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Overview of the PRI1
The Principles for Responsible Investment (the “PRI”) (formerly known as the United Nations Principles for Responsible Investment or “UN PRI”) is an initiative developed in partnership with the United Nations Environment Program Finance Initiative and the United Nations Global Compact. The PRI recognizes that responsible investing can and should be pursued by investors whose sole purpose is to achieve financial return. This overarching philosophy is reflected in the affirmation required to be made by each PRI signatory:
As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (“ESG”) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognise that applying these Principles may better align investors with broader objectives of society.
Taking into consideration this affirmation, the PRI set forth six principles that call for signatories to integrate responsible investment into their investment decisions. The six principles are to:
PRI Membership – Overview of Requirements2
In addition to being expected to integrate some or all of the PRI principles, PRI signatories are subject to certain additional minimum requirements. The failure to comply with these requirements after an initial phase-in period can result in the signatory being de-listed as a PRI signatory – an event which could have negative public relations implications for the former signatory. In relevant part, PRI signatories are required to:
It is important to remember that the PRI requirements are intended to foster collaboration and ongoing enhancement of best practices by investment managers committed to responsible investing. They are not regulatory requirements.
1) Additional information can be found on the PRI’s website.
2) For additional information on the minimum PRI membership requirements see Minimum requirements
for membership and PRI Minimum Requirements.
3) New signatories have a one year grace period in which the first reporting cycle is voluntary. However, the PRI recommends that new signatories prepare an annual report in their first year. The annual report is prepared and submitted via a reporting tool available on the PRI website.
4) These include discussions of (i) organizational overview, (ii) strategy and governance and (iii) climate change reporting.
5) The PRI reviews each signatory’s credentials (both on an individual and a peer-relative basis) before awarding them an official PRI rating for the year. The PRI rating is not publicly available but can be requested by certain entities.
6) For PRI guidance on developing a responsible investing policy, see Investment Policy: Process & Practice.