PRI updates reporting framework

by Matthias Plötz 1 February 2023

The Principles of Responsible Investment (PRI) has published an update to its reporting framework. Based on signatory feedback to the framework’s initial launch in 2021, the changes aim to reduce duplication and increase alignment with other private market modules, as well as external regulatory reporting standards.

“The changes made to the reporting framework for 2023 are designed to deliver optimisation and efficiency of the framework, following on from signatory feedback,” commented Peter Dunbar, head of private equity at PRI.

Key amendments include:

  • An update to the terminology and guidance throughout the framework
  • A decrease in required indicators
  • Simplification of existing indication structures
  • Increased alignment with other existing frameworks such as the TCFD
  • Asset owners no longer need to report at the internally managed asset class level, only on external manager selection, appointment and monitoring
  • A reduction in granularity of required data
  • A revised assessment methodology to ensure signatories are not penalised for not adopting irrelevant practices

Existing minimum requirements will remain in place for the upcoming reporting cycle as their review continues.

“PRI has aimed to reduce duplication while maintaining a credible and robust framework, and has pursued greater alignment with other private market modules (real estate and infrastructure), and external regulatory reporting standards,” said Dunbar. “Compared to 2021, indicators have been updated to increase their applicability to private market investors, including the revision of question and answer options, as well as now featuring the addition of N/A answer options, and specific guidelines for minority investors.”

According to Dunbar, PRI’s PE membership is growing, which also drove the latest changes: “We’re seeing more private equity firms come onboard as signatories, and we understand that these firms face a landscape distinct from other signatories such as other investment managers and asset owners. We want to ensure that our reporting process contributes to developing standards of best practice across the industry.”

Responsible investment
The PRI has heightened its focus on responsible investment. The corresponding module, PGS (previously the Investment and Stewardship Policy module), has grown to 47 indicators, with the aim of capturing investors’ overall approach to responsible investment.

Additionally, PRI highlighted human rights alongside climate change as a priority issue, with modules for reporting on TCFD alignment now focusing on human rights.

Next steps
According to PRI, GPs won’t have to take specific steps beyond the organisation’s recommendations to other signatories to prepare for the upcoming reporting cycle, which will commence in May 2023 and close in August 2023.

Reporting is mandatory for investors who signed the PRI before December 2020, while for later signatories reporting is voluntary in 2023 but will be mandatory during the 2024 cycle.

Signatories can expect additional guidance in the coming weeks, according to PRI.

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