PCG Asset Management became a signatory of the United Nations Principals for Responsible Investment on Wednesday, joining some of the biggest pension funds and other investors that represent more than $15 trillion in assets under management.
The UN document lays out a framework by which institutional investors can evaluate their portfolios to ensure that all risks are being properly addressed, including risks associated with environmental, social and governance (ESG) issues.
The document’s standards with which the signatories have agreed to comply include incorporating ESG issues into investment analysis; seeking appropriate disclosure on socially-responsible issues by the entities in which the signatories are investing and promoting acceptance of the principals in the investment industry.
Michelle Davidson, a managing director with PCG AM, said the firm will not direct its clients only to fund managers that abide by the UN framework. Davidson said the firm will use the framework as a way to assess how fund managers address various forms of risk, which will become part of the firm’s recommendations to its clients.
“This is part of our due diligence,” Davidson said.
Davidson said making sure fund managers address socially-responsible issues like climate change is important because ignoring them could affect investment portfolios in the long-term. She said, for example, a company that invests in coal would be significantly affected by a regulation that caps carbon emissions.
“They could get blindsided by things like new regulations,” Davidson said.
Other signatories include US public pension the California Public Employees' Retirement System and the California State Teachers' Retirement System, the Canada Pension Plan Investment Board, the UK's BP Pension Fund and BT Pension Scheme and Brazil's Petros.