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Principles for Responsible Investment

PRI

Principles for Responsible Investment is a UN-supported network for sustainable investment and ESG integration.

Lobbying Activity

PRI Urges Scientific Evidence for EU Taxonomy Review

5 Dec 2025
Topic — A review of technical criteria for identifying sustainable economic activities.
Message — The PRI recommends basing taxonomy revisions on scientific evidence and expert proposals. They suggest simplifying environmental harm criteria and aligning rules with international standards for global portfolios.123
Why — Fixing usability issues would help investors effectively identify and fund green projects.45
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PRI Urges 90% Climate Target to Boost Investor Confidence

16 Sept 2025
Topic — A proposal to amend the European Climate Law with a 2040 target.
Message — The PRI supports a 90% emission reduction target focusing on domestic action. They request detailed national investment plans and sectoral roadmaps for clarity.123
Why — Clear policy signals would reduce investment risks and help investors redirect capital.45
Impact — International carbon credit providers lose as investment is kept within European industries.6
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Meeting with Vincent Hurkens (Cabinet of Executive Vice-President Stéphane Séjourné) and Third Generation Environmentalism Ltd and

14 Jul 2025 · Simplification, CSRD, CSDDD

PRI Urges EU To Curb Wood Burning For Bioenergy

17 Jun 2025
Topic — Consultation on creating a circular, regenerative, and competitive bioeconomy within the EU.
Message — PRI seeks a governance framework prioritizing high-value material use. They request a cap on bioenergy and ending primary wood subsidies.12
Why — Investors would gain transparent market signals and lower financial risk exposure.3
Impact — Bioenergy firms lose subsidies and struggle against cheaper wind and solar power.4
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Meeting with Sirpa Pietikäinen (Member of the European Parliament)

3 Jun 2025 · Responsible investment, omnibus

Meeting with Maria Luís Albuquerque (Commissioner) and

2 Jun 2025 · Sustainable finance

Meeting with Nicolo Brignoli (Cabinet of Commissioner Valdis Dombrovskis)

24 Apr 2025 · Omnibus

Meeting with Ingeborg Ter Laak (Member of the European Parliament) and Institutional Investors Group on Climate Change and European Sustainable Investment Forum

13 Mar 2025 · CSRD & CSDDD

Meeting with Sven Gentner (Head of Unit Financial Stability, Financial Services and Capital Markets Union) and Institutional Investors Group on Climate Change and European Sustainable Investment Forum

10 Mar 2025 · Exchange of views on the Omnibus package.

Meeting with Benedetta Scuderi (Member of the European Parliament)

14 Nov 2024 · Sustainable finance

Meeting with René Repasi (Member of the European Parliament)

5 Mar 2024 · Policy Roadmap for the EU: Accelerating private investment to support the economic transition

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Katherine Power (Cabinet of Commissioner Mairead Mcguinness) and European Sustainable Investment Forum

4 Sept 2023 · Corporate Sustainability Due Diligence

Meeting with Florian Denis (Cabinet of Commissioner Mairead Mcguinness), Katherine Power (Cabinet of Commissioner Mairead Mcguinness) and European Sustainable Investment Forum

13 Jul 2023 · Sustainable finance

Meeting with Pascal Durand (Member of the European Parliament)

7 Jul 2023 · Sustainability (APA only)

PRI Urges Science-Based 2040 Climate Target to Guide Investors

21 Jun 2023
Topic — The European Commission is establishing a legislative 2040 greenhouse gas reduction target.
Message — PRI recommends a climate target for 2040 aligned with the Paris Agreement and a 1.5C pathway. They request an EU wide, whole-of-economy transition plan linking sector roadmaps with sustainable finance instruments.123
Why — Clearer regulatory signals will reduce investment risks and help align capital with sustainable returns.45
Impact — Fossil fuel producers lose as the plan targets massive phase-outs and prevents gas infrastructure lock-in.67
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PRI Urges Stricter Science-Based Rules for EU Green Taxonomy

