(December 13, 2013) — Six of the largest European pension funds have dumped the United Nations-backed Principles of Responsible Investment (PRI), citing continued fruitless attempts at improving the organisation’s overall structure.
The national fund ATP, Industriens Pension, PensionDanmark, PFA Pension, PKA, and Sampension, released a joint statement this morning saying they would continue to invest using the principles, but would “remain outside the organisation until it again lives up to basic requirements for good corporate governance—including restoring membership democracy in the organisation”.
The PRI was established to embed six basic environmental, social, and governance principles in investment decisions. Some of the world’s largest investors have signed up to the principles, including pension and sovereign wealth funds, along with large asset managers and insurance companies.
The principles were launched by a group of international investors with the support of the United Nations Environment Programme Finance Initiative and the Global Compact in 2006.
The Danish funds said today: “The UN-backed PRI have an important role to play in promoting responsible investment—including emphasising the importance of good governance in companies around the world. We have, nonetheless, over a sustained period of time observed with concern that the governance of the PRI organisation does not live up to the basic standards we as investors would expect of the companies in which we invest. Despite numerous attempts to improve the conditions within PRI, we must, unfortunately, acknowledge that these attempts have not been successful.”
This week, ING Investment Management said western Europeans were the most concerned of all institutional investors about incorporating ESG issues into their portfolios. Some 86% responded to the asset manager’s survey to say it was an important consideration when making decisions.
The Danish funds did not shut the door on the organisation completely. “Should the PRI organisation at a later stage endeavour to substantiate that the governance of the organisation has improved to a satisfactory level, we will as individual investors give serious thought to re-entering the organisation,” the statement added.
“The PRI is deeply disappointed that this has occurred,” said PRI Managing Director, Fiona Reynolds. “At our annual Signatory General Meeting in Cape Town in September, the PRI committed to undertake a review of its governance. The Council’s Governance committee has already begun to define the scope of this review, which will be led by a new Council Chair expected to be appointed in early 2014.
Reynolds said accountability and transparency were fundamental to all of the PRI’s work and it have recently launched a new mandatory public Reporting Framework for its 1,200 signatories to ensure both they and the PRI itself continued to lead by example.
“We had previously arranged to meet with our Danish signatories in Copenhagen on January 13 and we plan to continue with this meeting and hope all of the funds concerned attend,” she added. “Given the important work of the Danish pension funds in responsible investment, we hope that the funds concerned will reconsider their decision at some point in the near future.”
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