A proposed new board governance structure for the organisation running the Principles for Responsible Investment Initiative (PRI) has been endorsed by an overwhelming majority of signatories.
The vote follows the PRI Association’s 18-month independent governance review and extensive signatory consultation.
The changes, which also include new articles of association, are intended to introduce a simpler, more transparent and accountable governance structure, taking effect on 1 April.
A record 43% of asset owners voted, the highest participation rate for a signatory vote in the PRI’s history.
More than 95% of asset owners and non-asset owners approved the articles, which reflect the 10 recommendations of the review, carried out by corporate responsibility specialists Carnstone.
Since the PRI Association was incorporated in 2010, some signatories have raised concerns about the governance structures, which have been seen as overly complicated and lacking in transparency.
In December 2013, eight Danish pension funds including ATP, PensionDanmark and Industriens Pension left the association, although they said they would still follow the principles themselves.
The changes include introducing a single governing body, an independent chair, clear responsibilities for the board and committees, and formal reviews by the board.
Martin Skancke, chair of the PRI Advisory Council, said: “The governance review demonstrates our commitment to be responsive to the needs and concerns of our divergent signatory base. And the incredibly positive response we have received shows signatories are pleased with the direction we are now taking.”
Skancke added: “In addition to a single governing body, the new articles will deliver more opportunities for signatories to participate in governance matters and also broaden the eligibility requirements for directors, promoting diversity while deepening the skills and experience of the board.”
The changes, however, have received a muted response from some former signatories.
Ole Buhl, head of ESG at ATP, said: “ATP still hopes it will eventually be able to rejoin the organisation. But we find it is too soon to make an overall assessment of the changes made by the private organisation PRI to its governance since ATP’s withdrawal.”
Buhl added: “It is worth noting it is still not clear how willing PRI is to make further reforms. It will also take a lot of work to implement several of the reforms discussed between PRI and – among others – ATP in 2014, and that certain aspects of PRI’s governance remain to be discussed in earnest in 2015.”
Jens-Christian Stougaard, director at PensionDanmark, saw the changes as “improvements in the right direction”.
“We need to see how the changes will affect the governance of the organisation before we can form an informed opinion on it,” he said.
“From our point of view, there is still some way to meet our requirements, such as fully respecting the outset of the organisation as an asset owner-led initiative, with the rights and responsibilities that follow.
“PensionDanmark still works on implementing the six principles and continues to improve our work on responsible investments. But to consider re-joining the organisation, best practice governance has to be put in place – in letter and in practice.”
The changes must now be approved by the asset owner representatives of the PRI Advisory Council at its next meeting in early March.
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