Introduction

The Principles for Responsible Investment (PRI) are aspirational guidelines for institutional investors on integrating environmental, social and governance (ESG) issues into investment processes and ownership practices. Launched in April 2006, the PRI Initiative has grown to become the largest investor effort focused on addressing ESG issues. As of early 2010, the initiative has over 700 signatories representing assets of US$20 trillion, constituting close to 20 per cent of global capital markets. This chapter tells the story of where the PRI Initiative came from, where it is now, and where it is heading.

Origins of the PRI

In the 1990s and early 2000s, responsible investment in all its various forms experienced strong growth. Socially responsible investment (SRI) – primarily values-driven and retail investor-focused – had a small, but established foothold in many developed markets. Shareholder activism – particularly by US pension and SRI funds – was being conducted on a range of issues from ESG disclosure to corporate governance to labour standards, with increasing numbers of shareholder resolutions filed at US companies each year. In the early 2000s, a number of large UK fund managers began to engage in dialogue with companies on ESG issues and had established dedicated teams to conduct these engagements. Clean-tech and investment in renewable energy was taking off. Climate change was emerging as a major issue and a regulatory momentum was evident.

During this period, the debate around environmental and social issues started to shift from questions of ethics to questions of good governance, long-termism, risk management and emerging opportunities.