The Principles for Responsible investment (PRI) secretariat has no role in policing how its signatories address environmental, social and governance (ESG) issues, its executive director has said.

“The PRI doesn’t have any intention of becoming a prescriptive framework,” James Gifford told Environmental Finance. “We’ve never had those sort of mechanisms in place, and we’ve no intention of changing.”

Gifford was responding to calls for the PRI to act following recent dramatic reductions in ESG capacity at some leading UK-based asset managers. Aviva Investors last month announced, as part of wider job losses, that it was pulling out of sustainable and responsible investment (SRI) fund management, with the expected loss of two-thirds of its market-leading SRI and governance team.

At the end of last year, Henderson made its five-strong SRI team redundant, and now outsources research for its suite of SRI funds.

Although both groups remain signatories to the PRI, which commit them, among other things, to incorporate ESG issues into investment analysis, their scaling back of internal resources has led some commentators to question whether they should be booted out of the UN-backed initiative.

“Can you shred your team and still claim to be implementing the PRI?” asked responsible investment specialist Rory Sullivan at the time. “It raises real questions about the credibility of the initiative.”

However, Gifford rejected the call. “It’s not for me to comment on an individual organisation’s decisions,” he stressed, adding that “the PRI is a big tent.”

“The PRI is an aspirational framework, and it doesn’t have absolute requirements for performance” beyond requiring signatories to report to the secretariat on the progress of their implementation, he said. “If signatories choose to have different levels of implementation, that is entirely their choice.”

He noted that these decisions were made in the context of “larger decisions” about resourcing and market positioning, and argued that, “at the macro level”, responsible investment is in good health.

“There will always be ups and downs, but you have to look at the big picture,” he said. “What we’re seeing is that responsible investment is being taken up as a mainstream practice,” noting that fixed income asset management giant Pimco has recently signed up to the PRI, as has Goldman Sachs Asset Management and hedge fund specialist Man Group.

Launched in 2006, the PRI has been remarkably successful. It boasts 830 investor signatories, managing more than $30 trillion in assets.

Mark Nicholls
Environmental Finance