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This week the PRI launched its new three-year strategy which enables continued delivery of its 10-year Blueprint for Responsible Investment. Martin Skancke and Fiona Reynolds discuss the strategy which comes at a significant moment for the organisation and its global signatories as well as for the wider responsible investment movement.

The evolution of responsible investment and the PRI

Over the past decade, and particularly in the past few years, we’ve seen a shift, with a tangible acceleration in the uptake of ESG investing and both a mainstreaming and maturing of responsible investment philosophies and practices. Today, we’re facing inter-related crises: the COVID-19 pandemic, environmental challenges and deepening social inequalities.

In the wake of the pandemic, the private sector along with many governments and regulators are maintaining a focus on sustainability issues and commitments to ESG activities are only continuing to grow. At the same time, there is increasing recognition that issues such as climate change, human rights abuses and inequitable social structures seriously threaten the long-term performance of economies, investors’ portfolios and the world in which clients and beneficiaries live.

Even with this increased focus on sustainability, there is still much more to be done. In this period of momentum, it’s clear our Blueprint has never been more important. It provides a meaningful framework, through which we can continue to drive progress and deliver value to our signatories around the world.

In line with the evolution of responsible investment, as an organisation, the PRI has also come a long way. Starting with a small but dedicated group of signatories in 2006, we’ve grown to a diverse membership of nearly 4,000 global signatories representing more than half of the world’s institutionally managed funds.

Over the past year, we’ve worked closely with our signatories to develop our new strategy ensuring that as an organisation of, by and for signatories that it is first and foremostly underpinned by the perspective of the investor in the market economy. It draws on the distinctive strengths of the PRI to respond to the external environment we operate in and determine where we are best placed to deploy our efforts.

Maintaining inclusivity and increasing accountability

Importantly, the new strategy maintains an inclusive approach; the PRI will remain a ‘big tent’ organisation at its heart, open to all potential signatories. As responsible investment continues to grow, encouraging all investors to become responsible investors is critical to achieving momentum. Of course, we recognise that in welcoming a diverse signatory base, not every resource or programme that we produce will be relevant to every signatory. There will be no one-size-fits-all approach, but instead we’re aiming to provide value for everyone and to drive forward responsible investment as a whole.

In remaining a ‘big tent’ organisation, increasing the accountability of our signatory base will be key to tackling risks of greenwashing. We will continue to move the needle on what it means to be a signatory, celebrating leadership and raising the bar both at the bottom and the top. We will strengthen our minimum requirements and complete the reform of the reporting and assessment framework, aiming to improve practice over time. This year we’re piloting the new reporting framework and are encouraging signatory feedback. This will be reviewed by the board, who will formally report back to signatories on the outcomes of the pilot review before the 2022 reporting period.

Driving ESG incorporation and outcomes

The theme of our new strategy is ‘building a bridge between financial risk, opportunities and real-world outcomes.’ At its core, it will focus on ESG incorporation and we will continue to develop resources for those new to responsible investment as well as to respond to industry developments with work on asset classes and strategies where incorporation continues to progress. Empowering asset owners in their position at the top of the investment chain also remains critical to our success and we will work closely with them to increase the ambition of stewardship activities.

To complement our work on practices and frameworks, we will support the evolution of the industry. Increasingly we see investors recognising feedback loops between the real economy and financial markets, where the outcomes they shape directly impact the risks and opportunities they face. So, in this strategy, we will help those signatories seeking understand what this looks like in practice, how to integrate and measure outcomes, while remaining firmly grounded in fiduciary duty and the broader role of investors in society.

ESG issues and priority areas

This strategy begins against the backdrop of the COVID-19 pandemic as well as longer-term environmental emergencies and social equality failures. To help signatories navigate the next three years, we will prioritise two areas within our ESG incorporation work. Firstly, climate mitigation, as the most urgent existential challenge facing society, including focus on net-zero as well as biodiversity. And secondly, human rights, as both an immediate source of protection for individuals from harm and discrimination and as a necessary foundation for lasting social equality, stability and productivity.

We’re also experiencing significant tailwinds with sustainability high on the agenda in several important markets, providing the best opportunity for global co-operation we’ve seen in some time as well as an increasing role for responsible investment in global financial regulation. As such, our policy programme will play an important role in the new strategy, contributing to the inclusion of sustainability factors being imbedded in financial policy and regulation around the world. We’ll also leverage this opportunity to increase harmonisation, supporting the development of standardised and comparable sustainability reporting for investors and corporations.

