The Principles for Responsible Investment (PRI) has chosen law firm Freshfields Bruckhaus Deringer to carry out research on legal questions to do with investors factoring in the environmental or social impact of their investment decision-making.
As previously reported, the PRI is collaborating with the UN Environment Programme Finance Initiative and The Generation Foundation on the research project, which has been called A Legal Framework for Impact.
The organisations yesterday announced the launch of the project with Freshfields, also revealing it will have a larger geographical scope than had been communicated to IPE earlier this year. Eleven jurisdictions are to be covered: Australia, Brazil, Canada, China, the EU, France, Japan, the Netherlands, South Africa, the UK and the US.
According to the PRI and its partners, the research will explore legal frameworks to analyse the extent to which asset owners can prioritise “sustainability impact”, including where this may lead to a negative effect on investment return.
As concerns asset managers, the research will explore how they can or should address such an impact where their investment mandate is silent on this.
PRI CEO Fiona Reynolds said: “Investing for sustainability impact is the new frontier for responsible investment, with a stronger focus on how investment decisions have real world impact on ESG factors over financial materiality.
“This is an exciting and new area of work for PRI which will help investors across a number of markets ensure sustainability is a fundamental part of their investment practices.”
A group of experts in law, responsible investment and sustainability impact is to support the research project.
Daniel Jackson, managing director of Goldman Sachs Asset Management, is one member of this group, as is Martin Jonasson, general counsel for Swedish buffer fund AP2.
“The sheer number of regulations in hard and soft law across these 11 jurisdictions that may restrict, guide or influence asset owners and asset managers in their investment activities make it difficult to navigate the legal landscape to invest for sustainability impact,” said AP2’s Jonasson. “This is why this project is so welcome.”
The manager of Norway’s sovereign wealth fund has expressed concerns about the PRI’s move to embrace work on impact, writing that signatories should get a vote on “any substantial strategic development which may represent de facto a new principle”.
In 2005 Freshfields published what was hailed as a landmark report on fiduciary duty and the consideration of environmental, social and corporate governance (ESG) factors, although it failed to end the debate about their compatibility.