UN Principles for Responsible Investment to look at fixed income ESG integration

New bonds “work stream” being formed

The 882-member $25trn United Nations-backed Principles for Responsible Investment (UN PRI) is looking at how to integrate environmental, social and governance (ESG) factors into fixed income.
It says a “work stream” is currently being established to explore ESG integration in areas such as sovereign, municipal and corporate bonds.
“This will include analysis of how investors can engage with issuers on responsible investment-related topics and use fixed income to promote improved ESG performance,” the PRI says in a new strategy document.
A steering committee will be formed by mid-2011 ahead of a dedicated fixed income session at the PRI in Person event in September.

It’s also setting up a work stream on infrastructure, hedge funds and commodities. “We want to cover all asset classes,” new PRI chairman and re-insurance industry executive Wolfgang Engshuber said in an address to an event organised by index firm FTSE this week. “There is a lot to do. We need to address fixed income.”

It set up a stream to look at impact investing, microfinance and ESG themes last year and is publishing a fact sheet on sustainable forestry.It will hold a webinar on impact investing on May 19. Guidance for impact investors is to be made available in the fourth quarter.

There’s clearly a lot going on at the PRI right now. Apart from a new chairman and a new governance structure, it has just introduced mandatory fees for signatories. In addition it recently announced the appointment of APG’s Governance Head Rob Lake as its new Director of Strategic Development. It’s also emerged that the PRI has set up a separate company in the UK called the PRI Association which now conducts most of its operating activities.

Engshuber said the PRI wants to be truly global, noting that while it’s strong in Brazil and Australia, it is totally unrepresented in other areas.
“This April marks the fifth birthday of the PRI, and it is time for the Initiative to go to the next level of professionalism, capacity and impact,” Engshuber states in his foreword to the PRI’s 2011-2013 Strategy and work programme document.

“Mainstreaming responsible investment across all asset classes, investor types and regions is a massive task. It can only be achieved with a degree of organisational scale, and high-quality staff with experience in the field.”