Ethical Performance
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UN shows displeasure with five PRI backsliders

September 2009

Five signatories to the United Nations-backed Principles for Responsible Investment (PRI) have been de-listed for not complying with its annual reporting and assessment process.

The de-listed institutions – Desban (Brazil), Christopher Reynolds Foundation (US), Foresters Community Finance (Australia), Oasis Asset Management and Trinity Holdings (both South Africa) – all failed to take part in the PRI’s annual survey, which is mandatory for asset owner and investment manager signatories that have been signed up for more than a year.

The most high-profile of the organizations, Cape Town-based Oasis, said it had missed the deadline because it had been pre-occupied with helping its 35,000 clients get through ‘the most volatile markets the world has ever seen’. It said it remains committed to the PRI and hopes to ‘rectify the situation’.

The PRI said it was not yet sure whether the other four would attempt to rejoin, but would like to see them do so. James Gifford, its executive director, added: ‘We understand that participation in this survey can be time consuming and some funds have found it difficult to allocate these resources, particularly during these times. We would welcome them back at any time.’

The PRI’s move echoes similar disciplinary measures taken by the UN’s Global Compact as it has striven to prevent organizations signing up to its principles while doing little to uphold them.

Other social responsibility initiatives, such as the Extractives Industry Transparency Initiative and the Voluntary Principles on Security and Human Rights, have also come under increasing pressure to put sanctions in place against ‘free riders’.

In a suggestion that there could be further tightening of reporting conditions on PRI signatories, the UN has also announced that over the next year it will consult with signatories on a ‘transparency framework’ that will become part of the mandatory reporting and assessment process from 2011.
‘We would not expect signatories to disclose commercially sensitive or legally confidential information, but they should be sufficiently transparent to ensure their clients, customers, members and other stakeholders have a clear sense of their responsible investment processes, activities and capabilities,’ said Gifford. ‘The aim will be to roll this framework into the annual reporting and assessment process.’

Watson Wyatt investment consultant Jane Goodland said the new guidelines were ‘probably a positive development’, adding that the the PRI ‘looks like it is starting to apply some rigour’.

Aside from the five institutions that were de-listed, three others also voluntarily left the PRI last month – Mennonite Mutual Aid (MMA), New York State Teachers’ Retirement System (both US) and Rapaki Property Group (New Zealand). MMA, which manages $1.5billion (£929million) in assets, said it still supports the initiative but found the reporting requirements ‘onerous’. It is unclear why the other two left.

The PRI, set up three years ago to help investors better integrate CSR issues into their investment decisions, has 573 signatories – 93 of whom have joined in 2009.

Principles for Responsible Investment | Global | Responsible Investment

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