Strengthening a shared vision

In the creation of this strategy, it was clear to us that the external environmental has evolved significantly since the PRI’s purpose and mission were originally conceived. Since then, we’ve seen the adoption of the Paris Agreement and the Sustainable Development Goals, as well as an evolution in terminology, investor expectations and practices. So, to ensure our mission and purpose remain relevant, during this strategy period we will take the opportunity to consult with signatories on these cornerstones. Any possible changes will be put to signatory vote in 2022.

Our ultimate aim is to enable a sustainable global financial system and delivering this three-year strategy will be a major stepping stone to achieving our mission. It is an ambitious vision – and one we are well placed to achieve together.

You can find the full details in our 2021-24 Strategic Plan and further information on our key programmes for 2021/22 as well as a review of activities from the past year in our Work Programme.

Martin Skancke is chair and Fiona Reynolds is CEO of the PRI.

The C$23 billion Canadian fund, OPTrust is embracing the power of technology to improve investment outcomes. Wei Xie and Brandon Da Silva explain the fund’s focus on two subdomains of machine learning and how they can be used together: reinforcement learning and uncertainty modelling.

The exponential growth in new technology is democratising the investment process and allowing people to take investing into their own hands. The solution to staying relevant amid the disruption may be fighting fire with fire and using technology to stay ahead of the curve. But as with most things, it’s easier said than done.

For a pension fund like OPTrust, our sole purpose is to provide members with secure, predictable income in retirement. While pension plans are not profit-driven, standing still is like moving backwards in the current environment and we believe it is in the best interest of plan members to harness the power of technology to improve investment outcomes.

That said, applying artificial intelligence and machine learning in financial markets is no easy task.

The data is noisy, which leaves investors searching for insights from the lack of signal. Financial markets are also social ecosystems that experience regular regime changes.

As such, many of the approaches to AI and machine learning that work in other sectors, like health research, may not work in financial markets.

AI and machine learning efforts are resource intensive. Significant time spent on research and development may yield little to no results. The work also generally requires substantial financial resources for data, computing and storage. These are not small obstacles when our focus is on cost efficiency and ensuring investments made result in tangible benefits for our members.

To approach artificial intelligence and machine learning in the financial markets in a practical way, we’re focusing on risk management as it is scalable and relevant in many types of investment strategies.

As opposed to focusing on a niche data set applicable to only one area, the application in risk management could potentially be repurposed in many different situations and create outsized benefits for the total fund portfolio if successful.

Further, we believe success in the research and development process requires focus. The decision on what not to pursue is just as important as what to pursue.

At OPTrust we focus on two subdomains of machine learning and how they can be used together: reinforcement learning and uncertainty modelling.

Uncertainty modelling is about understanding what we don’t know. By quantifying our uncertainty, we are able to manage risk by getting out of an investment when we are not confident in its future.

On the other hand, reinforcement learning involves building an environment where artificial agents learn to behave in a way that is optimised for a reward. Think of it like giving your virtual cat a virtual treat for finding the virtual mouse faster. Humans learn in a similar way. We go into an environment, experiment and find what works and what doesn’t. Then, over time we learn behaviours that produce the desired outcomes.

If AI and machine learning in the risk management space is ultimately successful for OPTrust, we may also consider adopting the techniques in other areas of the fund.

With reinforcement learning, the general approach would be applicable to other scenarios, whether it’s in a capital markets strategy, a total fund problem or environmental, social and governance investing.

While early in our journey, we’ve seen some successes and learned along the way, including following the principle of “measure twice, cut once.”

It’s also useful to have a team-based approach that brings a mix of market experience and technical skill. Cognitive diversity is key to tackling complex problems from multiple perspectives.

We are leveraging this at OPTrust by identifying unique talent through our internship program. In fact, Brandon Da Silva started as an intern at OPTrust. Today, he is playing a leadership role in the development of our AI and machine-learning efforts.

At the end of the day, just like our artificial agents are learning, we’re learning too. Our agents are looking for rewards in their simulation environments and through them, we’re looking for rewards for our members by better managing risk with the goal of achieving better long-term returns.

With enough experimentation, we’re confident artificial intelligence and machine learning will help achieve these outcomes.