3 May 2023
Topic — The Commission is establishing sustainability criteria for water, circular economy, pollution, and biodiversity.
Message — The PRI calls for excluding biodiversity offsets from eligible activities and urges faster inclusion of agricultural sectors. They insist that all screening standards must remain strictly based on scientific evidence.123
Why — Clearer company reporting will help investors assess environmental alignment and manage investment risks.45
Impact — Aviation companies face exclusion if aircraft using bio-based fuels are denied transitional status.67
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Meeting with Pascal Durand (Member of the European Parliament)

12 Apr 2023 · ESRS (APA only)

Meeting with René Repasi (Member of the European Parliament, Rapporteur for opinion)

10 Mar 2023 · EU-Lieferkettengesetz/ Corporate Sustainability Due Diligence Directive (CSDDD) - Staff Level

Meeting with Axel Voss (Member of the European Parliament, Shadow rapporteur) and Association Française de la Gestion financière and

9 Feb 2023 · Corporate Sustainability Due Diligence

Meeting with Axel Voss (Member of the European Parliament, Shadow rapporteur) and EUROPEAN TRADE UNION CONFEDERATION and

7 Nov 2022 · Corporate Sustainability Due Diligence

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

7 Oct 2022 · Sustainable Finance

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

7 Sept 2022 · Sustainable Finance

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

3 Feb 2022 · Taxonomy

Response to Review of measures on taking up and pursuit of the insurance and reinsurance business (Solvency II)

13 Jan 2022

The PRI welcomes the review’s focus on addressing long-term sustainability risks in the insurance sector. However, more ambitious measures will be needed to align financial flows with the EU’s new sustainability objectives. ■ The reform’s aim to strengthen insurers' management of climate risks is particularly welcome. The new requirements should help further embed forward-looking climate scenario analysis into insurers’ risk assessment practices. We recommend that further guidance is provided on how the scenario analysis should be conducted, in alignment with new guidance from the TCFD. ■ The PRI supports the mandate to explore by 2023 a dedicated prudential treatment of exposures related to assets or activities associated substantially with environmental and/or social objectives and encourages EIOPA to explore how the EU Taxonomy can be used as a basis for this assessment. Higher capital requirements for exposures to new fossil fuel investments could be added as part of the current Solvency II review, subject to an impact assessment. ■ To help meet the EU’s sustainability objectives, insurers should assess not only the impact of climate and sustainability issues on their investments, but also the impact that their own investment activities have on sustainability factors. The PRI therefore recommends that the Commission or EIOPA further clarify how inside-out risks (or sustainability outcomes) should be considered as part of the prudent person principle. Please see the attached document for more detailed feedback.
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Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

1 Dec 2021 · EU taxonomy

Meeting with Mairead McGuinness (Commissioner)

14 Oct 2021 · pre-record on sustainable finance

Meeting with Simona Constantin (Cabinet of Vice-President Věra Jourová)

4 Oct 2021 · Sustainable Corporate Governance

Meeting with John Berrigan (Director-General Financial Stability, Financial Services and Capital Markets Union)

