Almost a third of the signatories placed on a watchlist by an influential UN-backed responsible investment initiative are at risk of being booted out of the body next year.
Last year the Principles for Responsible Investment put 180 of its signatories on notice after an annual audit suggested they had not demonstrated a minimum standard of responsible investment activity.
Signatories to the PRI, which are asset owners and managers, commit to six principles designed to embed environmental, social and governance considerations into mainstream investing and hold companies they invest in to account on ESG failures. They must file an annual report to the organisation detailing their progress.
The PRI gave those on the list two years to lift their game. The responsible investment body said 88 on the watchlist made improvements and met the minimum requirements this year. It is also working with 42 signatories who are on track to do so by 2020.
However 50 groups with $1tn in assets have failed to engage with efforts to get them to shape up and are at risk of being delisted. The PRI refused to name names.
Perhaps surprisingly the region with the greatest number of laggards is Europe, an area which is usually regarded as being at the forefront of ESG investing. The higher number reflects the fact that Europe has the biggest signatory base, with the region having 1,046 members when the watchlist was compiled. Seven of those falling short came from North America out of 472 signatories.
The move comes at a time of greater scrutiny of whether investors are practising what they preach when it comes to responsible investment.
“We still have some where they haven’t met with us,” said Fiona Reynolds, chief executive of the PRI, who said it was hard to know why they have not done so. “The aim was always to get people moving, not to delist people.”
The PRI also requires that at least half a fund manager’s assets be covered by a responsible investing policy and for there to be explicit commitment to the issue by senior managers.
This article was written by Jennifer Thompson from The Financial Times and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.
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