Asset owners and managers increasingly view responsible investment as inherent to their fiduciary duty to clients and beneficiaries, according to an analysis of signatory reporting by the UN Principles for Responsible Investment (PRI).
Three quarters (74%) of signatories’ policies explicitly connect responsible investment activity to fiduciary duty, the PRI said, drawing on annual reporting from 4,327 signatories globally.
The PRI said the data shows a large majority of signatories are increasingly emphasising the financial materiality of sustainability and governance factors.
Financial materiality underpinned two thirds (67%) of signatories’ rationales when acting on sustainability outcomes, with present and future regulatory risk cited by just under half (49%).
As well as outlining fiduciary duty and legal obligations, submitted senior leader statements increasingly referenced with due diligence and value creation. Climate change was the most cited risk.
The report also found that 43% of signatories used key performance indicators relating to responsible investment to evaluate executives, up from 40% last year.
A separate analysis of the climate policies of 200 institutional investors reported that 75% were assessing the financial risks and opportunities that climate poses for their portfolios, with a similar proportion implementing board-level oversight of climate-related strategies.
The ‘Global State of Investor Climate Action report’ – released by the founding partners of the Investor Agenda, including the PRI, ahead of COP30 in November – identified a growing appetite to engage with policymakers as well as portfolio companies as part of climate stewardship strategies.
According to the survey, 73% of investors are engaging investee companies on climate issues, with 64% using escalation mechanisms, and 57% integrating climate-related risk into proxy voting.
With engagement increasingly viewed as the main lever available for decarbonising the real economy, 43% of investors said they were engaging with governments on climate change.
The PRI recently launched guidance for asset owners and managers on addressing financially material system-level risks such as climate change to protect long-term portfolio value.
The guide outlines a three-step framework – identifying outcomes and developing strategy, taking actions, and monitoring, assessment and reporting – for investors to adapt to their own circumstances.
It highlights potential approaches to system-level stewardship approaches, including engagement with policymakers and regulators, as well as engagement with parties across the investment chain, such as asset managers, service providers and beneficiaries.