29 Sept 2021 · European Platform, Sustainable Finance

Response to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information

2 Jun 2021

The PRI welcomes the draft Article 8 delegated act (DA), as it provides much needed clarity to financial and non-financial undertakings preparing for their disclosures against the Taxonomy. Below are our main recommendations relating to the draft DA. Please see our full response attached. ■ Ensure consistency between disclosure requirements and sustainable finance policies. The final Article 8 DA must be coherent and aligned with the Article 5 and 6 Taxonomy disclosure requirements, as well as the Sustainable Finance Disclosure Regulation (SFDR) and the proposed new Corporate Sustainability Reporting Directive (CSRD). PRI strongly disagrees with the phase in approach of the draft DA as it is inconsistent with the Article 5 and 6 disclosure requirements and likely to decrease data accessibility for investors and confuse consumers. ■ Use appropriate timelines and avoid ambition drift. The Commission should consider bringing the timeline of the review clause forward so the treatment of derivatives and other asset classes can be assessed sooner. The review clause must also provide more clarity on how it will enable disclosure requirements to keep up to date with future developments of the Taxonomy as well as other legislations and methodologies. This must be consistent with the approach taken for disclosures under Articles 5 and 6. In addition, the timeline of capex plans must be possible to extend beyond 7 years for certain projects (e.g. large-scale infrastructure) otherwise there is a risk of dis-incentivising investment in any long-term transition projects. To avoid any greenwashing or ambition drift, all non-financial undertakings should be encouraged and supported by the Commission to undertake regular progress reporting during the period of the capex plan. This will give investors more detail and clarity to enable them to also publish targets and more accurately estimate future Taxonomy alignment. ■ Remove unnecessary reporting requirements. Financial undertakings should not have to report a breakdown of their numerators and denominators as described in Article 8(5) draft DA. This creates an unnecessary reporting burden and forgets the key purpose of the Taxonomy: to clearly and concisely detail alignment with sustainability objectives in order to increase capital flows, and accelerate the transition, towards a sustainable financial system. The PRI recommends a simpler approach for all financial reporting requirements, consistent with those under Articles 5 and 6 of TR. Assuming the final SFDR RTS uses the same approach as the draft proposal, financial undertakings under the Article 8 DA should simply disclose their Taxonomy alignment in the form of a pie chart for turnover, capex and opex. ■ Take a sensible approach to derivatives, sovereigns, and non-NFRD/CSRD activities. All investments should be included in the denominator of financial undertakings’ KPIs, even those that cannot be judged against the Taxonomy (i.e. sovereign bonds). Otherwise, there is a risk that the calculations for products containing a substantial proportion of such instruments become skewed. Investors need clarity that Taxonomy alignment disclosures give a complete and comprehensive picture of sustainability performance. The Commission should also allow voluntary disclosures, to include non-NFRD/CSRD companies in the numerators of financial-undertaking KPIs. Many non-NFRD/CSRD entities can often have Taxonomy aligned activities so in order for investor Taxonomy disclosures to be meaningful, they must be as comprehensive as possible. ■ Provide guidance and assurance. The Commission should provide more guidance on minimum social safeguards disclosures e.g. by providing an explicit list of social criteria which undertakings can cross reference. Finally, we support the Commission's proposal to ensure that the CSRD has a robust system for assurance of sustainability-related reporting and call on the Co-Legislators to support this provision.
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Meeting with Katherine Power (Cabinet of Commissioner Mairead Mcguinness)

29 Jan 2021 · EU Taxonomy Delegated Act

Response to Climate change mitigation and adaptation taxonomy

17 Dec 2020

Please refer to the attached document.
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Response to Integration of sustainability risks and factors in relation to insurance undertakings and insurance distributors

