PRI Invites Signatories to Help Design Framework

    Share post:

    Stockholm (NordSIP) – The Principles for Responsible Investment (PRI) has grown exponentially in recent years, attracting a global signatory base of 5,372 organisations representing most of the world’s professionally managed investments. Understandably, such a rapid expansion does not come without its challenges. For the past couple of years, the PRI has been engaging in some serious soul-searching, re-examining its vision, mission, and purpose and the value it provides to signatories.

    A broad consultation – PRI in a Changing World – conducted last year revealed that the overwhelming majority of the organisation’s signatories expected to progress in their responsible investment activities and wished to demonstrate this progress in terms more relevant to them than is currently possible. In response to this desire, the PRI set about to design a framework, Progression Pathways, meant to serve as a step-by-step journey for PRI signatories to develop and progress their responsible investment practice.

    - Partner Message -

    Progression Pathways in search of co-designers

    Now, it is time for the signatories to get seriously involved in this critical work. On 24 October, the PRI announced the launch of a co-design process for the Progression Pathways. Although it will be optional for signatories to adopt the pathways, they are encouraged at this point to participate in the process and ensure that their needs and preferences are reflected in the framework.

    “The nature of what it means to be a responsible investor has fundamentally changed since the PRI’s inception in 2006,” comments David Atkin, CEO of the PRI. “Expectations in the market and among regulators have advanced and at times diverged. Differences in the intended outcomes of responsible investment practices have become more apparent, creating risks of misaligned expectations and making progress more difficult. Our signatories should not feel boxed in, thinking there is a one-size-fits-all approach. These new frameworks will empower us to develop targeted guidance, tools, reporting, and accountability standards while fostering communities of shared practice, and we look forward to co-designing these with our signatories,” he adds.

    Fork in the road

    The PRI proposes two alternative models to structure the Progression Pathways, focusing either on investor purpose or on specific sustainability issues.

    Concept #1 suggests that establishing progression pathways based on investor purpose can help clarify to all stakeholders what an organisation’s actual objectives are. It would also allow them to be better assessed against those objectives and similar peers. For asset owners, investor purpose would be defined at the organisation rather than fund level, whereas for investment managers, this might vary depending on contractual obligations. Investment managers could potentially opt to sit in multiple pathways, where a minimum threshold of their assets under management across multiple strategies is managed in line with that purpose.

    To help promote a holistic approach, such investor purpose-based pathways would also be mapped against internationally recognised frameworks to best use investors’ current responsible investment reporting requirements, such as the TCFD and the UN Guiding Principles.

    Concept #2 focuses on progression through the lens of responsible investment practices applied to specific sustainability issues. Investors could determine the sustainability issues they want to make the most progress on within their practices and join pathways for these at varying levels, depending on their current practices. Examples of such areas could include climate change, human rights, or biodiversity.

    This concept responds to another challenge within responsible investment: broad statements on sustainability issues, stewardship, etc., can obscure sizeable differences in whether and how investors incorporate or influence individual sustainability issues through their investment activities.

    During the co-design process with signatories, one of these two models (or a combination of both) will provide the basis for the new Progression Pathways.

    Get involved

    To kick off the co-design process, the PRI is hosting a series of regional workshops to discuss the new concepts. The Nordic region is not an exception. “Our Nordic signatories have expressed a need from the PRI to help progress their responsible investment activities,” comments Magnus Oden, PRI Head of Nordic, CEE & CIS. “By consulting with our signatory base on the design of Progression Pathways, we now enter the next stage of the iterative development process in an open and inclusive manner. The goal is to identify investor preferences as we design voluntary, non-prescriptive concepts that are based either on investor purpose or on investors’ approach to specific challenges, including how to incorporate climate change, human rights and biodiversity challenges into strong investment practices. The key is to deliver useful tools and guides that are practical for our signatories,” he adds.

    Apart from the regional workshops, there will be other opportunities through the end of 2023 and into 2024 for signatories to engage virtually or provide written feedback. Watch out this space and make your voice heard!

    Image courtesy of Timo Volz on Unsplash
    - Partner Message -

    Nordsip Insights

    From the Author

    Related articles