UNEP FI Asset Management Working Group The - UNEP Finance ...

its mandate structure, what kind of reporting they should look for from their fund managers and how they can
structure incentives in this area.
Fiduciary II also provides sets of questions investors can use to challenge providers with regards to ESG
integration, engagement, positive and avoidance or negative screening. “This should speed up the challenge
trustees face and make ESG integration more efficient and a lot more effective,” explains Waygood. “It will
increase the sophistication of the demand environment for responsible investment, while rewarding good and
sanctioning poor practice among asset managers.”
The AMWG recommends that the PRI ‘should specify that, in order to maintain their membership, all asset
manager and asset owner signatories will be required to embed ESG issues in their legal contracts – such as
investment management agreements, and Statements of Investment Principles or Investment Policy Statements.’
“While the PRI has made huge progress since 2004 it now needs to build on those first steps by obtaining that
informed, high-quality demand from institutional investors and make it much more systematic within
signatories,” says Waygood. “It means that PRI signatories will make very informed decisions about who their
providers are. The market would then signal in turn that this is important for providers – whether it is asset
managers, data providers or consultants – to be delivering on.”
Fiduciary II also tries to make use of the PRI’s analysis tool. “Respondents to the questionnaire receive a
detailed performance chart showing how they perform relative to their peers in each of the principles,” says
Waygood. “But if it is not put to further use it wastes a huge amount of work on evaluating performance.
Trustees need to be able to compare and contrast performance of their providers, so their fund managers should
be required to share this analysis with them. The PRI should require their signatories to embed it in their
investment management agreements.”
Waygood does not view the legal side of ESG as a problem. “If the legal provision (see box) was an absolute
standard on what exactly should be done, how and by whom, then it would be an issue,” he explains. “However,
the proposal is a requirement to be transparent to trustees and to present them with a performance analysis,
using the mechanism that already exists within the PRI. In other words, it requires PRI asset managers to share
their score and questionnaire with their clients. It does not define what should be done.”
Author: Nina Roehrbein
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