The Principles for Responsible Investment (PRI) aims to publish the first annual progress report for its Advance engagement initiative in early 2025, Responsible Investor understands.
Investor heavyweights, including Norges Bank Investment Management (NBIM), Schroders and JPMorgan AM, are among the lead engagers of the initial 40 target companies, selected from the metals and mining and renewables sectors.
The latest update came last month at PRI in Person, when the assessment framework methodology – which will be used to help track progress of the overall initiative – was presented.
The framework was developed with continuous feedback and input from the initiative’s signatory and technical advisory groups.
RI understands that the framework is in the final stages of review and is set to be published on the PRI’s website shortly. Further key updates from the initiative are also in the works.
When Advance was announced in 2021, the PRI said that in its second year the initiative would start engaging with policymakers. RI understands that this is still the plan and will likely happen in the context of “sector-level engagement work”. More details on the latter will be released in due course.
RI also understands that the aim is for Advance participants to provide initial annual high-level reports to the PRI executive on their level of participation in the initiative – with lead investors also detailing progress of engagements – in Q2 2024.
The first annual progress report will then be published in Q1 2025. It will be based on the assessment framework and reports from investor participants.
Commenting on the work undertaken so far, Nabylah Abo Dehman, head of Advance at the PRI, told RI: “It delivers real value for the sector and our signatories, and feedback so far has been very positive. Advance is helping to significantly elevate the importance of human rights as an issue for responsible investors.”
Undertaking work of this nature “at this level of ambition and scale, and on such a complex agenda” remains an ongoing and iterative process, she added.
“We look forward to continuing to grow the impact of Advance as the initiative evolves, demonstrating this impact in due course, and working with signatories to shape the future direction of travel for our work.”
RI understands that there are currently 20 investors on a waiting list to join the initiative as a participant, and that there are existing participants who would like to expand their level of participation if there were places available on engagement groups.
Yet some investors have raised concerns to RI that the initiative is not moving fast enough.
One European asset owner told RI: “It’s not working. It’s just slow and I’m not really satisfied with the progress. It’s been quite frustrating compared with other collaborative engagements I’ve been involved in.”
The person noted that, in the year since Advance launched, they had only met once with a company they were on the engagement team for.
“That’s nothing,” they said. “We are a supporting investor in multiple engagements so we are very dependent on the lead investors, and it seems everyone is so busy, so work keeps getting pushed back and meetings get changed at the last minute.”
The fact that human rights is the focus of the engagement and there are fewer subject experts in the investor world – compared with climate, for example – also plays a role, the asset owner said.
Another investor also pointed to “very little happening” on engagement meetings. This could be due to investors’ preoccupation with regulatory developments such as SFDR, as well as the rising number of ESG issues being focused on and the increase in ambition for those issues, they added.
There has certainly been a delay in adding additional sectors or companies to Advance. Previously, the FAQ page for the initiative said they would be included in the focus list from 2023. This has been changed to 2024.
RI understands the PRI been working to ensure that it prioritises delivering on all aspects of the initiative, including stakeholder engagement, capacity-building activities, coordination with external stakeholders, and other investor initiatives.
Moving forward, the PRI plans to work with the advisory groups to identify sectors and companies to add.
‘Ease the work load’
Asked what could speed up progress, the EU asset owner suggested that the PRI should work more closely with the lead investors with a focus on moving the engagement along.
“Maybe it should play a more specific secretariat role, being responsible for allocating assignments, securing meeting dates, drafting minutes etc,” they said. “I don’t know if that would be realistic in any way, but it would possibly ease the work load of the lead investors.”
Another EU manager told RI the slow progress is not due to lack of effort but reflects the fact that human rights is a difficult topic to quantify and to demonstrate materiality to companies.
They said it would be helpful if the PRI were to take stock and set more quantifiable targets to demonstrate progress.
However, one UK investor said the rate of progress is down to individual engagement teams and the companies themselves, “which of course vary in ambition for outcomes and the time they have to allocate to Advance versus other priorities”.
They added: “My one is progressing well enough, with several investor meetings so far to prepare and awaiting a date with the company now.”
And a UK asset owner told RI that collaborative initiatives “can take time to gain momentum”.
They added that the fund’s involvement in Advance has in some ways helped contribute to/shape its own direct engagement activity. “So it has been meaningful and additive for us,” they said.