UN boost for 'Responsible Investment'

Posted: 22 July 2004

A set of globally-recognised principles for responsible investment is being developed by the United Nations Environment Programme (UNEP) in collaboration with major institutional investors.

The new principles, to be set by September 2005, seek to promote sustainable development by integrating environmental and social concerns with investor and market considerations.

The launch of the so-called Responsible Investment Initiative (RII) follows a meeting of more than 40 investors and fund managers held last month in Paris. At the meeting, organised by the UNEP Finance Initiative and hosted by Groupama Asset Management, participants proposed a global alliance of investors to guide responsible investment best practice.

"The global public and private investor community, which has a duty to protect long-term asset values, is a key sector in bringing environmental, social and governance disciplines to the heart of capital market considerations," said Klaus Toepfer, UNEP's Executive Director. "The short-termism inherent in our markets is a critical challenge when it comes to addressing environmental and broader sustainability issues," he continued.

Sir Graeme Davies, Chairman of the Universities Superannuation Scheme Ltd (USS), the third largest UK pension fund, said: "Pension funds have liabilities which last several decades so it's inevitable that the serious social and environmental issues which the UN system seeks to address will increasingly become material investment issues as well.

Sustainable growth

Commenting on the importance of the UNEP's involvement Sir Graeme said: "The UN and its sister organisations (eg the World Bank, OECD and IMF) have the international legitimacy and expertise to lead this work, as well as considerable clout as investors in their own right. That is why USS is participating in this important initiative."

Keith Jones, CEO of Morley Fund Management agreed, commenting "It is clear to us that success for companies focused on consistent progress over time means embracing the concept of sustainable economic growth."

Michaeal Hölz of Deutsche Bank and chair of the UNEP Finance Initiative added, "Deutsche Bank firmly believes in the potential of public private partnerships to develop and ensure governance, environmental and social performance."

UNEP is also co-ordinating its work with relevant international organisations including the World Bank, the OECD, the CFA institute, the International Corporate Governance Network and the Carbon Disclosure Project. Regional groups pinpointed for collaboration included the Investor Network on Climate Risk in the USA and the Institutional Investors Group on Climate Change in the UK.

The RII also builds on the findings of a UNEP study published last month, The Materiality of Social, Environmental and Corporate Governance Issues to Equity Pricing, which warned of a threat to stock markets if environmental, social and governance issues are ignored by financial analysts and the broader investment community.

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