Portfolio Partners is the first Australian fund manager to sign up to the Principles for Responsible Investment (PRI), a global scheme co-ordinated by the United National Environment Programme Finance Initiative and the UN Global Compact.
The PRI recognises that non-financial factors, such as environment, social and corporate governance issues (ESG), can impact the performance of investment portfolios. The principles aim to integrate consideration of these factors into investment decision-making and ownership practices, in order to improve the long-term returns generated for investors.
To date, the initiative includes financial institutions from 16 countries, representing over $2 trillion in funds under management.
Portfolio Partners managing director Craig Bingham said: “It is our intention with the principles to develop a uniform, high-level framework with which investors can better integrate ESG issues into investment decisions.”
He added: “Investors that have a systematic process for assessing and understanding sustainability issues and how companies are managing them will have a better understanding of companies as a whole and generate better returns as a result.”
To date, other Australian signatories to the PRI include Christian Super, the Catholic Superannuation Fund and Mercer Investment Consulting.
Mercer, which also served as the UN’s consultant on the process, said the need for the principles is driven by a “simple investment reality”.
Global head Tim Gardener added: “While environmental, social and corporate governance factors are increasingly perceived as having an impact on corporate financial performance, they are rarely incorporated into investment decision-making.
“This leaves room for corporate scandal, environmental degradation, and human rights abuses — all of which can affect both a company’s bottom line and its share price.”
The PRI also aims to provide all signatories to a global network of financial institutions, enabling organisations to pool resources, lowering the costs of research and active ownership practices.
Bingham said: “We look forward to collaborating with other signatories to explore possible synergies in this area.”
