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The Principles for Responsible Investment (PRI) were created in 2006 to provide a set of standards, guidelines, and commitments for sustainable-minded investors across the world. Backed by the United Nations, the PRI are one of the few widely accepted international standards for responsible and sustainable investment. Below, you will find the 6 principles all signatories commit themselves to. Essentially, they provide ways for companies to include environmental, social, and governance (ESG) factors throughout investment decisions and active ownership. In 2020, the PRI had achieved over 3,000 signatories and exceeded 100 trillion dollars in assets under management (AuM).
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
Principle 6: We will each report on our activities and progress towards implementing the Principles.
Above all, the PRI aim to be more than just words on paper. A requirement of being a signatory is to report on progress towards the principles, creating a culture of transparency and accountability throughout the industry. As more and more companies commit themselves to the PRI, their very real goal of creating a network of sustainable investors becomes more of a reality. Beyond just a network, the overarching goal is to create sustainable markets that provide incentives for companies to act in accordance with the United Nations’ Sustainable Development Goals, creating a better and more equitable world for all.
Earlier this month, the Trump Administration made advances to limit responsible, sustainable, and ESG investing. Under the recently introduced regulation by the Department of Labor, in the management of 401k and pension funds, only financial profit can be considered. With this in mind, rather than weighing ESG or other ethical factors, managers have to consider profit alone. Additionally, while ESG investing can remain an option for employees, it can no longer be presented as the default if the rule were to be enacted.
The CEO of the PRI, Fiona Reynolds, stated that this rule was the “the biggest single threat that the responsible investment industry faces.” With this in mind, even amidst record growth in recent years of the PRI and ESG investing in general, there still remains a number of threats to the future of responsible investing.
As established by the goals of the PRI, responsible investing can have a significant impact on the world, making establishing its future within the United States a necessity for progress. Join Physis today to join the movement towards sustainability!
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