It is the time of year when signatories to the Principles for Responsible Investment (PRI) are fully immersed in the PRI reporting and assessment process, including the institutional investors responsible for Sustainable Development Investment Asset Owner Platform (SDI AOP). Importantly, for the first time this year, signatories will be able to report on sustainable outcomes as part of the PRI reporting process.
In this explainer, Jennifer Coulson from British Columbia Investment Management Corporation (BCI) shows that by using the SDI AOP data investors can demonstrate their intent to invest in sustainable outcomes and use a sophisticated evidence-based data set to support that goal.
About the PRI framework for Sustainable Outcomes
A new five-part framework developed by the PRI seeks to help investors understand the real-world outcomes of their investments, and to shape those outcomes in line with the Sustainable Development Goals (SDGs). A set of 17 global sustainable development goals adopted by world leaders in 2015, the SDGs are a PRI flagship project embedded in its Blueprint strategy. Measuring the SDG implications of investments is one pillar of the new five-part framework. The PRI states that to support meeting the SDGs, investors must understand how they can increase the positive outcomes and decrease the negative consequences arising from their actions.
How does the SDI AOP data fufill the requirement?
The work of the SDI AOP fully aligns with the priority the PRI places on the SDGs and the expectation that investors report out on their alignment with them. The platform offers a common definition, taxonomy and data source. With the help of artificial intelligence, it allows investors to determine whether and how much companies contribute to the SDGs with their products and services.
The PRI believes the urgency to deliver on the SDGs has only increased by the COVID-19 pandemic, and expectations from beneficiaries, clients, governments and regulators over how investors should respond have changed – driven by increased visibility and urgency around many of the SDGs.
While the new reporting & assessment framework for Sustainable Outcomes is currently voluntary, it is expected, over time, to become mandatory. For now, signatories cannot be considered for leadership awards from the PRI unless they report out on sustainability outcomes.
The role of the PRI
With a combined US$103.4 trillion in assets under management, PRI’s 3,600 signatories can play a significant role in helping the world to meet the SDGs. Signatories who can demonstrate leadership by measuring alignment with the SDGs will be viewed favourably, and this could be an area of differentiation for asset managers in particular. The SDI AOP presents a unique opportunity for investors to show that commitment.
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See related article here: Qontigo Becomes PRI Signatory.