6 Jul 2020

We have substantial concerns with the proposed definition of “sustainability preferences” in the delegated acts. It would restrict sustainability preferences to an augmented version of the definitions on the regulation on Sustainability-Related Disclosures in the Financial Services Sector. This is problematic because: 1. It defines a consumer’s preference in relation to a regulated fund category. It is very unlikely that an end-investor will formulate their preference in this way, or that this categorisation will be helpful in creating meaningful dialogue between advisors and clients. Also, the categories themselves – while they cannot be changed without amending Level 1 Regulation – do not accurately reflect the sustainability outcomes an investor may expect from different products. 2. The gold-plating of Article 8 funds is misguided. We understand Article 8 funds to be a “catch-all” category which would include a large number of existing sustainable, ESG and SRI strategies on the market. Article 9 funds, by contrast, focus on allocating capital to sustainable activities and avoid exposure to activities which are substantially harmful. The requirement of Article 8 by the proposed delegated acts to also pursue some sustainable investments and to avoid significant harm across all underlying investments, is a concern for several reasons: a) it reflects an inaccurate understanding of how individual investors can influence outcomes in the real economy. In many cases, exposure to harmful activities is essential to influencing environmental performance of underlying investee (e.g. through voting in support of adoption of meaningful climate transition plans). Stating that a client can only have a preference for a fund that avoids all exposure to harmful activities would remove fund options that may be better aligned with their preferences. b) It adds further confusion to the definition of Article 8 and 9 funds. The framework implies that Article 8 funds may target and include some “sustainable investments” in line with the regulatory definition. Yet, it is not clear at what point this would become an Article 9 fund, given that no minimum expectation is set for Article 9 funds’ exposure to “sustainable investments”. 3. For insurance and reinsurance undertakings, the clarifications to the prudent person principle state “(the investment...) strategy and those decisions shall reflect the sustainability preferences of its customers taken into account in the product approval process”. This could be interpreted as mandating insurance and reinsurance firms to develop specific products in line with the categories embedded in the definition. 4. Finally, while we expect a high, and increasing, number of clients (retail and institutional) to express a preference for funds with positive sustainable characteristics, it is still legitimate that some clients will prefer to rely on the regulatory minimum expectations which have been strengthened through the other provisions in the delegated acts, as well as through the Disclosure Regulation and revised Shareholder Rights Directive. Logically, the definition should allow for a client to express no preference for sustainability outcomes. The Disclosure Regulation and the Taxonomy Regulation both set fund-level disclosure requirements for Article 8 and 9 funds. Rather than define a client’s sustainability preferences in relation to fund categories, we recommend that the Commission establish a broader definition of sustainability preferences, while in parallel ensuring that the fund-level sustainability disclosures provide a clear, coherent and accessible framework for understanding the sustainability profile of the products. The PRI recommends the following alternative definition: Sustainability preferences means a client’s or potential client’s choice as whether, to what extent and how sustainability-related investment objectives should be reflected into his or her investment strategy.
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Response to Integration of sustainability risks and factors for undertakings for collective investment in transferable securities

6 Jul 2020

The proposed amendments to the delegated acts underpinning UCITS state that sustainability risks should be considered in risk management, conflict of interest and governance. However, they do not directly address the need to integrate sustainability risks when determining how to act in the best interests of end investors. Without explicit clarification of the relationship between sustainability and fiduciary duties, we are concerned that investors will continue to lack the necessary certainty, undermining systematic integration of sustainability risks. To address the sustainability risk angle, the PRI recommends that clarification be introduced to the following clauses: a) Article 22 of Commission Directive 2010/43/EU (UCITS delegated directive); and b) Article 17 of Commission Delegated Regulation 231/2013/EU (AIFMD delegated regulation); This clarification should reflect the recommendations of the EU High Level Expert Group on Sustainable Finance which include: ■ Clarification that sustainability risks and opportunities should be taken into account, consistent with the investment timeframe of the client; ■ Financial market participants should proactively seek to understand the sustainability preferences of their clients and incorporate those preferences into decision-making and stewardship where possible. Regarding impact, UCITS management companies are required to incorporate principal adverse impacts into their due diligence processes, where they consider them under their SFDR obligations, but no clarification is made regarding fiduciary duties. In the absence of an investment policy which makes specific reference to sustainability objectives, the best interests will likely be understood as the financial best interest. In many cases, we expect that sustainability impact and financial materiality can be pursued in tandem. However, there are cases where an investment decision may require resolution of a conflict between financial return and sustainability impact. In addition, stewardship – a critical tool for investors to influence the performance of investees, and therefore real economy outcomes – may incur additional costs, which may be considered not to consistent with the “best interests” of the UCITS unless a clear financial benefit can be expected. In the Commission’s open consultation on a revised Sustainable Finance Action Plan, question 91 asks whether there are merits in further adapting fiduciary duties to require investment firms to consider and integrate adverse impacts of investment decisions on sustainability. The proposed amendments do not offer clarity around whether these issues can be taken into account as part of pursuing best interests. They therefore offers little comfort to investors seeking to introduce impact into their investment decision-making and stewardship activities, including where they are doing so to comply with the SFDR disclosure obligations. In addition, by focussing only on negative impacts, the framework is increasingly at odds with market practice, as investors typically seek to maximise positive outcomes as well as minimise negative outcomes.
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Response to Strengthening the consideration of sustainability risks and factors for financial products (Regulation (EU) 2017/565)

