The United Nations does not think environmentally friendly is not enough to create a better world. With how social issues still keep on emerging, they decided to come up with something new. Hence, supported by the United Nations, the UN Principles for Responsible Investment (PRI) was established. Institutions participating in the organization are those which are totally conscious over the environment as well as social matters in this modern world.
What is the UN Principles for Responsible Investment (PRI) and who are involved in it?
In April 2006, the UN Principles for Responsible Investment is launched (PRI). The organization works to promote the manifestation of environmental, social and corporate governance (ESG) criteria in the investment industry globally. As of January 2020, Investopedia reveals the organization consist of over 2,300 financial institutions. Investopedia further mentions that the signatories involved are now responsible for over $80 trillion in assets worldwide. Some of them are even big-name investors, such as the Norwegian Government Pension Fund, the Government Pension Fund of Thailand, and others.
The organization names the institutions participating in it as signatories. These signatories take part in legalizing the PRI’s six key principles. Another contribution that these voluntary signatories need to do is to submit reports regularly to the organization.
The UN Principles for Responsible Investment’s (PRI) top priorities: environmental and social responsibility
Supporters of the PRI condones investment that does not consider the environmental impact of a business. They also mark such acts as “financially and ethically irresponsible”. It is a core philosophy of the organization to always take into account environmental and social considerations in every investment decision-making. Meanwhile, a majority of investors debates environmental and social impacts as negative externalities. In fact, they often neglect these two aspects in investing.
The six principles
The UN Principles for Responsible Investment (PRI) created the six principles to war the anti-environmental and anti-social impact sentiments among investors. Signatory companies have to conform to the six principles. Quoted from Investopedia, below are the six principles of the UN Principles for Responsible Investment (PRI):
- Signator institutions involved will manifest ESG matters into the analysis of investment and processes related to decision-making.
- Signatories will be active owners, and by that, signatories will manifest ESG matters into each ownership policies and practices.
- Signatories will reach for appropriate disclosure on ESG matters by the entities the signatories invest in.
- Signatory institutions involved will promote acceptance and execution of the Principles within the investment industry.
- Signator institutions involved in the organization will join hands in enhancing the effectiveness of the Principles’ practices.
- Signatories will report their activities and progress upon the implementation of the Principles.
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