With more than 5,000 PRI signatories navigating different mandates, asset mixes, and sustainability priorities, a one-size-fits-all approach to responsible investment no longer works.

In this episode, our host and Chief Marketing & Strategy Officer Paul Van Eynde speaks to our Chief Sustainable Systems Officer, Nathan Fabian, to unpack the thinking behind the PRI’s Pathways framework, designed to reflect the real-world complexity of responsible investment and support signatories in ways that make sense for them.

Later, our Chief Solutions and Technology Officer, Kate Webber, explains how her team is bringing that framework to life, turning it into a product signatories can use and interact with through MyPRI, our new digital portal launching in November.

For more on Pathways and MyPRI, visit: https://pathways.unpri.org

New episodes released fortnightly. Subscribe to The Responsibility of Investing wherever you get your podcasts.

The Responsibility of Investing is a podcast by the pri, the world's largest global body on responsible investment, representing over $128 trillion in assets under management.

Each episode features conversations with thought leaders and experts from around the world exploring how sustainable factors are transforming the investment landscape.

This series helps PRI signatories and the wider investment community navigate responsible investment with greater precision confidence for the benefit of both investors and society.

Welcome back to the Responsibility of Investing.

I'm Paul Van Einde, Chief Marketing and Strategy Officer at the pri.

Responsible investing has moved from the margins to the mainstream.

Investors today must manage urgent risks, from climate change to biodiversity loss, while also looking very closely at new opportunities in clean energy and new technologies.

At the same time, they face evolving regulations and rising expectations from clients and stakeholders.

This leads to growing complexity.

Complexity demands that ask for clearer guidance and better tools.

And today, we'll explore how the PRI is responding to this because we are building pathways designed to help investors advance their responsible investment practices.

Pathways will be accessible through MyPRI, our new digital platform tailored to support diverse investment goals and approaches, no matter where signatories start their journey.

Joining me for this episode will be Nathan Fabian, our Chief Sustainable Systems Officer, whose team built the pathway framework, in other words, the structure and concept behind our pathway offering.

And we'll also hear from our Chief Solutions and Technology Officer, Kate Weber, whose team is turning pathways and MyPRI into a digital experience for our signatories.

So first we'll hear from Nathan.

But I am traditional enough to respect the ladies first rule and go to Kate and ask her to basically jump to conclusions and take us to what do you want our listeners to remember very briefly, very shortly, and why as well?

Kate?

So I want them to remember three things.

I want them to remember they're going to get a load of tools that they can look at, and that's really, really important, and be content in a whole variety of different ways and from a whole bunch of different sources that's easy to find.

Then I want them to think about choice.

It's their choice to do everything their way.

And then thirdly, I want them to think about insights.

So insights to enable them to think about the world in a different way or to know that their practice follows market best practice.

All right, thanks, Kate.

Nathan, welcome.

Good to see you.

Paul, good to see you.

Hey.

Over the past few years, as I said in the intro, responsible investment has become more complex.

New regulations, client expectations rising, rapid changes in technology and other things.

From your perspective, what were the key challenges that made it clear that the PRI needed to rethink how it supports signatories, how it supports the investor community, and what ultimately led to the creation of pathways.

Yeah, you're right, to identify differences for signatories.

I think that's the key thing.

So that's a very large expansion in who's in the pri big tent.

And of course that started to bring in much more diversity.

But in addition, we had differences in different markets.

We had regulation really progressing in some regions, especially in Europe and in the uk and we had now this firming up of the investment purpose around responsible investment in the US that we're seeing a bit of a narrowing and a sharpening really.

So we had these broader trends, plus, as I say, a 5,000 signatory membership base with signatories of different size, different mandates affected differently by their regulations.

And of course, we have all different types of asset owners and all different types of investment managers.

And so in this diverse community, we realize that we had to be much more responsive to signatories own experience in implementing the principles.

The idea that everyone as a signatory would implement the principles in the same way and have to report and demonstrate in the same way an idea that had worked pretty well for the first sort of 10 or 15 years was really not going to apply anymore.

And so we realized we must respond to this more flexible, tailored way of serving signatories.

And of course, I think two or three years ago there was still quite high optimism, I guess, about responsible investment going on this inexorable path of ambition and growth.

And of course we've now learn that's not how this is going to play out.

There's going to be learning and a requirement to sharpen what we're doing, which is not a bad thing, even though there's obvious pressure on some of our signatories.

And so at that time, we started with this idea of, well, different ways of being a responsible investor, but everyone should advance what they're doing, because that's one of the core tenets of the principles.

So different ways of investing and advancing.

And that led us to this thinking about pathways for signatories.

That's where the idea came from.

And at the time, the idea of progressing was quite important.

