Presented by Fiona Reynolds, Chief Executive Officer, PRI; Dustin Neuneyer, Head of Germany & Austria; Elise Attal, Head of EU Policy and Susanne Dräger, Senior Policy Analyst.
Since Covid-19, the PRI has seen higher levels on engagement from its signatory base on “S” issues. Last October, the PRI released a new report, Why And How Investors Should Act on Human Rights, which sets out clear expectations for investors based on global human rights standards and provides recommendations on the integration of human rights into investment practices.
Fiona Reynolds, Chief Executive Officer, PRI: “Following on from this paper, the PRI will be focused on promoting and understanding human rights in the investment process. Later this year, we will be launching a new collaborative engagement on human rights, looking at actions that investors should be taking. Social inequality will form part of the PRI’s new three year strategy, covering the period 2021-2024.”
See also other articles on Human Rights on investESG.eu.
The COVID-19 crisis put social issues under the magnifying glass:
– Highlighted the vulnerability and precariousness of workers lives and livelihoods, exposing deep-seated inequalities
– Amplified the lack of adequate safeguards to protect the rights of workers
– Disproportionately affected ethnic minorities, who are overrepresented among essential works
Building Back Better
– Business models relying on externalizing social costs are neither resilient nor sustainable
– Investing in people and future-proofing the workforce to shocks and transitions as main priority
– We need a people-centred recovery that focuses on well-being, improves inclusiveness and reduces inequality
How is the PRI addressing these issues?
Fiona Reynolds, Chief Executive Officer, PRI, outlines the plans of PRI over the period 2021-2024 as follows: “The COVID-19 pandemic has amplified the need for immediate investor action on the social issues’ agenda.
Through respecting human rights, investors can address social issues and reimagine the financial system to facilitate a sustainable recovery from the COVID-19 pandemic. Decent work and DEI fall under our human rights umbrella.
As result of COVID-19, we are working to:
– Undertake systemic work at the macro level
– Well designed and implemented social protection policies
– Labour market structure in relation to working conditions and labour relations.
Conduct issue-based work around systemic issues
– Gig economy and impact on workers rights
– Fair wage and access to benefits
– Modern slavery and human trafficking
Diversity, Equity and Inclusion
As result of COVID-19, we are working to:
– Nurture inclusive corporate culture by enabling diverse workforces that represent the makeup of society
– Foster inclusive business models by driving innovations that reflect diversity and support equity and inclusion
– Build inclusive societies by focusing on key social outcomes – concentrating on inclusion and equity.”
PRI Three-Year Strategy 2021-2024
Fiona Reynolds, Chief Executive Officer, PRI: “Today, we’re facing interrelated crises: COVID-19; environmental challenges and social inequalities. Our priorities for the next three years as we continue to deliver on the goals of our Blueprint for Responsible Investment:
– Maintaining inclusivity and increasing accountability: The PRI will continue to be a “big tent” open to all potential signatories—currently over 3,800 representing in excess of US$100 trillion
– Driving ESG incorporation and outcomes: ‘building a bridge between financial risk, opportunities and real-world outcomes.
– ESG issues and priority areas: climate mitigation; human rights; strengthening our policy programme
– Strengthening a shared vision: We will consult with our signatory base on milestones such as the Paris Climate Agreement and the SDGs.”
PRI also informed about key climate initiatives (CA100+, The Net Zero Asset Owner Alliance and The Net Zero Asset Managers Initiative), the new reporting framwork to hold signatories accountable and gave a brief outlook on COP26.
PRI Growth in Germany
Dustin Neuneyer, Head of Germany and Austria: “Over the past 12 months the number of PRI signatories based in Germany increased from 127 (31 March 2020) to a total of 178 (12 April 2021). The number of asset owners increased to 46 (26 percent of German signatories). A number of insurance companies have started to incorporate ESG into investment analysis and decisions-making.”
Globally the number of signatories increased by 28 percent to 3.884. The number of asset owners increased by 17 percent to 621 (16 percent of all signatories).
German Market Update
There is a strong interest in climate. Allianz SE was a key player in founding and is now chair of the Net Zero Asset Owner Alliance convened by PRI and UNEPFI. Munich RE and KENFO also joined, as well as many large asset owners around the word. All members made a public commitment to transitioning investment portfolios to net zero GHG by 2050 and to setting intermediary targets, including for 2025. On the Investment Managers side, some members of the Net Zero Asset Manager Alliance supported by PRI include Allianz Global Investors, DWS. They committed to support the goal of net zero GHG emissions by 2050.