6 Jul 2020

The proposed amendments to the delegated acts underpinning MiFID state that sustainability risks should be considered in risk management, conflict of interest and governance, but do not directly address the need to integrate sustainability risks when determining how to act in the best interests of clients (as defined in Article 24(1)). In the context of MiFID, investment decisions are also substantially guided by the concept of “suitability” of the investment in relation to the individual client. The proposed amendments to Delegated Directive (EU) 2017/593 and Delegated Regulation (EU) 2017/565 do require investment firms to consider the sustainability preferences of clients in determining the suitability of products, in addition to risk. The proposed amendment to Article 54 would clarify that the client’s sustainability preferences should be considered in the suitability assessment alongside their risk tolerance. However, although this framework does not prohibit consideration of sustainability risk, it does not explicitly clarify that sustainability risks should be considered either. To address sustainability risk, the PRI recommends that Commission delegated regulation 2017/565/EU (MiFID II delegated regulation) be amended as follows: ■ Article 65 of be amended to clarify that sustainability risks and opportunities should be considered; ■ Article 54 be amended to clarify that sustainability risks should be considered (as a sub-set of the client’s overall risk tolerance) as well as sustainability preferences. The concept of impact is addressed through the lens of suitability. Investment firms are required to consult clients on their sustainability preferences, but the draft delegated acts do not explicitly require providers to systematically offer sustainable investment products, when the provider has them available and otherwise meeting all requirements regarding cost and suitability. In the Commission’s open consultation on a revised Sustainable Finance Action Plan, question 91 asks whether there are merits in further adapting fiduciary duties to require investment firms to consider and integrate adverse impacts of investment decisions on sustainability. The proposed amendments provide a route by which impact may be considered but would not require systematic consideration. In addition, we have substantial concerns with the proposed definition of “sustainability preferences” in the delegated acts. The definition would restrict sustainability preferences to an augmented version of the definitions on the regulation on Sustainability-Related Disclosures in the Financial Services Sector. This is problematic for several reasons (please see the attached document). The Disclosure Regulation and the Taxonomy Regulation both set fund-level disclosure requirements for Article 8 and 9 funds. Rather than define a client’s sustainability preferences in relation to fund categories, we recommend that the Commission establish a broader definition of sustainability preferences, while in parallel ensuring that the fund-level sustainability disclosures provide a clear, coherent and accessible framework for understanding the sustainability profile of the products. The PRI recommends the following alternative definition: Sustainability preferences means a client’s or potential client’s choice as whether, to what extent and how sustainability-related investment objectives should be reflected into his or her investment strategy.
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Response to Strengthening the consideration of sustainability risks and factors for financial products (Directive (EU) 2017/593)

6 Jul 2020

The proposed amendments to the delegated acts underpinning MiFID state that sustainability risks should be considered in risk management, conflict of interest and governance, but do not directly address the need to integrate sustainability risks when determining how to act in the best interests of clients (as defined in Article 24(1)). In the context of MiFID, investment decisions are also substantially guided by the concept of “suitability” of the investment in relation to the individual client. The proposed amendments to Delegated Directive (EU) 2017/593 and Delegated Regulation (EU) 2017/565 do require investment firms to consider the sustainability preferences of clients in determining the suitability of products, in addition to risk. The proposed amendment to Article 54 would clarify that the client’s sustainability preferences should be considered in the suitability assessment alongside their risk tolerance. However, although this framework does not prohibit consideration of sustainability risk, it does not explicitly clarify that sustainability risks should be considered either. To address sustainability risk, the PRI recommends that Commission delegated regulation 2017/565/EU (MiFID II delegated regulation) be amended as follows: ■ Article 65 of be amended to clarify that sustainability risks and opportunities should be considered; ■ Article 54 be amended to clarify that sustainability risks should be considered (as a sub-set of the client’s overall risk tolerance) as well as sustainability preferences. The concept of impact is addressed through the lens of suitability. Investment firms are required to consult clients on their sustainability preferences, but the draft delegated acts do not explicitly require providers to systematically offer sustainable investment products, when the provider has them available and otherwise meeting all requirements regarding cost and suitability. In the Commission’s open consultation on a revised Sustainable Finance Action Plan, question 91 asks whether there are merits in further adapting fiduciary duties to require investment firms to consider and integrate adverse impacts of investment decisions on sustainability. The proposed amendments provide a route by which impact may be considered but would not require systematic consideration. In addition, we have substantial concerns with the proposed definition of “sustainability preferences” in the delegated acts. The definition would restrict sustainability preferences to an augmented version of the definitions on the regulation on Sustainability-Related Disclosures in the Financial Services Sector. This is problematic for several reasons (please see the attached document). The Disclosure Regulation and the Taxonomy Regulation both set fund-level disclosure requirements for Article 8 and 9 funds. Rather than define a client’s sustainability preferences in relation to fund categories, we recommend that the Commission establish a broader definition of sustainability preferences, while in parallel ensuring that the fund-level sustainability disclosures provide a clear, coherent and accessible framework for understanding the sustainability profile of the products. The PRI recommends the following alternative definition: Sustainability preferences means a client’s or potential client’s choice as whether, to what extent and how sustainability-related investment objectives should be reflected into his or her investment strategy.
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Response to Integration of sustainability risks and factors in relation to the business of insurance and reinsurance

