A recent sustainability report revealed the pension fund of a small European nation is heavily invested in sectors with poor sustainability records. In response to pensioner and other stakeholder requests, the fund joins the PRI.
What strategy must the fund incorporate to comply with the PRI?
The PRI, or Principles for Responsible Investment, requires signatories to integrate environmental, social, and governance (ESG) factors into their investment and ownership decisions. One of the key strategies mandated by the PRI is to request disclosure from investee firms on ESG issues. This ensures transparency and enables informed decision-making based on the sustainability practices of the firms in which the fund is invested.
"By joining PRI, investors commit to 1. incorporating ESG in investments and decisions; 2. being active owners; 3. seeking disclosure on ESG issues from investee firms; 4. promoting acceptance and implementation of the Principles; 5. collaborating to implement the principles; and 6. reporting activities and progress toward implementing the Principles."