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PRI unveils new responsible investing framework

© Shutterstock / MoomusicianGreen steel.

The Principles for Responsible Investment (PRI) has published the 2023 Reporting Framework, providing signatories with more than three months to prepare their responses before the reporting cycle opens in mid-May. 

  • The PRI has released the 2023 Reporting Framework after a two-year hiatus.
  • It has been designed to align with global standards based on signatories’ feedback.
  • Signatories have until May 2023 to review the updates and prepare for the 2023 reporting cycle.

The PRI has released the 2023 Reporting Framework, including an update on accountability for its members. PRI says its reporting process is the largest voluntary responsible investment reporting process in the world. As such, it is the only framework specifically for responsible investing to provide insight to a comparable standard irrespective of an organisation’s location around the globe, therefore distinct from individual regulatory requirements.

What is the PRI?

The initiative was launched in 2006 by a group of investor signatories, with the support of the United Nations. It is intended to help the finance community integrate ESG in their investment process

Signatories commit to six principles of ESG investing which are voluntary and aspirational. Its members are currently 5,353, mostly investment managers with a smaller number of asset owners and service providers. The signatory base rose 28% by March 2022, according to its latest annual report, with estimated total assets under management of $121.3 trillion.

The PRI is currently advancing its 2021-24 strategy, developed under the framework of its 10-year Blueprint for Responsible Investment, addressing issues caused by the COVID-19 pandemic, environmental challenges and deepening social inequalities. 

PRI reporting first took place in its current form in 2012 and is designed to provide signatories with clarity around their responsible investment activity, as well as inform the initiative’s own ongoing work.

How does the new framework look like?

The update comes after a two-year hiatus, when the PRI analysed feedback provided by signatories from the 2021 pilot reporting year. 

It changed its framework so it would align with global reporting standards, such as the Task Force on Climate-related Financial Disclosures, the Task Force on Nature-related Financial Disclosures and the International Sustainability Standards Board.

The initiative also worked on improving clarity, for instance by updating the glossary, as well as consistency and applicability. It also eased the effort on signatories by reducing the granularity of data requested, decreasing the overall number of indicators, and implementing simpler indicator structures. 

Changes to the reporting framework were designed to reflect emerging themes across the responsible investment landscape and build on PRI’s 2020 research programme. For example, climate change and human rights are recognised as priority issues in the current strategic plan, so signatories are encouraged to embed these priority issues in their policies and governance structure, which is reflected in updates made to the framework.

Specifically, in 2023 the PRI is introducing voluntary indicators solely focused on human rights for the first time, based on the PRI’s 2020 paper, Why and how investors should act on human rights.

Meanwhile, the existing minimum requirements will remain in place for the 2023 reporting cycle, and their review will continue during the year. This is because there has been growth in the signatory base in the few years prior, meaning that many were not included in the 2020 consultation and have not yet participated in a reporting cycle. 

The minimum requirements were introduced in 2018 to strengthen accountability by providing a baseline performance requirement, determined through reporting. To keep pace with a rapidly changing landscape, PRI committed to reviewing the minimum requirements to ensure they remain fit-for-purpose and began a formal review process in 2020.  

What does it mean for signatories?

Following the launch, PRI signatories have three months to review the updated requirements before the Reporting Tool is opened and the reporting cycle commences. The PRI is planning to release more guidance for signatories, including webinars and mapping resources. 

The three-month cycle opens in mid-May and will close in mid-August, with exact dates to be announced shortly. September and October will see data analysis, testing and generation of transparency and assessment reports, which will be released between November and December.

When signatories first sign up, they are entitled to a one-year grace period whereby the first reporting cycle is voluntary. Signatories that would have reported voluntarily in 2022 will have their grace period extended to 2023.

“We have listened to signatory feedback and worked throughout 2022 to ensure that this new iteration of the Reporting Framework is truly reflective of their needs and the changing issues confronting the responsible investment landscape,” said chief reporting officer Cathrine Armour.

“Our Reporting Framework is constantly undergoing a process of evolution, and we believe that this most recent iteration of the framework delivers vital transparency and insight which benefits our signatories on both an individual and collective basis. Notably, the inclusion of key indicators on issues such as human rights demonstrates how PRI is enabling change through our reporting process.”

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