Background of UN PRI
The United Nations Principles for Responsible Investment (UNPRI) was initiated by the United Nations in 2006 and participated by global financial institutions. Like the ESG proposed in 2004, the goal of UNPRI is to create an efficient and sustainable global financial system to create long-term value. UNPRI hopes to have a positive impact on the environment and society through responsible long-term investment.
UNPRI and the United Nations Global Compact play similar roles in ESG. Both are initiated from the financial industry, and through investment, asset management and other similar ways, they can improve the long-term value of investment and promote the development of enterprises in the direction of ESG. From the perspective of time sequence, the Global Compact first proposed the concept of ESG, while the Responsible Investment Principles Organization extended the concept of ESG to more financial institutions.
UNPRI focuses on the following three areas:
- Responsible investors: UNPRI will guide financial institutions to participate in ESG investment, pursue long-term value, and make financial institutions become influential investors;
- Sustainable market: UNPRI hopes to bring sustainability into the financial market and create an economic and efficient global financial market;
- Prosperity and development of society: UNPRI contributes to the current and future prosperity and development of society through responsible investment;
UNPRI and Responsible Investment
What is responsible investment? UNRPI believes that if investors actively incorporate environmental, social and governance factors into their investment decisions, these investments can be considered as responsible investments. Environmental, social and governance factors are the three aspects of ESG. In fact, sustainable investment and impact investment are all related to responsible investment.
UNPRI believes that the reasons why financial institutions choose responsible investment are:
- The importance of responsible investment has been recognized: Whether in the financial industry or academia, it is generally believed that incorporating ESG factors into investment decisions can improve the risk and return of investment;
- Responsible investment is the demand of the financial market: Investors and customers of financial institutions are increasingly concerned about how their funds are used, as well as the value of investment to the outside society;
- Responsible investment has been valued by regulators: many regulators around the world have taken ESG and other responsible investments as regulatory documents to guide financial institutions and enterprises to participate in investment activities;
Development of UNPRI
Since its establishment in 2006, UNPRI has developed rapidly. The official data in 2021 shows that more than 4000 global financial institutions have signed responsible investment agreements, and the management scale of these institutions exceeds 120 trillion US dollars (in 2018, more than 2000 financial institutions signed agreements, and the management scale exceeds 80 trillion US dollars).
Financial institutions signing responsible investment agreements need to abide by the following six investment principles:
- Incorporate ESG factors into investment analysis and decision-making;
- Incorporate ESG into the Company’s own ownership policy;
- Promote invested institutions to disclose ESG information;
- Promoting the financial industry to accept responsible investment;
- Cooperate to improve the actual effect of responsible investment;
- Provide information disclosure on the responsible investment activities of the Company;
Assistance Provided by UNPRI to Members
Since 2006, many institutional investors have signed the agreement with UNPRI to follow responsible investment and ESG investing. UNPRI has provided a series of assistance to financial institutions signing responsible investment agreements, including:
- Guide financial institutions to apply the principle of responsible investment in different investment categories and investment themes;
- Provide policy analysis on responsible investment and ESG investment by different national regulators;
- Provide a globally recognized framework for responsible investment reporting;
- Provide relevant training and meetings on responsible investment knowledge;
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