2. What is the role of the investors and
what exactly is expected of them?
John Ruggie: Demonstrate to yourself
that you respect human rights
3. Responsible Investing
Timeline
PRI launched at New York Stock Exchange 2006
Based on fiduciary duty to report on Environmental, Social and Governance (ESG)
issues
Princeton Roundtable on SRI , 2008 Danish Ministry of Economic and Business Affairs
The promiseofsri.org
§§ 99a Dansk Årsregnskabslov
Dansif
2010 GRI og Global Compact
2011 OECD, May, Multinational Companies
2011, UNGP, June
2012, §§ 99b, Dansk Årsregnskabslov , skal undertegnes, alternativt: UN GLObal
Compact rapport uden konkret modtager
4. Responsible Investing
PRI Based on fiduciary duty to report on Environmental, Social and Governance (ESG)
issues
A fiduciary is a legal or ethical relationship of trust between two or more parties.
Typically, a fiduciary prudently takes care of money for another person. One party, for
example a corporate trust company or the trust department of a bank, acts in a
fiduciary capacity to the other one, who for example has entrusted funds to the
fiduciary for safekeeping or investment. Likewise, asset managers--including managers
of pension plans, endowments and other tax-exempt assets--are considered
fiduciaries under applicable statutes and laws
Quote from: Lemke and Lins, ERISA for Money Managers, Chapter 1 (Thomson West,
2013)
5. Responsible Investing
Questions raised at Princeton Roundtable 2008
• 0wnership sometimes diffuse, accountability?
• Initial Cost of Reporting
• Risk of Non- Compliance?
• The role of the state is to support STRATEGIC CSR
• Rating is not standarized, difficult for Asset managers
• What are the ”virtues” that we need more of in the financial markets- and which
investors can ask for?
• Are pension funds less susceptible to pursue high risk investment opportunities
and therefore less dependent on collective standards for corporate governance
(given their focus on long term profitability)?
6. Responsible Investing
Investing the Rights Way 2013
• Human Rights abuse exposes to operational, legal/regulatory
and reputational risk
• Not only Risk management, but responsibility in its own right
• Critism of UNGP: no enforcement power, narrow focus on
process and management at the expense of substance and
outcomes
7. Responsible Investing
HARVARD article aug 2013: Cheng, Ioannou and Serafeim:
CSR and Access to finance
a) reduced agency costs due to enhanced stakeholder engagement and
b) reduced informational asymmetry due to increased transparency.
Investors have a critical role to play in encouraging companies to comply
with the UNGP through emphasizing a proactive due diligence approach.
”Raising the bar” on all fronts to mitigate risk and contribute to the
protection and documentation of humans rights.
8. Responsible Investing
SUSTAINALYTICS : Raising the bar on Human Rights august 2011, Dan
Schoemaker
• Criminal Accountability. Outside own territory – corporate liability
• New National Laws ( limited number MNC rather large influence on )
• Remedy and Complaint
• ANALYSIS: GAPs between PRI and UNGP are largely congruent with these
points
9. Responsible Investing
Two examples:
Pensionkasse : PRI rapport 2010 og 2012 (dele), COP
cofounder of DANSIF, PRI clearing house : Internal managers, mainly Real
Estate and Environmental: Forest, Alternative energy : Windmill farms,
Micro loans,
and external provider, active ownership, influence at AGM through proxy.
mainly Governance issues
Recently published Collaboration with Sustainalytics
Another company: no CSR, different Asset class, less regulation, still recent
investee for pensionfund
10. Responsible Investing
Further consideration: the discrepancy between rules/law and
implementation
Steps/action:
Present to pensionfund
Possible short article
Further readings:
Investing the Rights way
Pavan Sukhdev: Corporation 2020
Jane Jagd: CSR rapportering 2013
