UN PRI takes legal advice on Mercer data ownership

Investor signatories raise questions about use of information handed over for PRI progress report.

The UN Principles for Responsible Investment (UNPRI), the $13 trillion (€8.3 trillion) institutional investor initiative, has taken legal advice over the ownership of data that Mercer, the investment consultant, collects on its behalf. Signatories to the PRI told Responsible Investor that a definitive statement on the data ownership had yet to be made and that further discussions on the issue would take place at the PRI’s forthcoming annual summit in Seoul, South Korea, in June.
UNPRI, initiated in 2005 and supported by Ban Ki-Moon, UN Secretary-General, has become one of the largest investor collaborations in the world with hundreds of signatories, including the world’s largest pension funds and asset managers. It encourages investors to integrate environmental, social and governance (ESG) factors into investment and become active shareholders in the companies they invest in by signing up to six principles, one of which is to push for better corporate transparency.
Mercer was hired by the PRI on a three-year contract to carry out a detailed annual survey of PRI signatories and their progress in adopting the principles. The consultant recently collected responses for the 2008 PRI progress report. However, signatories say they have become concerned about clarity over the way the data is used. One signatory, speaking off the record, said: “We, and other investors, believe there are issues about the way the information, which could be commercially sensitive, is handled. We also think it would be good practice for there to be an annual tender for the data processing.”
Another investor, speaking off the record, said: “We don’t feel this issue has been fully resolved yet and there willbe further discussions.”
Mercer has built the largest global team of specialist responsible investment consultants since launching a dedicated unit in 2004. In June, 2007, it created the Principles for Responsible Investment (PRI) Implementation Service, including the monitoring of ESG factors within investment at fund managers.
James Gifford, executive director of the PRI said: “Mercer is not permitted to disclose the information from the review in any way. The data stays confidential. Our lawyers are quite clear on that. It’s difficult to stop whoever collects the data being aware of it, but like last year’s data, it is aggregated anonymously. The questionnaire is an extremely intricate document and it needs both IT and consultant analysis skills. Mercer has done an excellent job in a hugely complicated process.”
Garrie Lette, head of global strategic research at Mercer, said: “Clearly we have an agreement with the PRI about how the data can be used, such as anonymity for signatories in all cases and the fact that if we use the data in any other way we have to make it available to the PRI to publish on its website. There are only a limited number of people at Mercer that have access to the data and when protocols are introduced then these will apply.”
The UNPRI has become an increasingly potent force in the institutional investment world. An amendment tabled by the UK Conservative Party to the UK Pensions Bill, proposes that fund managers sign up to the PRI before they can manage the estimated £4-£5bn ($8-10bn) per annum in new UK pensions money to come on stream in 2012 under the proposed personal pension accounts system.