Wei Xie is co-head and director and Brandon Da Silva is an associate portfolio manager in the multi-strategy investing team at OPTrust, a defined benefit pension plan with over 98,000 members and over C$23 billion in assets under management.

Speaker

Moderator

Tate has been an investment industry media publisher and conference producer since 1996. In his media career, Tate has launched and overseen dozens of print and electronic publications. He is the chief executive and major shareholder of Conexus Financial, which was formed in 2005, and is headquartered in Sydney, Australia.
The company stages more than 20 conferences and events each year –
in cities which have included London, New York, San Francisco, Los Angeles, Amsterdam, Beijing, Sydney and Melbourne – and publishes three media brands, including the global website and strategy newsletter for global institutional investors conexust1f.flywheelstaging.com. One of the company’s signature events is the bi-annual Fiduciary Investors Symposium. Conexus Financial’s events aim to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. Tate served for seven years on the board of Australia’s most high profile homeless charity, The Wayside Chapel; and he has underwritten the welfare of 60,000 people in 28 villages throughout Uganda via The Hunger Project.

Speaking at the Top1000funds.com event, Sustainability: A planet in trouble, renowned feminist Gloria Steinem tells institutional investors it is time to ditch the labels that describe our gender, class or ethnicity and urged the investment community to look at investments through the lens of gender, class and racial equality.

About Gloria Steinem

Gloria Steinem is a writer, political activist, and feminist organizer. She was a founder of New York and Ms. magazines, and is the author of The Truth Will Set You Free, But First It Will Piss You Off, My Life on the Road, Moving Beyond Words, Revolution from Within, and Outrageous Acts and Everyday Rebellions, all published in the United States, and in India, As If Women Matter. She co-founded the National Women’s Political Caucus, the Ms. Foundation for Women, the Free to Be Foundation, and the Women’s Media Center in the United States. As links to other countries, she helped found Equality Now, Donor Direct Action, and Direct Impact Africa. For her writing, Steinem has received the Penney-Missouri Journalism Award, the Front Page and Clarion awards, the National Magazine Award, the Lifetime Achievement in Journalism Award from the Society of Professional Journalists, the Society of Writers Award from the United Nations, and the University of Missouri School of Journalism Award for Distinguished Service in Journalism. In 1993, her concern with child abuse led her to co-produce an Emmy Award–winning TV documentary for HBO, Multiple Personalities: The Search for Deadly Memories. She and Amy Richards co-produced a series of eight documentaries on violence against women around the world for VICELAND in 2016.
In 2013, she was awarded the Presidential Medal of Freedom by President Barack Obama. In 2019, she received the Freedom Award from the National Civil Rights Museum. She is the subject of Julie Taymor’s recent biopic, The Glorias, released in Fall 2020.In 1972, she co-founded Ms. magazine, and remained one of its editors for fifteen years. She continues to serve as a consulting editor for Ms., and was instrumental in the magazine’s move to join and be published by the Feminist Majority Foundation. In 1968, she had helped to found New York magazine, where she was a political columnist and wrote feature articles. As a freelance writer, she was published in Esquire, The New York Times Magazine, and women’s magazines as well as for publications in other countries. She has produced a documentary on child abuse for HBO, a feature film about the death penalty for Lifetime, and been the subject of profiles on Lifetime and Showtime.Ms. Steinem helped to found the Women’s Action Alliance, a pioneering national information center that specialized in nonsexist, multiracial children’s education, and the National Women’s Political Caucus, a group that continues to work to advance the numbers of pro-equality women in elected and appointed office at a national and state level. She also co-founded the Women’s Media Center in 2004.
She was president and co-founder of Voters for Choice, a pro-choice political action committee for twenty-five years, then with the Planned Parenthood Action Fund when it merged with VFC for the 2004 elections. She was also co-founder and serves on the board of Choice USA (now URGE), a national organization that supports young pro-choice leadership and works to preserve comprehensive sex education in schools. She is the founding president of the Ms. Foundation for Women, a national multi-racial, multi-issue fund that supports grassroots projects to empower women and girls, and also a founder of its Take Our Daughters to Work Day, a first national day devoted to girls that has now become an institution here and in other countries. She was a member of the Beyond Racism Initiative, a three-year effort on the part of activists and experts from South Africa, Brazil and the United States to compare the racial patterns of those three countries and to learn cross-nationally. As a writer, Ms. Steinem has received the Penney-Missouri Journalism Award, the Front Page and Clarion awards, National Magazine awards, an Emmy Citation for excellence in television writing, the Women’s Sports Journalism Award, the Lifetime Achievement in Journalism Award from the Society of Professional Journalists, the Society of Writers Award from the United Nations, the James Weldon Johnson Medal for Journalism, the University of Missouri School of Journalism Award for Distinguished Service in Journalism and the 2015 Richard C. Holbrooke Distinguished Achievement Award.
In addition to her bestsellers, her writing also appears in many anthologies and textbooks, and she was an editor of Houghton Mifflin’s The Reader’s Companion to U.S. Women’s History.Ms. Steinem graduated Phi Beta Kappa from Smith College in 1956, and then spent two years in India on a Chester Bowles Fellowship. She wrote for Indian publications, and was influenced by Gandhian activism. She also received the first Doctorate of Human Justice awarded by Simmons College, the Bill of Rights Award from the American Civil Liberties Union of Southern California, the National Gay Rights Advocates Award, the Liberty award of the Lambda Legal Defense and Education Fund, the Ceres Medal from the United Nations, and a number of honorary degrees. Parenting magazine selected her for its Lifetime Achievement Award in 1995 for her work in promoting girls’ self-esteem, and Biography magazine listed her as one of the 25 most influential women in America. In 1993, she was inducted into the National Women’s Hall of Fame in Seneca Falls, New York. In 2014, she received The Eleanor Roosevelt Val-Kill Medal Award and in 2013, President Obama awarded her the Presidential Medal of Freedom, the highest civilian honor. Rutgers University is now creating the Gloria Steinem Endowed Chair in Media, Culture and Feminist Studies. In 1993, her concern with child abuse led her to co-produce and narrate an Emmy Award winning TV documentary for HBO, “Multiple Personalities: The Search for Deadly Memories.” With Rosilyn Heller, she also co-produced an original 1993 TV movie for Lifetime, “Better Off Dead,” which examined the parallel forces that both oppose abortion and support the death penalty. She is also host and executive producer of the Emmy-nominated VICE series, WOMAN.Gloria has been the subject of three television documentaries, including HBO’s Gloria: In Her Own Words, and she is among the subjects of the 2013 PBS documentary MAKERS, a continuing project to record the women who made America. She was the subject of The Education of a Woman, a biography written by Carolyn Heilbrun.

