GLOBAL - Donald MacDonald, chairman of the United Nations' Principles of Responsible Investments (PRI), has refuted claims suggesting the initiative is a talking shop without teeth by threatening non-compliant fund manager signatories with expulsion.

MacDonald,who is also a trustee of the British Telecom (BT) pension scheme, told IPE today his organisation does not want to be a 'brand image' to signatories who are not serious, and is therefore preparing to expel a small number of fund managers who have not responded to a survey looking at their environmental, social and governance (ESG) credentials for the second year in a row.

The organisation, which has been in force for just over two years, says it is the first time the process has been initiated, but MacDonald added in future all signatories will need to comply with the reporting and assessment framework within their second year of membership.

The PRI, which has just completed the second assessment for the evaluation process - conducted by Mercer - stressed the issue has come up for a "very small number of fund managers".

According to MacDonald, the vast majority of signatories take the principles very seriously and have improved their own performance in terms of ESG issues, while the response to the survey has been "extremely high".

The PRI, whose effectiveness has been questioned by fund managers and pension funds in recent times, wants to demonstrate it is serious about its aims.

"We are not terribly interested in providing a brand image for organisations who are not contributing towards it," said MacDonald.

That said, he does not think the move will scare potential signatories off, since the move is designed to enhance quality assurance.

"The six principles of PRI are all aspirational, and we really do not put any obligations on signatories, other than for them to seek to carry out the principles and the one thing we insist on is they take part in the annual reporting and assessment framework," concluded Macdonald.

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