6 Jul 2020

These clarifications will provide greater comfort to insurers and reinsurers seeking to integrate impact considerations, although practical challenges may remain in the absence of clear guidance on resolving potential conflicts between sustainability impact and financial return. In the Commission’s open consultation on a revised Sustainable Finance Action Plan, question 91 asks whether there are merits in further adapting the prudent person principle to require (re)insurers to consider and integrate adverse impacts of investment decisions on sustainability. The proposed amendments described here, while positive, would permit rather than require any such consideration. We have substantial concerns about the proposed harmonised definition of “sustainability preferences” which would restrict sustainability preferences to an augmented version of the definitions in SFRD. This is problematic for several reasons (please see the attached document for the full list). For insurance and reinsurance undertakings, the clarifications to the prudent person principle state “(the investment..) strategy and those decisions shall reflect the sustainability preferences of its customers taken into account in the product approval process”. This could be interpreted as mandating insurance and reinsurance firms to develop specific products in line with the categories embedded in the definition. The Disclosure Regulation and the Taxonomy Regulation both set fund-level disclosure requirements for Article 8 and 9 funds. Rather than define a client’s sustainability preferences in relation to fund categories, we recommend that the Commission establish a broader definition of sustainability preferences, while in parallel ensuring that the fund-level sustainability disclosures provide a clear, coherent and accessible framework for understanding the sustainability profile of the products. The PRI recommends the following alternative definition: Sustainability preferences means a client’s or potential client’s choice as whether, to what extent and how sustainability-related investment objectives should be reflected into his or her investment strategy.
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Response to Institutional investors' and asset managers' duties regarding sustainability

22 Aug 2018

TAXONOMY The PRI welcomes the proposal to establish a framework to facilitate sustainable investment. We believe the taxonomy will create additional demand for and supply of sustainable financial products by simplifying, and as such, enabling, the investment of private capital in economic activity consistent with the EU’s sustainability objectives. We support the Commissions’ approach to establish the environmental sustainability of economic activities. In turn this will provide investors with: ■ clarity on the sustainability of assets they choose to invest in, that can be derived from the taxonomy, with no obligation to adopt any prescriptive targets on asset allocation or investment style ■ the ability to compare the sustainability of assets and funds based on a robust and common framework, which also encourages transparency, integrity and efficiency in the market for sustainable finance We agree with the proposed regulatory approach and believe that delegated acts should enable timely updating of the taxonomy which is essential for its success. The PRI is pleased to participate in the Technical Expert Group (TEG). COMMENTS ON ARTICLES OF THE TAXONOMY PROPOSAL 2018/353 ■ Article 5 – The PRI supports the proposal to establish six environmental objectives that the taxonomy need support. The PRI has multiple environmental workstreams underway (for example, on climate change, water and deforestation) which may be useful for the Commission. ■ Article 13 – The PRI supports minimum safeguards on social issues. The PRI recommends that the safeguards refer to UN Guiding Principles on Business and Human Rights because they encompass both ILO conventions and the International Bill of Human Rights, which have a broader scope than labour rights only, including: right to privacy, right to an adequate standard of living, right to health, and many more issues which have all been deemed at potential risk from private business activities. ■ Article 15 – The PRI supports establishing an expert group to advise on the technical screening criteria. Drawing on private market expertise is important for the success and practical application of the taxonomy. ■ Article 17 1 (b) – The PRI supports the need to review the criteria used to define what is environmentally sustainable, which provides a clear process for updating the taxonomy. We believe it is critical to the success of the taxonomy that it remains dynamic to incorporate scientific, technological and environmental developments and changes in environmental objectives as necessary, and to ensure that changes are made in a timely way.
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Response to Institutional investors' and asset managers' duties regarding sustainability