About Amanda White
Amanda White is responsible for the content across all Conexus Financial’s institutional media and events. In addition to being the editor of Top1000funds.com, she is responsible for directing the global bi-annual Fiduciary Investors Symposium which challenges global investors on investment best practice and aims to place the responsibilities of investors in wider societal, and political contexts. She holds a Bachelor of Economics and a Masters of Art in Journalism and has been an investment journalist for more than 25 years. She is currently a fellow in the Finance Leaders Fellowship at the Aspen Institute. The two-year program seeks to develop the next generation of responsible, community-spirited leaders in the global finance industry.

What is the Fiduciary Investors series?
The COVID-19 global health and economic crisis has highlighted the need for leadership and capital to be urgently targeted towards the vulnerabilities in the global economy.
Through conversations with academics and asset owners, the Fiduciary Investors Podcast Series is a forward looking examination of the changing dynamics in the global economy, what a sustainable recovery looks like and how investors are positioning their portfolios.The much-loved events, the Fiduciary Investors Symposiums, act as an advocate for fiduciary capitalism and the power of asset owners to change the nature of the investment industry, including addressing principal/agent and fee problems, stabilising financial markets, and directing capital for the betterment of society and the environment. Like the event series, the podcast series, tackles the challenges long-term investors face in an environment of disruption, and asks investors to think differently about how they make decisions and allocate capital.

