World's Largest Investors Back Principles for Responsible Investment

NEW YORK, New York, April 28, 2006 (ENS) - UN Secretary-General Kofi Annan rang the opening bell at the New York Stock Exchange Thursday morning to announce the start of a United Nations effort to encourage institutional investors to weigh the environmental and social impact of their investments.

A group of the world's largest institutional investors joined Annan at the Stock Exchange to officially launch the Principles for Responsible Investment. The heads of leading institutions from 16 countries, representing more than $2 trillion in assets owned, officially signed the Principles at the special launch event.

“The Principles provide a framework for achieving better long-term investment returns, and more sustainable markets,” Annan told the Wall Street audience, calling the UN and business “natural partners."

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UN Secretary General Kofi Annan (center) announces the Principles for Responsible Investment at the New York Stock Exchange. (Photo courtesy UN)
The principles are intended to provide a global framework for integrating environmental, social and governance criteria into investment analysis and ownership practices. They will align international investment practices with the goals of the United Nations, including sustainable development.

The six overarching Principles, which are voluntary, are underpinned by a set of 35 possible actions that institutional investors can take to integrate environmental, social and corporate governance considerations into their investment activities.

These actions relate to issues such as investment decisionmaking, active ownership, transparency, collaboration and gaining wider support for these practices from the whole financial services industry.

"These Principles grew out of the understanding that while finance fuels the global economy, investment decisionmaking does not sufficiently reflect environmental, social and corporate governance considerations " or put another way, the tenets of sustainable development," said Annan.

Putting the UN's money where its mouth is, Annan announced that the UN Joint Staff Pension Fund, with nearly $30 billion in assets, also signed on to the Principles at the launch event.

The Principles were developed during a process convened by Annan and coordinated by the UN Environment Programme Finance Initiative and the UN Global Compact over the course of eight months.

In joining with institutional investors to develop the Principles, the United Nations collaborated with some of the world's most influential institutions, many of them public pension funds involved in investment activities worldwide. It is estimated that pension funds alone, public and private, account for up to 35 percent of total global investment.

More than 20 pension funds, foundations and special government funds, backed by a group of 70 experts from around the world, held meetings in Paris, New York, Toronto, London, and Boston to craft the Principles.

"We are proud to endorse the Principles, which recognize that social and environmental issues can be material to the financial outlook of a company and therefore to the value of our shares in that company," said Denise Nappier, treasurer of the state of Connecticut, who is the principal fiduciary of $23 billion in pension fund assets.

"Financial markets tend to focus too heavily on short-term results at the expense of long-term and non-traditional financial fitness factors that could affect a company's bottom line," Nappier said. "For many institutional investors it is the long-term that matters and in this context environmental, social and governance issues take on new meaning."

"We manage assets for future generations and acknowledge the link between long-term return and the governance of companies, markets and economies," said Knut Kjaer, executive director of the Norwegian Government Pension Fund, which holds assets of more than $250 billion.

"We engaged in developing these Principles to help broaden the understanding of what drives long-term fund performance. Investors must collaborate to support well-regulated markets and sustainable development," Kjaer said.

To view the Principles, visit: http://www.unpri.org/principles/