The investor network targets heightened presence and relevance in emerging markets and developing economies.
The Principles for Responsible Investment’s (PRI) recently unveiled strategic plan seeks to better incorporate the views and needs of its increasingly diversified signatory base, as well as setting four key focus areas for the organisation, according to CEO David Atkin.
The new strategy sets priorities over the next three years for the investor network, which doubled in size between 2019 and 2023. The PRI now counts 5,300 signatories with more than US$120 trillion in AUM, spread across 100 countries and representing public and private markets, large asset owners, investment managers, and emerging markets (EMs).
The plan focuses on four key areas, including: driving signatory progression on responsible investment while streamlining PRI mandatory reporting; strengthening regional responsible-investing ecosystems in both mature markets and emerging economies; amplifying signatory impact by supporting and leading collaborative initiatives; and strengthening the enabling environment for responsible investment by influencing government and multilateral policy.
“The diversity of the signatory base has really changed,” Atkin told ESG Investor. “The levers that signatories have are different across markets, so we need to be more nuanced in our approach. There’s no one-size-fits-all.”
The four focus areas were selected following extensive consultation with signatories, Atkin explained, including through individual meetings, workshops and surveys. The PRI also ran a member consultation, ‘Responding to a Changing World’, between March and May.
In their responses, signatories stressed the need for the investor network to recognise that there is no one way to be a responsible investor, and that issues that are important to them will vary according to their strategy and geographical basis.
“We’ve tried to consolidate and focus on the key areas that signatories wanted to see from us,” said Atkin. “We’re very confident that we’ve captured [their] sentiment and got the right areas to work on.”
Supporting progress
Among the four priorities, offering a progression pathway for signatories is a new focus for the PRI. The network will look to provide signatories with support, guidance and resources at various stages of their journey, as well as help them develop responsible investment practices in line with their individual objectives, mandates and regulatory context.
“The progression pathways we’ve been testing through this consultation have received strong support,” said Atkin. “There’s still a lot of detail to work through, but we’re committed to co-designing those and think this will change the way [we are] able to support the diversity of approach of our signatories.”
Those pathways should take the PRI two to three years to fully implement, and will require the paring back some of the mandatory reporting currently expected of signatories.
“When the PRI started, there was no responsible investment reporting in the marketplace,” said Atkin. “Now there’s a plethora of those – both mandatory and voluntary.”
While reporting remains important to demonstrate that signatories are meeting the PRI principles and for global benchmarking, parallel requirements exist under stewardship codes and the Task Force on Climate-related Financial Disclosure.
“Our reporting needs to reflect that and make sure that signatories are only having to report once, not in multiple formats,” Atkin added. “Progression pathways is one of the most important strategies for the PRI. [We] want to see more than 50% of our signatories’ AUM participating in one of those pathways, demonstrating that the idea is resonating with members.”
A key balance to strike for the investor network, is to ensure the different circumstances facing signatories are being taken into account, while encouraging them to continue improving their practices.
“We could lift the minimum standards and that is under review, but we heard that if you lift them too high too quickly, you stop the learning curve – particularly in EMs,” Atkin explained. “If you’re going to solve sustainability issues, those markets need to be active and involved in responsible investing.”
EM focus
The other three focus areas set out in the new strategy are largely an evolution of what the PRI has previously been doing, but in greater detail. One of those will see the network targeting the development of regional responsible investing ecosystems in EMs and developing economies.
As part of these efforts, the PRI will aim to strategically increase its presence and improve its relevance locally, responding to the growing importance of EMs to sustainability priorities and system-wide risks. The network will also look to bridge communications between investors in those markets.
The PRI currently counts 640 EM signatories representing US$12.4 trillion in AUM, spread across 46 countries – including 120 members in Africa, 150 in Brazil, China, and Latin America respectively, and 40 in the Middle East.
“Systemic risk issues particularly play themselves out in EMs, and we’re getting strong signalling from those markets that they want to engage with the PRI,” said Atkin. “Increasing our work in these regions will enhance our collective understanding of global investor challenges and provide avenues for more collaborative and productive action towards a sustainable global financial system.”
A priority jurisdiction for the PRI in the coming period will be India, where it currently has 40 signatories. In addition, the investor network expects to see strong membership growth in Southeast Asia and Brazil over the next three years.
“If there’s one thing to say about this plan compared to previous ones, it’s that we’ve tried to really focus on the things that matter and build it in a way that tracks our success against the implementation of the strategy – which is why [key performance indicators] are important,” said Atkin.