22 Aug 2018

REGULATION ON DUTIES AND DISCLOSURES RELATING TO SUSTAINABLE INVESTMENTS The PRI considers the Commission’s Investor Duties and Disclosures proposal (2016/2341) critical for the success of its sustainability objectives. We agree that it “lays the foundation for an EU framework which puts ESG considerations at the heart of the financial system.” We believe the proposal is consistent with the PRI’s principles and mission statement. Clarifying investor duties and ESG disclosure requirements has long been a priority of the PRI. PRI’s Principle 1 states that signatories “will incorporate ESG issues into investment analysis and decision-making processes.” Despite significant progress, some institutional investors believe that ESG issues are not relevant to portfolio value and are therefore not consistent with their duties. While support for this assumption is limited, the PRI finds that implementation is progressing at different rates, in different asset classes and in different geographies. Across EU member states, there is high awareness and intention, but low implementation. For example: ■ PRI’s reporting data finds that 95% of all reporting signatories have an investment policy that covers their responsible investment approach. However, only 54% of European asset owners define ESG objectives in their mandates and only 40% of European asset owners set ESG standards or benchmarks to be followed in their mandates. As stated in the PRI’s response to the Commission’s consultation on duties: “analysis of PRI reporting data demonstrates that a number of asset owners and investment managers in Europe have made commitments to ESG issues in their responsible investment policies, however, we find that depth and scale of implementation varies. In particular, implementation varies across asset classes, with ESG incorporation reported more frequently in listed equity than other asset classes.” ■ Mercer surveyed 1,241 European pension funds in 2017 and found that that only 5% of funds have considered the investment risk posed by climate change. ■ ShareAction conducted an in depth study of 40 European asset managers and found wide variation between leaders and laggards on ESG factors. This report also concluded legal clarity around ESG was necessary. As such, the PRI agrees with the Commission that regulation is required. The PRI also believes the conditions are in place for regulation, to: ■ address a need for more sustainable investment (as articulated by governments in support of the Paris Climate Agreement and the UN Sustainable Development Goals); ■ build on a foundation of existing finance industry literacy and sustainability expertise (as demonstrated by signatory reporting to the PRI); ■ reduce compliance costs by aligning existing regulation (for example, UCITS, AIFMD, EuVECA, EuSEF and IORP ii); and ■ “level the playing field” to reward good performers that fully integrate ESG issues in investment processes. COMMENTS ON ARTICLES OF THE DISCLOSURES PROPOSAL 2016/2341 ■ Article 2 (o) – the Commission might wish to refer to
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Response to Institutional investors' and asset managers' duties regarding sustainability

