16/7/2009
By Sophie Baker
Responsible investment has continued to rise in popularity despite difficulties in the markets, demonstrated by the 560-plus signatories to the UN-backed Principles for Responsible Investment (PRI) Initiative.
The PRI's annual assessment of its signatories has shown that there are now over US$18trn in assets signed up to the principles, which consist of six duties signatories agree to comply with.
The Principles aim to help investors integrate the consideration of environmental, social and governance (ESG) issues into their investment decision-making and ownership practices, which in turn should improve long-term returns to beneficiaries.
The PRI Reporting and Assessment process, managed by financial consultant Mercer, surveyed around 300 global pension funds and fund managers, who are all signatories to the PRI, on how they have implemented the six principles. The survey found that two thirds of asset owners, including pension funds, feature responsible investment elements in their contracts for external managers of their investments, although less than 15 per cent include these in the incentive structure of externally managed funds.
It was also found that a majority of signatories are considering Responsible Investment/ESG capabilities where relevant in the selection of various categories of service provider.
Jane Ambactsheer, global leader of Mercer's responsible investment business, said: "It is very impressive to see the increase in the level of responsible investment implementation over the past three years. It is interesting to note that investors involved in the PRI since the beginning achieved higher results than newer signatories. This likely reflects two things: Firs, these funds have had more time to develop and further their implementation approach,. Second, the signatory base is becoming more diverse. Each signatory comes in at a different starting point - and increasingly, from different perspectives."
James Gifford, executive director of the PRI, added: "It is striking to see the growth in responsible investment in a year of financial crisis. Not only are more and more mainstream institutions signing the PRI, but this survey shows that they are moving ahead each year in their implementation of the principles."
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