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The UN Principles for Responsible Investment

What are the UN Principles for responsible Investment?

The United Nations-supported Principles for Responsible Investment (PRI) initiative is an international network of investment companies working together to put the six Principles for Responsible Investment into practice. Its goal is to understand the implications of sustainability for investors, and to support the PRI signatories to incorporate these issues into their investment decision making and ownership practices.

The Principles are voluntary and aspirational. They offer a menu of possible actions for incorporating ESG issues into investment practices across asset classes. Responsible investment is a process that is tailored to fit our investment strategy, approach and resources.

The PRI’s mission

The signatories of the PRI believe that an economically efficient, sustainable global financial system is a necessity for long-term value creation. Such a system will reward long-term, responsible investment and benefit the environment and society as a whole.

The PRI will work to achieve this sustainable global financial system by encouraging adoption of the Principles and collaboration on their implementation; fostering good governance, integrity and accountability; and addressing obstacles to a sustainable financial system that lie within market practices, structures and regulation.

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes

We will take the following into consideration:

  • Address ESG issues in investment policy statements
  • Support development of ESG-related tools, metrics, and analyses
  • Assess the capabilities of our investment managers to incorporate ESG issues
  • Ask investment service providers (such as financial analysts, consultants, brokers, research firms, or rating companies) to integrate ESG factors into evolving research and analysis
  • Encourage academic and other research on this theme
  • Advocate ESG training for investment professionals

Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices: 

We will take the following into consideration:

  • Develop and disclose an active ownership policy consistent with the Principles
  • Exercise voting rights or monitor compliance with voting policy (if outsourced)
  • Develop an engagement capability (either directly or through outsourcing)
  • Participate in the development of policy, regulation, and standard setting (such as promoting and protecting shareholder rights)
  • File shareholder resolutions consistent with long-term ESG considerations
  • Engage with companies on ESG issues
  • Participate in collaborative engagement initiatives
  • Ask investment managers to undertake and report on ESG-related engagement

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest:

 We will take the following into consideration:

  • Ask for standardised reporting on ESG issues (using tools such as the Global Reporting Initiative)
  • Ask for ESG issues to be integrated within annual financial reports
  • Ask for information from companies regarding adoption of/adherence to relevant norms, standards, codes of conduct or international initiatives (such as the UN Global Compact)
  • Support shareholder initiatives and resolutions promoting ESG disclosure.

Principle 4: We will promote acceptance and implementation of the Principles within the investment industry:

We will take the following into consideration:

  • Include Principles-related requirements in requests for proposals (RFPs)
  • Align investment mandates, monitoring procedures, performance indicators and incentive structures accordingly (for example, ensure investment management processes reflect long-term time horizons when appropriate)
  • Communicate ESG expectations to investment service providers
  • Revisit relationships with service providers that fail to meet ESG expectations
  • Support the development of tools for benchmarking ESG integration
  • Support regulatory or policy developments that enable implementation of the Principles

Principle 5: We will work together to enhance our effectiveness in implementing the Principle:

We will take the following into consideration:

  • Support/participate in networks and information platforms to share tools, pool resources, and make use of investor reporting as a source of learning
  • Collectively address relevant emerging issues
  • Develop or support appropriate collaborative initiatives

Principle 6: We will each report on our activities and progress towards implementing the Principles:

  We will take the following into consideration:

  • Disclose how ESG issues are integrated within investment practices
  • Disclose active ownership activities (voting, engagement, and/or policy dialogue)
  • Disclose what is required from service providers in relation to the Principles
  • Communicate with beneficiaries about ESG issues and the Principles
  • Report on progress and/or achievements relating to the Principles using a ‘Comply or Explain’* approach
  • Seek to determine the impact of the Principles
  • Make use of reporting to raise awareness among a broader group of stakeholders

 *The Comply or Explain approach requires signatories to report on how they implement the Principles, or provide an explanation where they do not comply with them.

Integrating sustainability and governance