Picture: 123RF/RATTANASIRI INPINTA
Picture: 123RF/RATTANASIRI INPINTA

London — Five investors have been removed from the UN-backed Principles for Responsible Investment (PRI), in the first such move by the group for those failing to meet its minimum requirements.

The PRI has amassed more than 3,000 signatories managing more than $100-trillion in assets since it was launched in 2006 and membership is increasingly seen as crucial for asset managers pitching for mandates from pension schemes.

But the PRI, whose members were told in 2018 they had two years to reach a new set of minimum requirements, said on Monday four asset managers and one asset owner will be delisted.

BPE, the private banking arm of France’s La Banque Postale, is the largest, with assets the PRI put at about $5bn.

Stichting Gemeenschappelijk Beleggingsfonds (GFB), which is part of the biggest Dutch labour union; Indonesia’s Corfina Capital; US-based Primary Wave IP Investment Management; and French-based Delta Alternative Management, which reported assets of $40m-$310m, were also removed, the PRI said.

A spokesperson for GFB was “very disappointed” by the PRI’s decision.

The GFB holds a small part of the overall capital of the FNV union and the costs of meeting the new requirements exceeded the benefits, the spokesperson said, adding that most of FNV’s capital is managed separately and will still be listed.

A spokesperson for Delta Alternative Management declined to comment. The three other firms did not respond to requests for comment from Reuters.

The delistings follow criticism in recent years that the PRI is not doing enough to ensure members live up to the principles, including to embed environmental, social and governance-related issues in their investment decision-making.

“We had signatories who just weren’t doing enough, and were very much there for the marketing,” PRI CEO Fiona Reynolds told Reuters. “They were sort of riding on the brand and riding on what other signatories were doing.”

This first round of exclusions may not satisfy all its critics given it affects mainly small firms, while some much larger signatories are being challenged for perceived inaction when engaging with companies on climate change.

The new standards require members to have a responsible investment policy covering at least half of all managed assets, staff responsible for implementing it and senior-level oversight.

The PRI did not say which standard the delisted firms failed.

At the start of the process, 165 PRI members were warned they did not meet the new criteria, though most improved over the two years.

“I think this was a bit of a wake-up call to some people … [it is a case of] ‘I can’t just sit here now; they’re actually upping the game and they’re taking this more seriously and I’d better get my act together’,” Reynolds said.

Of those firms originally warned, 23 chose to delist themselves for a variety of reasons, while four disputed the evidence that they had failed to meet the new requirements and successfully appealed, the PRI said, without naming them.

The PRI said it now plans to toughen membership requirements further and will launch a consultation at a meeting on October 21.

Proposed changes include requiring firms’ responsible investment policies to cover 90% of assets and making that policy public. Engagement and voting would also be made mandatory for those managing equities.

Reuters

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