The Principles for Responsible Investment has relaunched its signatory reporting framework after a hiatus. Among the key changes are the introduction of indicators solely focused on human rights and greater alignment with TCFD and other bodies.
Thursday’s release is a revision of a framework launched two years ago that was designed to streamline and improve the reporting process. The 2021 version also asked signatories to provide evidence of the outcomes of their portfolio-level sustainability efforts and detail of how signatories are measuring and managing these outcomes.
However, signatories raised issues with the structure and questions of the framework, as well as on the experience of using the reporting tool. In response, PRI delayed the reporting cycle until 2023.
The new framework is comprised of 12 modules, with mandatory core and voluntary plus indicators. Signatories are assessed at an indicator (question) level and module, asset class or sub-strategy level. No overall organisation score is given.
For this latest version, the PRI has attempted to improve the clarity, consistency and applicability of the framework, as well as adding new topics.
In particular, PRI has for the first time introduced voluntary indicators – which are not assessed – solely focused on human rights in the Policy, Governance and Strategy module. The issue was flagged as a priority in the PRI Strategic Plan 2021-2024.
Investors will now be able to indicate whether they have assessed the human rights context of their potential and/or existing investments in the reporting year, and project how this could connect the organisation to negative human rights outcomes. They can also record whether they have taken steps to assess and manage the actual and potentially negative outcomes for people connected to their investment activities.
The new framework is also more aligned with other industry frameworks and classifications such as the TCFD, NZAOA and NZAM, the PRI’s chief reporting officer Cathrine Armour told Responsible Investor.
“This is a minimum viable product,” she said. “We’re going to continue to evolve the framework to achieve alignment and consistency. I don’t think we could say that the 2023 framework or any of the other frameworks out there are fully aligned with each other, but it is something that we all know is desired.”
For Armour, with the return of the reporting framework over the 2023 and 2024 cycles, the PRI can start to see where there is signatory improvement and change – and, “more critically”, where the organisation is seeing stagnation in performance. “We can then feed that back to colleagues to work with signatories to improve performance.”
When RI spoke to signatories in November about the future of the PRI following the launch of a consultation by the initiative, an asset manager suggested that the reporting requirements could take a more regional approach.
“They would still have common foundations and common requirements, but certain requirements could be different depending on the geography of where the signatory is based. This can help continue to raise the bar in a way that appreciates regional specificities.”
While no regional element has been created for the new framework, Armour said the PRI is “looking at where signatories are reporting from, and what jurisdictions signatories are within”.
“I do agree there’s an advantage to taking a more regionalised approach, and that’s certainly something we will look into as the reporting framework stabilises as it will give us the opportunity to look at how we develop specifically within the regions,” she added.
Signatories will complete the annual questionnaire over a three-month reporting window from mid-May this year. The PRI aims to provide signatories with their results in November.
Each investor will publish a transparency report which provides their answers to all core indicators, as well as an any voluntary ones they have agreed to make public. However, signatory scores at the module and asset class/sub-strategy level are confidential.
Armour noted that the network has seen signatories increasingly publishing their results. “I think that’s where we’d go first – encourage them to publish assessments and include their narrative and intention.”