The central question that motivates this paper is: do signatories of the UN PRI receive an above-average ESG-Performance as non-signatories? If this question is confirmed, we will go into detail and analyse, whether the signature leads to a higher ESG-Performance after signing. In order to answer these questions we will use the database of Thomson Reuters ASSET4 to measure the ESG-Performance of the companies.
ESG-Investing, Green Investing, Impact Investing, Responsible Investing, Socially Responsible Investing, Sustainable Investing (Zagst et al. 2011: 21), just to name a few examples, all these catchwords have one thing in common: they want to establish and promote sustainability in the field of investment.
Zagst (2011: 21) criticized that there is no uniform definition for Responsible Investing, instead the above catchwords are more or less a substitute for it.
Against this background, it was important that an institution is established, which creates order and clarity. However, no obligation to join the institution, but to create incentives to join voluntarily. This gap could close an institution: UN PRI.
The United Nations-supported Principles for Responsible Investment (UN PRI or PRI) is an investor initiative in partnership with UNEP Finance Initiative and the UN Global Compact (PRI n. d. a: 1). Following an invitation of the UN Secretary-General Kofi Annan at that time, a twenty-member group of the world’s largest institutional investors and a seventy-member expert group have jointly begun to develop the Principles for Responsible Investment in early 2005 (PRI n. d. e). During the formulation of these principles by these selected groups, care was taken to ensure that they are “[…] compatible with the investment styles of large, diversified, institutional investors that operate within a traditional fiduciary framework” (PRI n.d.a: 4).
In April 2006 the PRI were officially introduced at the New York Stock Exchange (PRI n. d. e).
Within nine years the number of signatories of the PRI has grown from 100 in April 2006 to 1,380 in April 2015. Assets under management recorded a strong average growth of 29 % from 6,5 trillion US-Dollar in April 2006 to 59 trillion US-Dollar nine years later. This amount represents more than half of worldwide institutional assets. (PRI n. d. f: under the title “Growth of the PRI Initiative” and PRI n. d. g)
This strong and rapid growth illustrates the relevance and right to exist of this initiative.
Table of Contents
1. Introduction
2. Introducing the UN PRI Initiative
2.1 About the UN PRI
2.2 Signatories and their commitments
2.3 The six Principles for Responsible Investment
3. Data and methods
3.1 Data
3.2 Methods
4. Results and discussion
4.1 Inductive statistics
4.2 Descriptive statistics
4.3 Discussion
5. Conclusion
Research Objectives and Core Themes
This seminar paper investigates whether companies that are signatories of the UN Principles for Responsible Investment (UN PRI) exhibit a higher ESG performance compared to non-signatory companies, and further explores whether the act of signing the principles leads to a measurable improvement in ESG ratings.
- Analysis of the UN PRI initiative and the commitments required from its signatories.
- Empirical examination of ESG performance differences using Thomson Reuters ASSET4 data.
- Statistical validation using the Mann-Whitney U test across different market capitalization groups.
- Investigation into whether the signature serves as a direct catalyst for rating improvements over time.
Excerpt from the Book
1. Introduction
E.S.G.-Investing, Green Investing, Impact Investing, Responsible Investing, Socially Responsible Investing, Sustainable Investing (Zagst et al. 2011: 21), just to name a few examples, all these catchwords have one thing in common: they want to establish and promote sustainability in the field of investment.
Zagst (2011: 21) criticized that there is no uniform definition for Responsible Investing, instead the above catchwords are more or less a substitute for it. Against this background, it was important that an institution is established, which creates order and clarity. However, no obligation to join the institution, but to create incentives to join voluntarily. This gap could close an institution: UN PRI.
The United Nations-supported Principles for Responsible Investment (UN PRI or PRI) is an investor initiative in partnership with UNEP Finance Initiative and the UN Global Compact (PRI n. d. a: 1). Following an invitation of the UN Secretary-General Kofi Annan at that time, a twenty-member group of the world’s largest institutional investors and a seventy-member expert group have jointly begun to develop the Principles for Responsible Investment in early 2005 (PRI n. d. e). During the formulation of these principles by these selected groups, care was taken to ensure that they are “[…] compatible with the investment styles of large, diversified, institutional investors that operate within a traditional fiduciary framework” (PRI n. d. a: 4).
Summary of Chapters
1. Introduction: This chapter defines the context of sustainable investment catchwords and introduces the UN PRI initiative as a voluntary framework for institutional investors.
2. Introducing the UN PRI Initiative: This section details the organizational structure of the UN PRI, its signatory categories, and the specific commitments required by the six Principles for Responsible Investment.
3. Data and methods: This chapter explains the data selection process from the Thomson Reuters ASSET4 database and justifies the use of the Shapiro-Wilk and Mann-Whitney U tests for statistical analysis.
4. Results and discussion: This section presents the empirical findings regarding ESG performance differences between signatory and non-signatory companies and discusses the implications of these results.
5. Conclusion: This final chapter synthesizes the research findings, acknowledges limitations regarding sample size and data sources, and suggests directions for future research.
Keywords
Sustainable Finance, ESG-Performance, UN PRI, Responsible Investing, Asset Management, Thomson Reuters ASSET4, Statistical Analysis, Mann-Whitney U Test, Institutional Investors, Corporate Sustainability, Investment Strategy, Signatories, Market Capitalization, Extra-financial Information.
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the relationship between being a signatory of the UN PRI and a company's ESG performance, specifically questioning if signatories outperform non-signatories.
Which primary themes are addressed in the study?
The study focuses on sustainable finance, the implementation of UN Principles for Responsible Investment, and the empirical measurement of corporate ESG ratings.
What is the main research question of this work?
The central question is: "Do signatories of the UN PRI receive an above-average ESG-Performance as non-signatories?"
What scientific methodology does the paper employ?
The authors use non-parametric statistical methods, specifically the Shapiro-Wilk test for normality and the Mann-Whitney U test to compare the central tendencies of signatory and non-signatory company samples.
What topics are covered in the main body?
The body covers the institutional background of the UN PRI, the methodology for data selection and statistical testing, and a comprehensive analysis of ESG performance results across various market segments.
Which keywords best characterize this work?
Key terms include UN PRI, ESG-Performance, Responsible Investing, Statistical Analysis, and ASSET4 data.
How does the study account for potential distortions in the data?
The authors account for distortions by categorizing companies according to market capitalization and excluding small companies or those from lower-income countries to create more homogenous samples.
Does the act of signing the UN PRI lead to an immediate improvement in ESG ratings?
The findings suggest that the signature itself does not directly trigger an immediate rating improvement; rather, it appears to be a continuous process where companies might already have sustainable practices before joining.
- Quote paper
- Stefan Rittmeier (Author), Vladimir Polschin (Author), 2015, Do UN PRI signatories receive an above-average ESG-Performance?, Munich, GRIN Verlag, https://www.grin.com/document/316162
