The United Nations Principles of Responsible Investment (UNPRI) will expand its focus beyond the micro focus of ESG implementation for its signatories to include thought-leadership research and public and policy debate, writes Amanda White.
James Gifford, executive director at UNPRI, said the new strategy came out of its board meeting last week in Australia and would include its own internal research function.
“UNPRI is uniquely positioned to contribute to a more sustainable system,” he says.
“We are building on a micro focus of supporting our signatories in implementing principles, but given the problems in the financial system as a whole, UNPRI is uniquely positioned to make a contribution to the solution to a sustainable financial system that delivers returns to members, beneficiaries and customers and also benefits the environment and society.”
He says one of the problems is the misalignment of incentives in the industry.
“You often hear super funds are long term, and most corporations are very long term, but the intermediaries that connect them are very short term,” he says.
“Asset owners are in the driving seat. It is up to them to incentivise managers appropriately.
“We don’t have any answers at this stage, but UNPRI is well positioned to have a look at these issues to create a more sustainable system.”
He says UNPRI will work closely with its signatories, which now number more than 1000, to develop an internal research capability and agenda.
“We want to engage more in public debate around these issues more than in the past. We are canvassing signatories on what they feel we should work on.”
Chair of the UNPRI, Wolfgang Engshuber, said the organisation needs to be more vocal.
“We need to have a public voice, be a thought leader and engage with signatories and policy makers.”
David Atkin, chief executive of the Australian superannuation fund, Cbus, and UNPRI board member, says funds are long-term investors but are driven by short-term incentives.
“We need to understand the issues and collaborate. A lot of focus in the industry is on how we can outperform our peers, but [we] need to see our economies performing well. We don’t focus enough as an industry on the beta, and supporting productive economies.
“We need to collaborate and have a strong voice on these debates. We have been mute in very dramatic times.”
Definitions will be an issue and it will be particularly important to distinguish between:
a) ‘Sustainable’ as in ‘contributes to sustainable development’
b) ‘Sustainable’ as in ‘can be sustained under a business as usual scenario’
c) Long-term
The PRI will need to be very clear on which of these it aims to pursue – as they are often mutually exclusive.