Principles for Responsible Investment ramps up its US policy engagement

Letter to US signatories from CEO Fiona Reynolds.

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The Principles for Responsible Investment (PRI) has announced plans to ramp up its engagement with US policy makers and regulatory authorities in a letter to signatories in the country.

It comes as the PRI is holding a sustainable finance policy summit in Washington DC today attended by senior investment figures such as GPIF Chief Investment Officer, Hiro Mizuno, Scott Mather, CIO of PIMCO and CalSTRS’ Chair Sharon Hendricks.

The letter, seen by Responsible Investor, announces the responsible investment body’s plan to “enhance engagement with Congress and the SEC to advance a comprehensive set of policy solutions that will create a sustainable financial system”.

US signatories are also encouraged in the missive to “directly engage” with policymakers on sustainability.

The letter describes the US as a “glaring outlier” on sustainable finance policy level that is increasingly “out of step” with other markets.

“Despite its dominant role in the global financial industry, the United States—at a federal level—remains a glaring outlier when it comes to the growing global policy consensus surrounding sustainable finance”, the letter reads.“In some cases, we’ve seen it embark on a rollback of positive features in the existing regulatory framework which support good governance, transparency and consideration of ESG factors in investment processes.”

The letter cites the “chilling effect” the language in the Department of Labor’s 2018
policy guidance has had on ESG integration, as an example, and the recent policies coming out of the SEC on proxy voting, which could have a negative effect on ESG proposals.

Three areas of focus are identified in the letter:

1. ESG disclosure: The PRI has called on Congress and the SEC to mandate corporate disclosure of material ESG matters.

2. Shareholder rights: “In conjunction with our signatories we have opposed policies that would make it more difficult for investors to file proposals at a company’s annual general meeting”
3. Fiduciary duties: “We continue to seek clear and consistent interpretations of fiduciary duty.”