GLOBAL - Investment according to environmental, social and governance (ESG) factors is no longer a niche area, according to Wolfgang Engshuber, chairman of the UN Principles for Responsible Investment (PRI).
"ESG is not a niche anymore," he said, speaking at the FTSE4Good Index Series 10th anniversary in London yesterday, which also saw FTSE Group launch its ratings data service, which aims to measure the ESG practices of more than 2,300 public companies worldwide.
"There are some specific products out there, but it is becoming mainstream," he added.
UN PRI is currently working on broadening its network across more regions, with a focus on regions where the initiative is underrepresented.
It also aims to cover all asset classes, which is why it has launched work streams for private equity, hedge funds, fixed interest and infrastructure.
It wants to engage in all ESG criteria and aims for its clearinghouse and experts to help its signatories engage with various themes.
"We are also working on the enhancement of our reporting and assessment tool," Engshuber said. "We want to use it as a guiding principle for our signatories on how to best engage, how to see what is the best practice and how to best work with others, which will be a major undertaking for the next two years."
Issues currently discussed at the PRI include the long-term stability of the financial markets, the investment process value chain, conflicts of interests and the embedding of ESG in RFPs and the monitoring of asset managers.
"Another point is that we still have separate financial and ESG reporting," said Engshuber. "Ideally, we will have integrated reporting that highlights all of a company's value drivers in the long run."
Speaking at the same event, Joanne Segars, chief executive at the UK's National Association of Pension Funds (NAPF), said pension funds could do better in the ESG space by committing to the UK Stewardship Code, by incorporating stewardship and sustainable investing in their IMAs and SIPs, by conducting more active and targeted engagement and by assessing companies on a broader range of issues.
The NAPF recently published its guide 'Stewardship made simple: Practical Steps for Pension Fund Trustees in applying the Stewardship Code' to encourage more pension funds to sign up to the code.
At present, the UN PRI has 882 signatories globally, including 228 asset owners and 494 asset managers.