PRI in Person 2018 Wrap Up

19 September 2018

PRI Conference 2018 news

Discussions centred on how best to tackle the different scenarios in the transition to a lower-carbon economy.

This year’s PRI-in-Person conference, which took place in San Francisco last week, was the largest PRI conference to date, with 1200 attendees representing asset owners, asset managers, consultants, service providers and NGOs. The agenda focused on climate change as one of the key issues to tackle in attempting to meet the UN’s Sustainable Development Goals’ (SDGs) ambitious 2030 timescale.

PRI 2018 David Sheasby Video Play Play Video
PRI In Person Conference, San Francisco - September 2018

Here are my key takeaways from the event:

  • The conference saw two powerful keynote addresses from both Al Gore and from Paul Polman (Unilever CEO) who reinforced the message on climate change, but also emphasised the need to move to a more circular economy, reorientate the financial system towards the longer-term and address global inequalities.

  • Concerns about the increasing impact of social inequality have set an agenda known as ‘The Just Transition’, which addresses the challenges that the shift to a lower-carbon economy may create for different elements of society. This is one of the ‘Social’ considerations (the ‘S’ in ESG) that is increasingly coming into focus for asset owners and managers alike.

  • The Task Force for Climate-related Financial Disclosures (TCFD) generated much discussion. The initiative now has the support of 390 organisations including corporates as well as asset managers and asset owners. Discussions centred on how best to tackle the different scenarios in the transition to a lower-carbon economy. The good news for investors is that there are some tools beginning to emerge, such as the Paris Agreement Capital Transition Assessment (PACTA) and the Transition Pathway Initiative (TPI) – both of which we will take a closer look at within Martin Currie’s integrated approach to ESG analysis.

  • There were some excellent panel discussions on ESG integration, outlining some of the barriers and what ‘good’ looks like. The common themes were i) support from the top, and ii) ensuring that the portfolio managers and analysts are the ones doing the analysis and engagement.

  • There was also debate on the increasing availability of ESG data and the use of external ESG ratings. Data consistency and reliability is still an issue – for example, there are low correlations of ratings between ESG rating providers. This suggests: i) that there is no consensus on what ‘good’ looks like; (ii) that a strategy based on using these raw ratings is potentially flawed; iii) and that asset managers need to do their own ESG analysis.

  • The PRI’s Academic Network, which took place in advance of the PRI-in-Person conference, provided an opportunity to meet with the academics behind some of the latest responsible investment research. I moderated a session that examined the influence of different stakeholders on Corporate Social Responsibility performance. The key takeaway was the importance and potential impact of engagement.

  • Finally, there were many references to regulation both with respect to increasing current regulation on responsible investment and the potential future pathways for climate-related regulation. A poll of attendees showed a large majority expect a disorderly policy response. This will be an area that we will continue to monitor closely.