UK asset owner pauses PRI membership to focus on ‘more specific’ industry bodies

Pension fund says network remains valuable, particularly for schemes without in-house RI teams.

UK pension scheme Nest paused its membership of the Principles for Responsible Investment (PRI) last year as it finds groups focused on “specific issues” more relevant to its work, the asset owner has told Responsible Investor.

Nest is growing quickly and as a responsible investor we want to be more specific in the key risks we’re managing in our portfolio,” a spokesperson for the £33 billion ($42 billion; €38 billion) scheme explained.

“As we refine our RI approach, we’re finding that representative bodies, focused on specific issues, are more relevant and targeted to the core work we’re doing.” 

As examples, the spokesperson pointed to the Institutional Investors Group on Climate Change (IIGCC) and the Workforce Disclosure Initiative (WDI). Nest has not left “other similar groups” over the past year, they said.

The spokesperson added that the PRI’s reporting requirements were also among “the range of factors” considered when Nest chose to pause its membership.

In the past, signatories have raised concerns around the requirements. In December, the network announced that reporting and assessment would be voluntary in 2024 for any investor signatory that reported this year, and those in their grace period.

Despite its decision to leave the PRI, Nest sees the initiative as a useful vehicle for pension schemes to publicly demonstrate their commitment to investing responsibly, the spokesperson said.

“It provides a wealth of knowledge and resource to support members in fulfilling their RI responsibilities and we encourage other schemes, particularly those without in-house RI teams, to consider signing up.”

They also noted that Nest asks its fund managers during procurement exercises whether they are signatories of the PRI and/or other initiatives. “We believe the annual reporting provides useful information for asset owner clients.”

They added that the decision to pause membership is being kept under review.

A spokesperson from the PRI told RI: “The PRI welcomes feedback from its signatories on an ongoing basis. Signatories voluntarily delist for a number of reasons, and it is not the PRI’s place to comment on individual cases.”

In September, RI conducted a survey to see how asset owners were managing the growing number of sustainability initiatives vying for their support.

Analysis of results found that the vast majority of respondents believed consolidation among initiatives is needed, with 91 percent of asset owners saying they periodically reviewed their sustainability and ESG memberships, and the remainder planned to do so in the future.

Two-thirds of asset owner respondents also said they had considered leaving an initiative in the last 12 months.

The most commonly selected reasons were “duplication around goals/aims of initiatives” and “lack of impact”. These were followed by “resource constraints”, “credibility concerns” and “costs”.