporting cycle started on January 6 (it runs until March 31).