PRI, SRI and ESG :
it is not just an alphabet song
We hear a lot in the public about how we should save or invest our hard earned dollars for the future. It applies from individuals, family office to PEs, asset managers and governments across the globe. It’s all generally material about choosing among the mind boggling range of options out there.
But there is a framework that offers a way to think about where and how we put our money and it’s one that many studies have shown resonates with consumers. People nowadays, specially to the new generation leaders, want to be affiliated with a mission, a cause greater than themselves. A program like the UN supported Principles for Responsible Investment, or PRI, is a great program to help frame your thinking. The principles are voluntary and something to which signatories or belief aspire.
The initiative is recognized as the leading global network for investors and financial industry participants who are committed to integrating environmental, social and governance (ESG) considerations into their investment practices and ownership policies. To launch such principles in the Social perspective through community participation , whereby the funds could evaluate worthiness and accountability, adoption of socially recognized SRI processes should give a proper and answerable result.
So what does this really mean and why is it important?
PRI is about responsible investing, which is about more than financial returns. It is about harnessing the unique power of corporations to help address, to varying degrees, global issues like climate change, water scarcity, environmental degradation, worker health and safety, employment dispute etc. etc.. Using ESG criteria in investment decision making is another way to manage risk. Responsible investing also encourages accountability, transparency and corporate responsibility through directed investments, active proxy voting, fairness, corporate engagement and collaboration.
While responsible investing and ESG analysis have been gaining a lot of attention recently, they are not new ideas. Over the years, they have gone by many different names: responsible investing, sustainable and responsible investing (SRI), socially responsible investing (also SRI), values based investing, and impact investing. Many of those terms are still in use.
Sustainable and responsible investing in one form or another has actually been around for centuries, evolving from the Quakers’ refusal to invest in enterprises that supported the slave trade over 200 years ago to the Swire Properties sustainability linked loan with Credit Agricole CIB and their SD2030 strategy of today.
However, sustainable investing is more than just saying no. SRI goes with definitive yes to many targets that could be nurtured. We aim to provide guidance and award throughout the process for targets that wish to bring their investors from well known fund providers such as PEs and governments. The purely exclusionary approach still exists no to alcohol, no to tobacco, or firearms, or fossil fuels. But an integrated SRI approach is becoming more widely accepted.
This approach seeks to identify and analyze corporations through the lens of ESG criteria, evaluating their commitment to environmental responsibility (E); community involvement, stakeholder engagement, employee relations, health and safety issues, supply chain management (S); and sound business practices, ethical behavior, and overall corporate governance (G). So while there may be many different investment methodologies, what these approaches all have in common is a commitment to responsible investment.
A Growing Trend
We have seen growing interest in sustainable and responsible investing over the years as more and more investors are seeking investments that take into account environmental, social and governance considerations. In the US alone, professionally managed assets invested in sustainable and responsible strategies have grown from $639 billion in 1995 to $6.57 trillion in 2014. And as noted above, since its launch in 2006, PRI now has nearly 1,500 signatories worldwide, representing $59 trillion.
Putting it All Together
SocietyNext Foundation does not incorporate ESG analysis across all asset classes in listed companies’ reporting requirements, we do take the lead to offer our "*.do" programs for
different expectations. Those corporations may be awarded under different levels of achievements so as to let the fund managers, asset managers and governmental investing committees have a hands on report for their investment.
Being responsible stewards of the UN PRI and SRI, we help those funds obtain fair credits through awarding those target companies (listed or unlisted), and we are demonstrating our commitment to these core values. It is just one more step for you to walk and talk to us.