22 Aug 2018

The PRI is a membership organisation of over 2000 global institutional investors, (including insurers, investment managers and advisors) with approximately US $82 trillion in assets under management. Over 1000 of these signatories are based in the Europe. The PRI strongly supports all four of the Commission’s recent regulatory proposals. The proposals are strongly aligned with the Six Principles that investors agree to implement when they become PRI signatories. The PRI believes the Commission’s approach is comprehensive. We welcome the opportunity to contribute to the Commission’s work through the High Level Expert Group (HLEG) and The Expert Group (TEG) on Sustainable Finance. The PRI published analysis of the EU Action Plan for Financing Sustainable Growth, updated to reflect the Commission’s regulatory proposals. For further details on PRI’s policy programme, please email policy@unpri.org. LOW CARBON BENCHMARKS AND POSITIVE CARBON IMPACT BENCHMARKS The PRI welcomes the Commission’s benchmarks proposal. We agree with the Commission’s approach to start by focusing on benchmarks with characteristics that support investors in meeting their climate objectives. We believe it important that asset owners and managers are able to monitor their performance against a benchmark that reflects an economy oriented towards environmental goals, such as the Paris Agreement. COMMENTS ON ARTICLES OF THE BENCHMARKS PROPOSAL 2018/353 ■ Article 13 1 – The PRI supports the proposed amendment on transparency of the methodology, which will allow for greater comparability between benchmarks and therefore better investment decision-making by portfolio managers. ■ Article 27 – The PRI supports the proposed amendment on the “benchmark statement” to require that for benchmarks that pursue ESG objectives, benchmark administrators must explain how ESG factors are reflected for each benchmarks or family of benchmarks.
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Response to Institutional investors' and asset managers' duties regarding sustainability

21 Jun 2018

The Principles for Responsible Investment (PRI) believes that dialogue between investors and clients on ESG interests and preferences is a necessary to a sustainable financial system and we welcome policy initiatives to encourage this dialogue. The PRI has traditionally focussed on ESG in investment rather than the point of sale dialogue on client ESG interests, we nevertheless have signatory data on asset consulting services and disclosure of ESG related investment information to individual beneficiaries and clients of investment funds that is relevant to the proposed changes to MiFID II. The PRI is a membership organisation of over 2000 global institutional investors, (including insurers, investment managers and advisors) with approximately US $90 trillion in assets under management. Over 1000 of these signatories are based in the Europe. PRI members are required to report on an annual basis on their responsible investment activity, which creates a public disclosure of their policy, process and approach to environmental, social and governance (ESG) issues across asset classes. Many European asset owners have made considerable efforts to integrate ESG factors in their investment processes, however, the PRI finds that the depth and scale of implementation can vary. In addition, the PRI’s data indicates that a minority of investment advisors and asset managers disclose to how they take client preferences on ESG issues into account. For example, while 95% of global investors reporting to the PRI have an investment policy that covers their approach to responsible investment, approximately half (52%) consider ESG issues in their economic analysis. Only just over half of PRI signatories (55%) with internally managed listed equity assets indicate that they disclose their ESG integration approach publicly, in any form, including to clients and beneficiaries. In relation to investment consultants, our data also shows that only 41% of asset consultants incorporate ESG issues when developing investment policies for clients. Even fewer consultants assess the ESG risk profile, materiality or time horizon of ESG objectives of their client. The PRI believes that client and beneficiary preferences on ESG issues should be clearly understood and taken into account by those investing on their behalf. This is necessary to address a societal need for capital flows into assets that will support sustainable economic development, such as that envisaged by the Paris Climate Agreement and the UN Sustainable Development Goals. It is our view that dialogue between investors and clients is a necessary step to influence the sustainability of capital flows. The PRI notes that under the existing MiFID II framework, firms providing investment advice and portfolio management are required to obtain information about the client ... to provide services and products that are suitable for the client (suitability assessment). Without considering the client’s ESG preference, this process is incomplete. The PRI also welcomes the full suite of reinforcing reforms released by the Commission, including: clarification of investors duties to act in the best interests of clients and beneficiaries; and the development of a taxonomy to clarify sustainable economic activities. We note that the duty to pay attention to the preferences of clients is separate from the duty to consider ESG issues that can be material to investment risk and return. We support the requirement for advisors and portfolio managers to provide clear information about the potential benefits and risks of taking client and beneficiary preferences, including ESG issues, into account, as stated in the proposed wording of articles 48 and 54. We believe a taxonomy will provide greater clarity and consistency to enable investors to determine how their portfolios can be better aligned with client and beneficiary preferences on environmental and social issues in due course.
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