Climate Action 100+ is an initiative led by investors to engage systemically important greenhouse gas emitters across the global economy to achieve the goals of the Paris Agreement. 12 German investors are involved and are playing leading role in dialogues with German companies (including Airbus, BASF, Bayer, BMW, Daimler, E.ON, HeidelbergCement, RWE, Siemens, ThyssenKrupp, Uniper, Volkswagen).
For PRI all these initiatives will be crucial for the involvement of investors leading up to COP26.
Ongoing or increased momentum on disclosure (general, EU SFDR and taxonomy), but also on (often policy related) topics such as “How to Scale up Green Investment as Part of the Economic Recovery”; German investors will be speaking at the PRI/ CDP/IIGCC event on 20 April. A conversation between investors and policymakers on how to scale up green investment as part of the economic recovery.
On social issues, there is a growing interest on how investors can contribute to a Just Transition, further development of the EU Taxonomy, but also Human Rights issues due to German and European policies / regulation on supply chains. Partly this is early stage when it comes to implementation; PRI has corresponding work programmes together with signatories.
Continued engagement of German investors in PRI’s programme on ESG in credit risk and ratings (Allianz Global Investors, Allianz SE, ESG Portfolio Management, KfW Bankengruppe, Union Asset Management) through which credit rating agencies and fixed income investors commit to incorporating ESG into credit ratings and analysis in a systematic and transparent way. To date, the statement is supported by over 170 investors (with more than US$36trn in collective AUM) and 26 credit rating agencies (CRAs) (e.g. workshops with financial analysts and sectors/industries).
In terms of engagements with companies, German signatories still lag behind compared to international peers; as of now 10 signatories are involved in 8 engagements listed in the PRI collaboration platform (e.g. for France or the Netherlands these numbers are at least twice as big).
The PRI German team is in regular exchange with local stakeholders: Forum Nachhaltige Geldanlage FNG, Gesamtverband der Deutschen Versicherungswirtschaft GDV, aba Arbeitsgemeinschaft für betriebliche Altersversorgung, Arbeitsgemeinschaft berufsständischer Versorgungseinrichtungen ABV. PRI also has dialogues with German supervisors and policy makers such as Bundesfinanzministerium BMF and BaFin.
Policy Priorities fro G7 and G20
Elise Attal, Head of EU Policy, PRI, outlined the policy priorities for G7 and G20: “In 2021, the UK and Italy co-host COP and the G7 and G20 meetings. This represents a unique opportunity to align agendas at all three convenings, potentially creating a focus on action to link COVID recovery to sustainability goals, including on climate. In our briefing, Sustainable Finance Policy: the role of G7 and G20, we set out 3 key recommendations to host governments of the G7 and G20. A further briefing on COP26 will be released in late spring.”
- The 2021 Summit outcomes’ statements should affirm that financial policies at national and multilateral levels need to be aligned with sustainability goals.
- The finance ministers’ meeting agenda should include key sustainability issues relevant for financial policies and discussion on policies that support a sustainable recovery, including through aligning markets with net zero economies.
- The G7 and the G20 Summits should commission detailed policy recommendations and implementation guidance on sustainable finance and real economy policies to multilateral organisations, such as the OECD and the IMF.
PRI EU policy – key priorities 2021-2022
Sustainable Finance Policy
1 – Preserve EU Taxonomy integrity and make it a central tool of EU SF policies
2 – Improve mandatory ESG disclosure for corporates (NFRD) and investors (SFDR), (aligned with Taxonomy, TCFD and including impact)
3 – Advocate for incorporation of impact into sustainable finance EU regulation and stewardship
4 – Support a green Recovery in the EU, aligned with climate targets and unlocking private finance for sustainability
5 – Align EU climate and energy policies with net zero by 2050
6 – Reinforce corporate governance and promote mandatory human rights due diligence
Platform on Sustainable Finance
PRI also provided an update on the Platform on Sustainable Finance. A group of 67 experts set up to advise the European Commission on the ongoing development of the sustainable finance agenda. The Platform is comprised of appointed members from a wide range of sectors, including industry, academia and civil society.
German Sustainable Finance Committee
Susanne Dräger, Senior Policy Analyst, PRI, summarized the final report published in March 2021.
31 recommendations on how the transformation of the German economy can be financed with a sustainable financial system. The 5 priorities defined are as follows:
- A reliable national and European policy framework that lays a coherent groundwork for promoting sustainability in the financial sector and real economy
- Integrated and forward-looking company reporting that ensures transparency and comparability
- Research and systematic knowledge-building
- Sustainable financial products that satisfy growing investor demand
- Consolidating sustainable finance by building up institutional capacities that can provide continuous monitoring and guidance during the transformation process
| This article is based on information provided by PRI. It is not sponsored content.
| All opinions expressed are those of the authors. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.