By Emmet McNamee, Head of Progression and Innovation, PRI
Since we started to develop the Progression Pathways framework last year, we have received valuable and extensive feedback from signatories.
We are pleased to give an update on the Progression Pathways framework, including our next stage of development, and the further opportunities to collaborate and engage with signatories in different regions. As our CEO David Atkin noted last week, supporting signatory progression is one of four focus areas of our new organisational strategy.
This work builds on the concepts first introduced in our October 2023 paper, Progression Pathways: advancing responsible investment practices among PRI signatories.
Signatory base diversity creates need for tailored support
Our signatory base – and the responsible investment ecosystem more broadly – has grown both in size and diversity in recent years, creating a need for us to better differentiate and support signatories with different approaches, goals, and levels of advancement. In response, we are developing Progression Pathways, providing step-by-step journeys for signatories to develop and progress their responsible investment practice. Importantly, we are co-designing the pathways with our signatories to ensure they are actionable and ambitious.
Following our launch session last year at our PRI in Person conference in Tokyo, we held 24 in-person and online workshops between October and December 2023. The workshop goals included familiarising participants with the concepts of the pathways, discussing what signatories need from us to help their progression, and exploring their positive feedback and concerns.
In-person workshops were held in Australia, Canada, China, Brazil, France, Hong Kong, South Africa, Sweden, the UK, and the US. We convened several online workshops to gather insights from signatories in other regions, as well as holding dedicated sessions for asset owner and for investment manager signatories. In total over 450 individuals from approximately 390 signatories participated in the workshops.
Signatories lead the way on Progression Pathways design
During the workshops, we presented participants with our two concepts for the proposed framework. The investor objective model focuses on the extent to which signatories are aligned with their purposes, intentions or objectives as responsible investors, and the issue-specific model looks at how they contribute to advancing investors’ priority sustainability issues.
Most of the signatory participants favoured the investor objective model, due to its flexibility and inclusiveness. This model will frame the Progression Pathways development moving forward. However, signatories noted that many benefits of the issue-specific concept should not be lost in the design, such as being able to evaluate and compare themselves, peers, or managers against tangible issue-specific criteria tied to real-world outcomes.
The investor objective model envisages three types of responsible investment objective:
- to incorporate ESG factors to enhance long-term risk-adjusted returns;
- to tackle the drivers of sustainability risks and thus contribute to mitigating them; and
- to create positive real-world impact as an end in itself.
During the workshops, 94% of participants fully or broadly agreed that these were the right categories for defining investors’ objectives. We believe there will be space for investors to be playing these different roles in a sustainable global financial system.
Figure 1: Progression Pathways investor objective model
Signatories flag design necessities
Overall, signatories that participated in the workshops expressed support for the co-design process and welcomed the early opportunity to shape the pathways’ development.
Across regions, participants emphasised the need for the Progression Pathways to integrate smoothly into different markets, noting that the pathways should use terminology consistent with that of the responsible investing community more broadly. Also, plans to incorporate equivalency – recognising how investors’ participation in existing initiatives and reporting regimes contribute to and demonstrate progression – were universally welcomed and regarded as essential.
Based on the initial draft over half of signatories said they would be likely to opt into or actively use these Progression Pathways, while 35% were interested and open but waiting for more details before offering a view.
Join the co-design effort
We encourage all signatories to join the next stage of the co-design process, via the PRI Strategy Consultation survey (PRI Strategy Consultation 2024: Responding to a changing world) that will be emailed out to signatories next week. The survey will include a section on key Progression Pathways design considerations, including opportunities for peer collaboration, applicable use cases, and further insights on the investor objective model.
Signatory preferences are key to building a solid Progression Pathways programme. Please complete the survey to provide your perspective and help steer our future offerings.
To keep up to date on Progression Pathways news, refer to our webpage or get in touch with the team via email.
