What is the PRI and PRI reporting?
This article outlines what the PRI is and what it is for. If you are interested in becoming a PRI signatory, or would like help with your PRI reporting or improving PRI score, please see our PRI services page.
The UNPRI, often known simply as the PRI, is an independent network set up to promote six principles of responsible investment, in order to properly define the investment implications of ESG factors, and have these factors incorporated into investment and ownership decisions.
Although the PRI is supported by the UN, it is not part of the UN and is considered an independent organisation.
The Principles
The six principles of the PRI are as follows:
We will incorporate ESG issues into investment analysis and decision-making process.
We will be active owners and incorporate ESG issues into our ownership policies and practices.
We will seek appropriate disclosures on ESG issues by the entities in which we invest.
We will promote acceptance and implementation of the Principles within the investment industry.
We will work together to enhance our effectiveness in implementing the Principles.
We will each report on our activities and progress towards implementing the Principles.
Asset owners, investment managers and related service providers can publicly demonstrate their commitment to these principles by becoming signatories of the PRI and meeting the minimum requirements. There are now over 5,300 signatories representing well over US$121tn of AUM, with numbers growing constantly.
A PRI signatory will generally identify themselves using the official PRI signatory logo. This can be found on signatory websites and email correspondence for easy identification.
Danesmead ESG is a proud signatory of the PRI.
Why be a Signatory?
There are a number of benefits in being a PRI signatory, including:
Signalling / Marketing tool
The PRI provides an established approach to demonstrate to your investors that you meet a minimum set of responsible investing standards. PRI also works closely with other platforms like TCFD, SBTi, and NZAMI; becoming a signatory helps demonstrate your commitment to working towards net zero.
Industry standard
More investors are requesting/requiring PRI membership, for example European investors and UCITS platforms.
ESG reporting
Becoming a PRI signatory gives you the ability to share standardised reporting with stakeholders. You’ll also get access to peers’ reports via the PRI data portal, as well as assessment and reporting guidance.
Learning and Resources
Becoming a signatory enables you to access and participate in industry events, workshops, and advisory committees. PRI membership also gives you access to training and support to help implement and grow responsible investing processes and incorporate ESG factors into investment decision-making.
Minimum Requirements
To become a signatory, a company must meet some minimum standards. The current minimum standards are:
Internal or external staff implementing responsible investment
Senior leadership oversight of responsible investment
Policy setting out overall approach to responsible investment covering 50% of AUM
Over time these requirement are likely to become more rigorous and the PRI has been considering implementing increased requirements.
More information about the proposed changes can be found here.
PRI Reporting
Once becoming a signatory, an organisation is obliged to report annually on their responsible investing processes and activities. This is to ensure accountability of the principles, as well as standardised metrics for the transparency tool.
Reporting is an annual process, running from Q2-Q3 each year. It’s also worth noting that when signatories initially sign up, they will have a one-year grace period in which the first reporting cycle is voluntary.
2024 Reporting Framework update
In February 2024, the PRI released the 2024 Reporting Framework, with a few notable updates.
Who must report in 2024?
Reporting is voluntary for:
Most signatories who reported publicly in 2023 (so long as the minimum requirements were met)
Signatories who joined the PRI in 2023
Reporting is mandatory for:
Signatories who did not complete the voluntary reporting in 2023
Signatories who reported privately in 2023
What has changed in the 2024 vs. 2023 reporting framework?
33 indicators (~10%) have been updated or amended. The following modules have had updates to indicators:
Operational Overview
Policy Governance and Strategy
Manager Selection, Appointment and Monitoring
Real Estate
Infrastructure
Sustainability Outcomes
In most cases these changes mainly relate to updated logic or assessment criteria. In some cases, an indicator question or response options have been modified too.
It does not appear that any changes have been made to Core/Plus classification, meaning the 2023 voluntary questions have remained voluntary in 2024.
Integration of reporting requirements for NZAMI members.
Platform improvements – enhancing performance and navigation.
Reporting Timelines
The timeline for reporting has also been revised. For more information on how you may be affected by the latest changes, please get in touch.
Exact dates to be confirmed, but the PRI has indicated the portal will be open between May-July 2024 (slightly earlier than last year).
2024 reporting timeline
Progression Pathways
The Progression Pathways are an initiative the PRI introduced in 2023 as a concept. This initiative sets out three distinct “pathways” that signatories would elect to align with:
Pathway A: Incorporating ESG factors
Pathway B: Addressing the drivers of sustainability-related financial risks
Pathway C: Pursuing positive impact
Within each pathway, there would be defined “Levels”, with criteria setting out what alignment with each level would require. The PRI anticipates the market would regulate the use of these pathways – i.e. allocators would say for example: “we would like managers who are PRI signatories, and who are aligned with Pathway A, Level 2”.
This means PRI reporting will change… again. But hopefully for the better. We understand that there will still be mandatory reporting, which would be simplified, but still address and assess key elements of your approach to responsible investment and assess the minimum requirements.
In addition, there will be reporting to demonstrate progression in line with the progression pathways – though the format of this is yet to be determined, but we expect to hear more in the coming months.
Need Help with PRI?
Danesmead ESG provide a range of PRI services from becoming a signatory to PRI reporting and improving PRI score. Please get in touch to discuss how we can help you take the first step, maximise your rating, and get ready for the Progression Pathways.