Chapter 6 – Sustainability

United Nations Principles for Responsible Investment (PRI) and ESG

https://www.unpri.org/

As it says on the United Nation’s website, the committee on PRI (Principles for Responsible Investment)

“We work to understand how environmental, social and governance (ESG) issues – such as climate changehuman rights and tax avoidance – impact investments, and we support our international network of investor signatories in incorporating these factors into their investment and ownership decisions.

The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole.”

https://www.unpri.org/

As is says on the United Nation’s website, the committee on PRI (Principles for Responsible Investment)

“We work to understand how environmental, social and governance (ESG) issues – such as climate changehuman rights and tax avoidance – impact investments, and we support our international network of investor signatories in incorporating these factors into their investment and ownership decisions.

The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole.”

What is responsible investment?

https://www.unpri.org/pri/what-is-responsible-investment

Responsible investment is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns.

Why invest responsibly?

The global momentum around responsible investment is driven by:

  • recognition in the financial community that ESG factors play a material role in determining risk and return;
  • understanding that incorporating ESG factors is part of investors’ fiduciary duty to their clients and beneficiaries;
  • concern about the impact of short-termism on company performance, investment returns and market behaviour;
  • legal requirements protecting the long-term interests of beneficiaries and the wider financial system;
  • pressure from competitors seeking to differentiate themselves by offering responsible investment services as a competitive advantage;
  • beneficiaries becoming increasingly active and demanding transparency about where and how their money is being invested;
  • value-destroying reputational risk from issues such as climate change, pollution, working conditions, employee diversity, corruption and aggressive tax strategies in a world of globalisation and social media.

What are environmental, social and governance (ESG) factors?

Examples of environmental, social and governance (ESG) factors are numerous and ever-shifting. They include:

Environmental

  • climate change
  • greenhouse gas (GHG) emissions
  • resource depletion, including water
  • waste and pollution
  • deforestation

Social

  • working conditions, including slavery and child labour
  • local communities, including indigenous communities
  • conflict
  • health and safety
  • employee relations and diversity

Governance

  • executive pay
  • bribery and corruption
  • political lobbying and donations
  • board diversity and structure
  • tax strategy

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Engineering and Technology in Society - Canada Copyright © by Jennifer Kirkey. All Rights Reserved.

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