What Are The Principles For Responsible Investment?

The Principles were developed by investors, for traders. In applying them, signatories donate to creating a more lasting global economic climate. “As institutional traders, we have a duty to do something in the best long-term passions of our beneficiaries. In this particular fiduciary role, we think that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).

We also recognise that applying these Principles may better align traders with broader objectives of society. Principle 1: We will integrate ESG issues into investment evaluation and decision-making procedures. Principle 2: We will be energetic owners and include ESG issues into our possession policies and practices. Principle 3: We will seek appropriate disclosure on ESG issues by the entities where we make investments.

Principle 4: We will promote approval and implementation of the Principles within the investment industry. Principle 5: We will continue to work together to improve our performance in implementing the Principles. Principle 6: We will each report on our activities and improvement towards applying the Principles. The Principles for Responsible Investment were produced by an international band of institutional traders reflecting the increasing relevance of environmental, sociable and corporate governance issues to investment procedures.

The process was convened by the US Secretary-General. In putting your signature on the Principles, we as traders invest in adopt and put into action them publicly, where consistent with our fiduciary responsibilities. We also invest in evaluate the effectiveness and enhance the content of the Principles as time passes. We believe this will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader passions of society.

The Principles are voluntary and aspirational. Principle 1: We will include ESG issues into investment evaluation and decision-making procedures. Address ESG issues in investment policy claims. Support development of ESG-related tools, metrics, and analyses. Assess the capabilities of inner investment managers to include ESG issues. Measure the capabilities of external investment managers to include ESG issues. Ask investment providers (such as financial analysts, consultants, brokers, research firms, or ranking companies) to combine ESG factors into changing research and analysis. Encourage other and educational research on this theme.

Advocate ESG training for investment experts. Principle 2: We are active owners and incorporate ESG issues into our ownership policies and practices. Develop and disclose an active ownership policy constant with the Principles. Exercise voting rights or monitor compliance with voting policy (if outsourced). Develop an engagement capacity (either straight or through outsourcing). Take part in the introduction of policy, rules, and standard environment (such as promoting and safeguarding shareholder privileges). File shareholder resolutions consistent with long-term ESG considerations.

Engage with companies on ESG issues. Take part in collaborative engagement initiatives. Ask investment managers to undertake and record on ESG-related engagement. Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest. Require standardised reporting on ESG issues (using tools such as the Global Reporting Initiative). Require ESG issues to be integrated within annual financial reports.

Ask for information from companies regarding adoption of/adherence to relevant norms, criteria, codes of conduct or international initiatives (like the UN Global Compact). Support shareholder resolutions and initiatives promoting ESG disclosure. Principle 4: We will promote acceptance and implementation of the Principles within the investment industry. Include Principles-related requirements in demands for proposals (RFPs). Align investment mandates, monitoring procedures, performance indications and incentive structures accordingly (for example, ensure investment management processes reflect long-term time horizons when appropriate).

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Communicate ESG targets to investment service providers. Revisit human relationships with service providers that neglect to meet ESG anticipations. Support the introduction of tools for benchmarking ESG integration. Support regulatory or policy developments that allow implementation of the Principles. Principle 5: We will work together to improve our effectiveness in implementing the Principles. Support/participate in networks and information platforms to share tools, pool resources, and make use of investor reporting as a way to obtain learning. Address relevant emerging issues Collectively. Develop or support appropriate collaborative initiatives.

Principle 6: We will each report on our activities and progress towards implementing the Principles. Disclose how ESG issues are integrated within investment practices. Disclose active possession activities (voting, engagement, and/or policy dialogue). Disclose what is required from service providers in relation to the Principles. Talk to beneficiaries about ESG issues and the Principles. Report on improvement and/or achievements relating to the Principles utilizing a comply-or-explain approach. Seek to determine the impact of the Principles.