Top 10 Must Know Facts of the new PRI reporting process

This week, I want to share with all the UN PRI Signatories who are in the middle of the annual reporting season (and potential future signatories who want to better understand what they would have to report if they become signatories) the Top 10 Must Know Facts of the new reporting process.

It is mandatory for all UN PRI’s signatories to report on their responsible investment activities every year, and this year the reporting process underwent a significant revamping. The framework was in many ways simplified (less things to report), and at the same time the bar was raised as to how far signatories take their commitment to responsible investing. Since this will be the first cycle anyone sees this new format, here are what we think are the key things to know ahead of responding:

1. Reporting due dates:

• Investors: April 29th
• Service providers: May 13th
• AUM reporting: March 31st

2. Less is more: 50% fewer indicators, 70% of them are mandatory (called CORE indicators, assessed), 30% of them are voluntary (called PLUS indicators, not assessed). Clearer dictions, fewer open-ended questions, and more stewardship-focused questions.

3. First impressions matter: even though the Senior Leadership Statement is not graded, we recommend all signatories try to do a good job on it. It sets the tone on what you do, how you do it, and why you care about this topic. If you are publishing your annual report (we recommend this too), this will be an especially useful investor relations material.

4. Stewardship and Hedge Funds: what used to be known as “Strategy and Governance” is now called “Investment and Stewardship Policy”. This change was done to offer an in-depth set of indicators related to stewardship activities. There is also another new module for Hedge Funds which is aligned with the fixed income and equity modules.

5. Changes in grading methodology: the 3-star rating system was replaced by 5-star rating system. Each indicator has been given a relative weight (low-relevance indicators receive 1 point, medium-relevance indicators receive 1.5 points, high-relevance indicators receive 2 points), and the total score is divided by the maximum possible points in each section. This is added up, and the scale is 0 to 100. The former system and current system are not comparable, so don’t worry about year on year changes in grades this year.

6. The PRI 2020-2021 mapping document: PRI published an indicator-by-indicator guide to transition from last year’s reporting to the new 2021 framework. New content and wording modifications are all identified and explained.

7. New dashboard: get familiar with the new platform since you may get lost trying to find new sections. Avoid having more than one person working on the platform at the same time, since the changes one person does to the responses while another is working on the platform may be lost.

8. Mandatory modules: if any asset class represents at least 10% of your AUMs or is worth US$10B, you must report the modules relevant to that asset class.

9. Where to start: if you are confused and do not know where to begin, start with the Organizational Overview section (OO). It will help you understand what modules apply to you. Remember all modules are publicly available here.

10. Ask for help: the PRI webpage is full of different resources to help you with the reporting process. There are guides for everything, articles on many key topics, useful examples of many things, among other relevant materials. If this is not enough, and you feel like you are too new to this topic and unsure about reporting this year, reach out to an ESG advisor who can help you bridge your knowledge gaps (we are always happy to help).

It is important for your report to be a true reflection of the responsible investing practices within your organization, so think about any low scores you may get in any given section as a roadmap to improving over time and truly enjoying the benefits of integrating these practices into your investing strategy.

I hope you found this interesting. As usual, if there is anything we can help you with, please reach out.

Best,

Marimar

CEO, Miranda ESG