The organisation running the Principles for Responsible Investment (PRI) initiative has published a draft scope for the review of its own governance, first announced in September last year.
The PRI’s two main governing bodies agreed to carry out the review following concerns by some signatories about the process used to adopt a new legal and governance structure for the organisation.
In 2010, it had been incorporated as the PRI Association, a not-for-profit company limited by guarantee under UK law.
The PRI said the structural changes were driven by the rapid growth of its signatory base, the need to strengthen management oversight of the secretariat and a decision to move from voluntary to mandatory fees, payable annually by all signatories.
But there were particular concerns about how the changes affected the rights of asset owner signatories.
And, in spite of the plans for a review, eight Danish signatories left the association last December.
Fiona Reynolds, managing director at the PRI Association, said: “The governance review will look at the rights of each category of signatory and the roles and responsibilities of the various bodies and committees that make up our governance structure.
“We want to establish what structure the PRI should adopt to ensure it fulfils its mission and ensure it is transparent and accountable to our signatories.”
The draft scope will effectively be a top-to-toe examination of the association’s constitution.
At present, asset managers make up the majority of PRI members, but asset owners hold most council and board positions within the association.
The PRI said the review would not consider whether asset owners should remain predominant in the PRI’s governance structure, or whether non-asset owners should be excluded from being signatories or from being involved in the PRI’s governance.
However, it will consider the extent to which asset owners should predominate, and how this predominance is best enshrined and exercised to ensure broad representation for other categories of signatory.
The review will evaluate the difference between the former and current constitutions, as well as carry out a peer review to compare the PRI’s governance with that of similar global membership organisations.
It will cover signatory input, signatory status and annual general meetings.
It will also include scrutiny of most aspects of the PRI governing bodies and their committees, such as number, composition, decision-making processes and conflicts of interest.
The review will be carried out by an external independent individual or organisation, working with the council’s governance committee, the PRI executive team and the new council chair, who is to be appointed within the next few months.
The process will also include consultation with signatories.
The independent adviser is expected to have prepared his report and recommendations by end-June.
These will then be published for further consultation by signatories.
Meanwhile, the PRI is inviting input on the draft scope from all signatories and other stakeholders, with a deadline of 28 February.
Feedback should be e-mailed to firstname.lastname@example.org.
A copy of the final scope will be published on the PRI website in April.