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Report by the UN Principles for Responsible Investment finds that asset owners and investment managers have increased their commitment to Responsible Investing in the wake of the economic crisis.
Ottawar (22 July 2009) – An increasing number of institutional investors are adopting socially responsible investing (SRI) into their internal and external operations in response to the global financial crisis, according to a recent report.
This is according to a report released last week entitled PRI Report on Progress 2009. The report was prepared by the Principles for Responsible Investment (PRI) Initiative—an investor partnership with the UN Environment Programme Finance Initiative and the UN Global Compact. PRI currently has 560 signatories managing a total of 18 trillion (US) in assets. The number of signatories to the PRI more than doubled in 2008 to 381, and since then has increased to the current number.
The report analyzes the responses of almost 300 global pension funds and fund managers out of the 560 signatories to the PRI. It utilizes research and analysis provided by Mercer, a global pension and investment consulting firm.
Data collected for the report shows signs of a growing culture of active ownership and cooperation among investors in response to the financial crisis, due, in part, to the recognition that a proper consideration of environmental, social and governance (ESG) issues within the investment process is a key component of a successful investment strategy.
The report found that 87 percent of asset owners and 84 percent of investment managers have policies in place that reference responsible investment (RI) and environmental, social, and governance (ESG) issues. Furthermore, more than 90% of asset owners and investment managers that have a policy have reviewed that policy in the past three years.
It found that a majority of signatories engage in screening as a way to implement ESG issues in investment analysis and decision-making. While ethical considerations remain at the forefront of screening practices, a majority of respondents also consider such financial issues as controlling risk and the elimination of long-term underperformers as factors.
The report also indicates a high degree of successful engagement in the area of active ownership. Sixty-four percent of signatories reported that they vote on all shareowner resolutions in their domestic markets whenever possible. Only five percent of signatories do not do any engagement, according to the report.
Respondents reported a total of 12,805 shareowner engagements with corporations in 2008. The rate of successful engagements by investment managers was 50 percent and 40 percent for asset owners.
About 85% of signatories now report that they collaborate with other investors on a regular basis to enhance investment effectiveness. The initiatives most widely supported by investors were the United Nations Environment Program Finance Initiative (UNEP FI), the Carbon Disclosure Project (CDP), and the International Corporate Governance Network (ICGN).
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