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Commonfund becomes a signatory to the
PRINCIPLES for RESPONSIBLE INVESTMENT (PRI) 


Commonfund has announced that as of February, 2013, it has become a signatory to the Principles for Responsible Investment (PRI).  As such, Commonfund affirms its corporate commitment to the importance of Environmental, Social and Governance (ESG) investment issues.  Specifically, the six abiding Principles set forth by the international organization, which Commonfund has committed to embrace include:

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

Possible actions:
  • Address ESG issues in investment policy statements
  • Support development of ESG-related tools, metrics, and analyses
  • Assess the capabilities of internal investment managers to incorporate ESG issues
  • Assess the capabilities of external investment managers to incorporate ESG issues
  • Ask investment service providers (such as financial analysts, consultants, brokers, research firms, or rating companies) to integrate ESG factors into evolving research and analysis
  • Encourage academic and other research on this theme
  • Advocate ESG training for investment professionals
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

Possible actions:
  • Develop and disclose an active ownership policy consistent with the Principles
  • Exercise voting rights or monitor compliance with voting policy (if outsourced)
  • Develop an engagement capability (either directly or through outsourcing)
  • Participate in the development of policy, regulation, and standard setting (such as promoting and protecting shareholder rights)
  • File shareholder resolutions consistent with long-term ESG considerations
  • Engage with companies on ESG issues
  • Participate in collaborative engagement initiatives
  • Ask investment managers to undertake and report on ESG-related engagement

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Possible actions:
  • Ask for standardized reporting on ESG issues (using tools such as the Global Reporting Initiative
  • Ask for ESG issues to be integrated within annual financial report
  • Ask for information from companies regarding adoption of/adherence to relevant norms, standards, codes of conduct or international initiatives (such as the UN Global Compact)
  • Support shareholder initiatives and resolutions promoting ESG disclosure

Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

Possible actions:
  • Include Principles-related requirements in requests for proposals (RFPs)
  • Align investment mandates, monitoring procedures, performance indicators and incentive structures accordingly (for example, ensure investment management processes reflect long-term time horizons when appropriate)
  • Communicate ESG expectations to investment service providers
  • Revisit relationships with service providers that fail to meet ESG expectations
  • Support the development of tools for benchmarking ESG integration
  • Support regulatory or policy developments that enable implementation of the Principles

Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

Possible actions:

  • Support/participate in networks and information platforms to share tools, pool resources, and make use of investor reporting as a source of learning
  • Collectively address relevant emerging issues
  • Develop or support appropriate collaborative initiatives

Principle 6: We will each report on our activities and progress towards implementing the Principles.

Possible actions:

  • Disclose how ESG issues are integrated within investment practices
  • Disclose active ownership activities (voting, engagement, and/or policy dialogue)
  • Disclose what is required from service providers in relation to the Principles
  • Communicate with beneficiaries about ESG issues and the Principles
  • Report on progress and/or achievements relating to the Principles using a ‘Comply or Explain’1 approach
  • Seek to determine the impact of the Principles
  • Make use of reporting to raise awareness among a broader group of stakeholders

1The Comply or Explain approach requires signatories to report on how they implement the Principles, or provide an explanation where they do not comply with them.

As a nonprofit investment organization serving mission-based institutions (e.g., colleges/universities, foundations, healthcare institutions and pensions, etc.) Commonfund recognizes that environmental, social and governance factors may have a material impact on long-term investment performance. Over the coming months, Commonfund will continue to develop appropriate guidelines for consideration of environmental, social and governance issues, recognizing that context matters and that the risks and opportunities posed by environmental, social and governance factors can vary greatly depending on geography, industry and asset class.

 

For more information on PRI, please click their logo below.