Now we've learned since then that signatories will advance in a way that suits them in their own context.

But the idea of pathways has lasted, I'd say, and really the objective there is to be more responsive to the ways that signatories implement the principles.

All right, Nathan, I think I know the answer, but I'm going to ask anyway.

Did you do this in splendid isolation in that ivory tower of yours?

Yeah, that's right.

No, it's a great question and I know that because PRI does analyze and research.

But we know that one of our strengths is we do consult a lot with signatories.

Sometimes signatories say, enough consultation, let's keep going.

But we know it's important.

We're a member based organization and so we need to keep that dialogue going.

And we did a lot of dialogue in this.

We had the responsible investment in a changing world survey and engagement process and that led into a co design process on our pathways as well.

And we had hundreds of signatories contribute through workshops, through surveys, through focus groups, even as we tried to refine some of the terms.

And listening to the signatories about what their experience was was always essential.

And I mean, let's be honest, we started with this quite ambitious idea of pathways for signatories and then we had to learn and listen how to make it workable for signatories.

And I think that's the big shift.

We tried to make it much more workable.

And I think after a couple of years of co design and now getting ready to run into actually providing these services to signatories, we've got something which can work much better for their expectations.

All right, we'll talk to Kate Weber, our chief solutions Technology Officer in a second.

How this is designed to be flexible and user focused.

But your team, with regards to the framework, before getting into the technology, can you explain what it should look like in practice?

And what are pathways A, B and C?

What are other options to help signatories improve their responsible investment journey?

Yeah, of course.

And it's important to set out some of the things we learned about how the pathways will be used as well.

So we heard that signatories didn't want to have to opt in, that they wanted something that was voluntary, their own choice to use.

We learned that they wanted it to be educational rather than about accountability.

So it was about their journey.

And so we've really emphasized the educational nature.

Also, signatories might want to change pathways.

They might want to use multiple pathways, or they may not.

They may want to focus on asset classes or individual practices.

And so we've responded to that and we also know that the pathways will evolve over time.

So as I set out the pathways in a moment, we know that they'll evolve because they're designed to reflect signatory experience and we will commit to updating and learning.

That's the purpose of this framework.

So we're starting off with three pathways.

The first is about managing investment risks, all of our responsible investors.

Management sustainability related investment risks is relevant to everyone.

But in addition, some address system level risks and think about how their investments are going to play out over longer time periods and across economies and across asset classes because they hold all the market and then some of our investors pursue impact.

So they're the three pathways, we call them A, B and C.

The first one's about managing risks, the second one is about addressing system level risks, and the third one's about pursuing impact.

All right, choice.

I heard Kate say, is it choice between the three pathways or is the range of choices larger than that?

Wider than that?

Well, they're larger.

So I mean, really the way to think about this is that we are using this as an organizing framework along with asset classes and investment themes for signatories to find what's useful for them.

So you can make any choice you want, you can look at all three pathways, you can look at asset classes, you can choose not to if you wish.

But we think it's going to actually be quite helpful to look, so we encourage it.

But I think the best way to think about using the pathways is if I'm interested in, say, stewardship.

How would I do that if I'm focusing on managing my own portfolio risk and return, If I'm interested in stewardship of assets for a longer term time frame that I know is going to be affected by systemic risks, what type of practices would I take?

And if I am trying to report impact as part of my obligation to my client, what type of practices and data sources would I use then?

And so in giving that example, I've described the differences of the three pathways and each will have things you can look at and use if you're trying to advance your practice in these areas.

But the choice is entirely for the signatory to make.

All right, thanks.

So Nathan, can you give us a couple of examples?

Yeah, I've got a few examples from the pathways.

So let's start with pathway A and let's look at investment analysis.

And by investment analysis, we're talking about examining financially material sustainability related risks.

So an intermediate step might be to apply some forward looking analysis, like some scenarios, to assessing my portfolio risk.

A more advanced step would be applying that analysis into the supply chain rather than just the investable entity.

So It's a more sophisticated step.

You need additional tools.

That's how you can advance also the differences between the pathways.

So again, if I'm looking at this forward looking analysis in pathway C, I'm focusing also on impacts, not only on financial materiality, because it's an impact experience.

So that would lead me to think I need a couple of different types of data here.

What are the types of data sources?

How am I going to describe them?

So that's the difference between pathway A and C.

And then if you want the most sophisticated materiality and impact steps in pathway C, you might use scenarios, you might look forward, you might look at financial materiality, you might look at impact, and you might look at supply chains.

If we look at all the different things you can do as the most advanced and we aim to have examples and tools that you can use if these are the types of steps that are relevant to your investment objective.

A whole menu to choose from.

That's right.

Okay, Nathan, thanks.

Thanks for these insights.

