The Principles for Responsible Investment (PRI) and the World Business Council for Sustainable Development (WBCSD) – together representing asset owners, investment managers, service providers and businesses – have forged a new collaboration to create the enabling conditions for a sustainable financial system.
In the landmark collaboration, the PRI and WBCSD will work to put sustainability at the heart of financial and strategic decision making by facilitating direct conversations between investors and business about what decision-useful sustainability-related information is, and how and where that information can be used.
In doing so, the two organizations provide financial market actors with the information and impetus they need to allocate more capital and other support towards sustainable business through improved supply and use of sustainability-related information. The collaboration will bring investors and corporates together to clarify how sustainability information is used in the investor-corporate relationship, how businesses and investors can align incentives, evaluation, valuation and decision-making with sustainability considerations related to resilience, impact and outcomes, and support the institutional arrangements that will deliver the sustainability information needed by investors and corporates. It is designed to complement and support efforts already underway toward a globally harmonized system for ESG reporting.
The current global context marks a critical moment for embarking on this work. Disruption in financial markets and economies has uncovered structural and relational challenges in the current market system, highlighting that the connections between risk, returns and sustainable development are not yet strong enough.
By strengthening communication and alignment between the business and investment communities, the PRI and WBCSD will work to address these issues through dialogue and consensus, providing recommendations and guidance on the integration of sustainability in corporate and investor relations, valuation, incentives and capital allocation decisions.
“Our signatories continue to tell us that being able to access comparable and meaningful sustainability data is a roadblock to progress when it comes to responsible investment. Working with WBCSD will enable PRI to enhance several channels over which investors have influence – capital allocation and investors’ engagement with companies,” said Fiona Reynolds, CEO of PRI. “By collaborating we can further develop the tools and data needed for future decision-making and create the incentives and collective action at a scale that can significantly influence the capital costs of companies.”
“We are working to redesign corporate and investor engagement and our organizations represent a powerful combination of those voices,” said Peter Bakker, President and CEO of WBCSD. “We see this work as integral for aligning the financial system with the transformations needed to address the major social and environmental issues – like climate change and inequality.”
The collaboration will also serve to complement existing regulatory and standard setter work towards a globally harmonized system for ESG disclosures by focusing upon investor needs, and strategic corporate communications – working to ensure the right information is consistently communicated, understood, used and actioned to drive change for a sustainable future.
The collaboration is focused on an area that is underserved to date, corporate and investor dialogue. WBCSD and the PRI are aiming to complement existing efforts and approaches to strengthen the effectiveness of developments. According to Mr Bakker and Ms Reynolds, the signatories and members of the PRI and WBCSD can bring much needed scale and market-based consensus to support and accelerate these efforts and to deliver a solution that meets market demand and stakeholder concerns.
The PRI is a U.N. supported organization, with more than 3,000 signatories who collectively represent over USD $100 trillion in Assets Under Management. The World Business Council for Sustainable Development’s 200 member companies represent a combined revenue of more than USD $8.5 trillion and 19 million employees, spanning 70 countries – and are working to accelerate the transition to a sustainable world.