About William Nordhaus
William Nordhaus was born in Albuquerque, New Mexico (which is part of the United States). He completed his undergraduate work at Yale University in 1963 and received his Ph.D. in Economics in 1967 from the Massachusetts Institute of Technology, Cambridge, USA. He has been on the faculty of Yale University since 1967 and has been Full Professor of Economics since 1973 and also is Professor in Yale’s School of Forestry and Environmental Studies. Professor Nordhaus lives in downtown New Haven with his wife Barbara, who works at the Yale Child Study Center.He is a member of the National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. He is on the research staff of the National Bureau of Economic Research and has been a member and senior advisor of the Brookings Panel on Economic Activity, Washington, D.C. since 1972. Professor Nordhaus is current or past editor of several scientific journals and has served on the Executive Committees of the American Economic Association and the Eastern Economic Association. He serves on the Congressional Budget Office Panel of Economic Experts and was the first Chairman of the Advisory Committee for the Bureau of Economic Analysis. He was the first Chairman of the newly formed American Economic Association Committee on Federal Statistics. In 2004, he was awarded the prize of “Distinguished Fellow” by the American Economic Association.From 1977 to 1979, he was a Member of the President’s Council of Economic Advisers. From 1986 to 1988, he served as the Provost of Yale University. He has served on several committees of the National Academy of Sciences including the Committee on Nuclear and Alternative Energy Systems, the Panel on Policy Implications of Greenhouse Warming, the Committee on National Statistics, the Committee on Data and Research on Illegal Drugs, and the Committee on the Implications for Science and Society of Abrupt Climate Change. He recently chaired a Panel of the National Academy of Sciences which produced a report, Nature’s Numbers, that recommended approaches to integrate environmental and other non-market activity into the national economic accounts. More recently, he has directed the Yale Project on Non-Market Accounting, supported by the Glaser Foundation.He is the author of many books, among them Invention, Growth and Welfare, Is Growth Obsolete?, The Efficient Use of Energy Resources, Reforming Federal Regulation, Managing the Global Commons, Warming the World, and (joint with Paul Samuelson) the classic textbook, Economics, whose nineteenth edition was published in 2009. His research has focused on economic growth and natural resources, the economics of climate change, as well as the resource constraints on economic growth. Since the 1970s, he has developed economic approaches to global warming, including the construction of integrated economic and scientific models (the DICE and RICE models) to determine the efficient path for coping with climate change, with the latest vintage, DICE-2007, published in A Question of Balance (Yale University Press, 2008). Professor Nordhaus has also studied wage and price behavior, health economics, augmented national accounting, the political business cycle, productivity, and the “new economy.” His 1996 study of the economic history of lighting back to Babylonian times found that the measurement of long-term economic growth has been significantly underestimated. He returned to Mesopotamian economics with a study, published in 2002 before the war, of the costs of the U.S. war in Iraq, projecting a cost as high as $2 trillion. Recently, he has undertaken the “G-Econ project,” which provides the first comprehensive measures of economic activity at a geophysical scale

About Sharan Burrow
Sharan Burrow was elected General Secretary of the ITUC at its Second World Congress in Vancouver, June 2010. Prior to this, she held the position of ITUC President since its Founding Congress in Vienna (November 2006) and the position of ICFTU President since its 18th World Congress in Miyazaki (November 2004). She is the first woman to have held any of these positions.
Sharan was born in 1954 in Warren, a small town in western NSW, into a family with a long history of involvement in unions and the struggle to improve the lives of working people.
Her great, great grandfather participated in the shearers’ strike of 1891/92, becoming one of the first organisers for the Australian Workers’ Union and standing for the state seat of Cobar for the fledgling Australian Labor Party in 1896.
Sharan studied teaching at the University of NSW in 1976 and began her teaching career in high schools around country NSW.
She became an organiser for the NSW Teachers’ Federation, based in Bathurst, and was President of the Bathurst Trades and Labour Council during the 1980s.
Sharan was elected Senior Vice-President of the NSW Teachers’ Federation and became President of the Australian Education Union (AEU) in 1992. She represented the AEU on the ACTU Executive through the 1990s.
Sharan was previously Vice-President of Education International from 1995 to 2000. Education International is the international organisation of education unions representing 24 million members worldwide.
In May 2000, Sharan Burrow became the second woman to be elected President of the Australian Council of Trade Unions (ACTU).
In October 2000, Sharan also became the first woman to be elected President of the International Confederation of Free Trade Unions Asia Pacific Region Organisation.
She has also served as a member of the Governing Body of the International Labour Organisation and a member of the Stakeholder Council of the Global Reporting Initiative. As part of her ILO responsibilities, Sharan chaired the Workers’ Group of the Sub-Committee on Multinational Enterprises.
Sharan Burrow was re-elected General Secretary of the ITUC at its 3rd Congress, in Berlin, May 2014 and at its 4th Congress, in Copengahen, December 2018.