Quarterly Signatory Update: Adapting the PRI to a changing world

PRI in a Changing World

One of my key priorities this year is delivering on the outcomes from the PRI in a Changing World signatory consultation. Since the PRI’s founding, the landscape for responsible investors has changed dramatically. The objective of the consultation was to understand signatory views on the changing expectations of responsible investors, and how the PRI might adapt to better support them. It explored key issues for the future of responsible investment, including the PRI’s mission, governance and the value we provide to signatories.

Having now reviewed signatory responses to the consultation, there are a number of clear priorities for us moving forward. We plan to design pathways to enable and measure progress in ways that acknowledge our diverse signatory base, develop a more agile PRI strategy-setting process, and further assess and seek input on our mission statement and governance, to name a few. I look forward to updating you on our progress in these areas in due course.

Another significant opportunity to contribute to the governance of the PRI is available this year, as we are holding elections for several positions on the PRI Board. Having served on the Board myself some years prior to my appointment as CEO, I know how important and rewarding this work is, and I encourage any interested candidates to submit a nomination.

Taking action through climate initiatives

2023 is the year of transition planning, and the financial sector needs to play a meaningful role in delivering the collective objective of transitioning to net-zero economies. To do that, businesses and investors must commit to goals that are aligned with the best available science, and they must set out clear plans on how they are contributing toward them.

With COP28 in Dubai on the horizon, the PRI has responded to the UN Framework Convention on Climate Change’s global stocktake consultation, which sits at the heart of the Paris Agreement’s ambition mechanism. We highlighted progress in the past eight years, but pointed out that governments still need to provide the right enabling environment to attract private finance flows. We also welcomed the work of the Coalition of Finance Ministers for Climate Action.

2023 is the year of transition planning, and the financial sector needs to play a meaningful role in delivering the collective objective of transitioning to net-zero economies. 

Creating an enabling environment for responsible investment

It is clear that the systemic risks we face from issues such as climate change and in creating inclusive, equitable societies cannot be solved by investors alone. Ultimately, the systemic changes we need must be facilitated by the policy sphere.

To that end, we continue to engage with policymakers in key global markets, supporting the formative processes underpinning these policy changes. So far this year, we have responded to consultations in the EU, UK and China, fed into work being carried out by IOSCO and the OECD, and assessed proposed SEC rules in the US.

We are also delighted to have received support from the highest levels of the Japanese government for our flagship annual conference, PRI in Person, which will bring us to Tokyo this October. I look forward to welcoming our distinguished keynote speakers – Prime Minister Fumio Kishida and Tokyo Governor Yuriko Koike – and hope to see many of you there too.

We are also delighted to have received support from the highest levels of the Japanese government for our flagship annual conference, PRI in Person, which will bring us to Tokyo this October.

Challenges to responsible investment

We know that some within the US political sphere are talking loudly and frequently in efforts to impede our important work. And we understand the concerns and risks that our US signatories share as this situation continues to develop. In light of this rhetoric, our message is clear: the principles of responsible investment are sound, and the PRI is here to support our signatories’ efforts.

It is a significant mischaracterisation to claim that considering responsible investment in decision-making is incompatible with investors’ fiduciary duty to their clients. We know well that responsible investment is about mitigating risk and identifying new opportunities for growth. It holds that investors are more likely to succeed when they consider all potentially relevant and useful information in their investment decisions – in fact, failing to do so could well be a breach of their fiduciary duty.

We understand that the PRI’s role, at the nexus of the responsible investment landscape, is to continue to advocate for investors’ freedom to act in the best interests of their organisation, their clients and their beneficiaries. We welcome good-faith discussions about the future of responsible investment and how best our industry can align to realise the benefits it offers. However, mandating limits on investors’ ability to decide the course of action that is best for their clients is not the way forward.

The work of the PRI will continue, and we will continue to be guided by our signatories in our ambition.

It is a significant mischaracterisation to claim that considering responsible investment in decision-making is incompatible with investors’ fiduciary duty to their clients. Responsible investment is about mitigating risk and identifying new opportunities for growth.

Understanding your local context

From engaging with governments and corporates to developing your investment practices, answering consultations and joining committees and collaborative engagements, it’s a privilege of my role at the PRI to work with so many of our signatories personally, as well as to witness the power of your collective action.

So far this year, I’ve had the pleasure of meeting signatories and other partners in a range of global markets. I started 2023 in my home country, Australia, where I was delighted to attend a PRI-convened roundtable with the Australian Treasurer and a group of influential asset owner signatories. I have also travelled to France, Austria, Singapore and Malaysia, where I was invited to speak at a number of industry conferences and meet with signatories, as well as engaging with our UK signatories back in London.

As our signatory base continues to grow and diversify – gaining over 60 new members in the past quarter – I truly value the opportunity to engage with you, our signatories, in your local context. I look forward to further opportunities to do so throughout the year, including local consultation with signatories on the development of our 2024-27 strategy.

 

 

The PRI blog aims to contribute to the debate around topical responsible investment issues. It is written by PRI staff members and occasionally guest contributors. Blog authors write in their individual capacity – posts do not necessarily represent a PRI view.