RI Interview: PRI MD Fiona Reynolds on Danish pension funds’ departure

Response to unexpected withdrawal by leading investors

Fiona Reynolds, the Managing Director of the Principles for Responsible Investment (PRI), says she hopes to change the minds of the six Danish pension funds who quit the PRI unexpectedly today citing concerns about how the initiative is governed.

“We want to change their minds,” she told RI in an interview.

ATP, Industriens Pension, PensionDanmark, PFA, PKA and Sampension said they were quitting over poor governance over a “sustained period” at the London-based body. They are upset over what they say is the PRI’s “lack of democracy and transparency”.

Reynolds said a pre-arranged meeting that had been scheduled for January 13th in Copenhagen with Danish signatories would still be taking place. “We’ll go ahead with the meeting and hope they will attend,” she said, adding that PRI Advisory Council members, PGGM Investments CEO Else Bos and Niels Erik Petersen, chief investment officer at Denmark’s Unipension, would also attend.

She told RI she was “deeply disappointed” by the Danish funds’ decision. “Danish funds play a very important role in responsible investment, they’re leaders,” she said.

She said the PRI had already committed to reviewing its governance structure, in response to concerns raised. This review would be undertaken by the body’s incoming chair, whose appointment is currently at the short-list stage.

Reynolds said she has “had a lot of engagement” on the governance issue since she took the MD role earlier this year and didn’t understand the funds’ decision: “How much more seriously can we take things? I have done everything I can.”To help it engage with signatories, she said the PRI is planning to roll out a global signatory consultation, comprising a survey and interviews conducted by an external company.

“The PRI is complex and complicated, because it’s global – there’s no one way to do responsible investment,” she said. “The PRI needs flexibility.”

“We’re not a public company, we’re a signatory organisation”

The Danish funds liken their relationship with the PRI to that between investors and companies. ATP says it has been in dialogue with the PRI for three and a half years trying to “re-establish satisfactory governance”.

But Reynolds said: “We’re not a public company, we’re a signatory organisation with a very diverse number of signatories with different approaches.”

Another issue raised by the funds is a perceived lack of accountability and transparency at the top of the organisation, stemming from what ATP calls the ‘private’ PRI Association Board, the UK-based company which directs the secretariat.

The PRI is overseen by a 16-person Advisory Council (PRIAC) and a seven-person PRI Association Board (PRIAB). While the Council sets the long-term direction of the PRI, the board, according to the PRI’s Annual Report, is “responsible for the overall effectiveness, performance and conduct of the Initiative”.

Reynolds contends that the PRIAB is indeed accountable to the Council, a “globally elected body made up of our signatories” and that the board is appointed by the Council. The PRI has no interest in not being transparent, Reynolds says. Link to PRI statement.