But before I let you relax and talk to Kate, just one thing.

I asked Kate at the beginning of the podcast what we should be remembering and what I heard back.

And I'm probably summarizing a bit too much, but I heard choice, I heard tools, and I heard insights.

Is that something you can live with?

Yeah, I think it's a great and useful way to describe it.

Choice really matters because we're now at a stage of responsible investment where people know what they're doing broadly and they're serving their clients and so they need choice for the tools that work for them.

There's two of those ideas and I think the insights can come from the fact that if we all start to use this framework as a community, we're going to start to be able to do much more comparative learning.

What are my peers doing if I'm interested in this?

One of the practices I just described, who else is doing it?

What data are they using?

How is it advancing what they're doing?

So if we as a community, this is the beauty of the big tank.

We got big groups of signatories using different parts of these tools.

We can have very rich information.

And this why PRI is a bit special, because we've got this global group, it's big enough to actually learn and compare.

So insights is a really good way.

To describe it all coming together.

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All right, I'll turn to Kate now.

Our chief solutions and Technology officer, Nathan talked us about the design.

Right.

The structure, the build, the framework, whatever you want to call it, and then over to technology and solutions.

Right.

Can you tell us what your team is doing, Kate, to build this and how do you translate this into what we hope is going to be a seamless and intuitive experience through our signatory journey?

Thank you.

Nathan's given me a huge task.

He's given me the job of delivering something that is quite complicated.

What we did was we started looking at our website.

Our website is a bit of a jumble sale really.

It's got a lot of things in it and signatories have told me that if they ever want to find something twice, they have to bookmark everything.

And our own staff have said they use Google search to find stuff on our website.

So if we want to provide choice and tools, the first thing we have to do is sort it out.

So we are curating our website in a completely different way.

So there is the public facing website and then we have mypri, which is a signatory portal which we're currently building, which is essentially a dashboard enabling our signatories to find an enormous amount of content in really easy ways.

So for example, we've used the Pathways framework, but we've also used thematics or responsible investing activities and topics.

And what we've done is we've labeled, we've tagged every single piece of content that will go onto the website.

So it either comes to the right place in the website or it is highly searchable.

We've also created a user journey, a user first journey throughout the entire design.

So it feels much more intuitive to find your way through all of the content that we have.

We've started introducing third party content which is also valuable.

And over time we'd love to get more and more of our signature content, some more case studies, some best practice in particular areas.

So coming back to what Nathan was saying about stewardship, how do we enable people to do the best type of stewardship based on the asset class in their region?

All of those things are incredibly important for us to start to try to dive into.

And at the same time we're trying to link it back to Salesforce which is our CRM to enable all of our face to face interaction and all of our digital interaction is connected together.

So we know what signatories are looking at and we can try and help them find more stuff that they would be interested in or show them what events are coming up.

So we're trying to create this whole rounded experience for them.

All right, the term digital transformation comes to mind.

Kate, what is the vision behind this shift to better serve a growing and increasingly diverse signatory base?

And how do you make sure that, that the whole organization is behind this and captures what we're trying to do?

Okay, so that's quite a big ask, but we've really pulled in what Nathan was talking around.

This growth of our signatory base and the diversity of our signature base.

We also, within our organization have quite a lot of diversity in terms of people's skills and approaches to the work.

And we're trying to pull all of this material in.

We're trying to get better at not just producing very long, complicated reports, but including things like this podcast or webinars or small case studies, things that are accessible for people.

So if we have very, very long reports, we might also produce summaries to enable people to find their way into that.

We're thinking about how we can use different technology in different ways, but the whole thing has got to be bound together to be much more enabling, not just for our users, but also for our own people.

All right, about the global view, Kate.

I think a lot of people in our industry will agree that reporting is important.

BRI has been launching the reporting and assessment framework over 10 years ago, I think.

Is that still what we want to do, reporting and assessment, or is that also something that will, that will work on and fine tune?

Yes, absolutely.

So when we first launched RNA reporting and assessment 10 plus years ago, there wasn't very much in the market around responsible investing.

Now there's tons of it.

Anecdotally, I've been told that 50% of a sustainability officer's time is spent just reporting.

They're not actually doing as much as they'd want to because they're having to use lots and lots of different reporting frameworks, from regulators, mandatory and quasi mandatory right the way through to voluntary pieces.

And if the pris to have a reporting entity within the context of this ecosystem, it needs to be valuable.

But we're also a membership organization where you will sign up to the principles that we all wish to follow.

And so therefore we've taken our current reporting framework, which is probably best Described as quite heavy, a little bit complicated, far too complicated, and really pulled it down to what we would describe as just 40 mandatory questions or less than 40 mandatory questions which relate back to responsible investing activities and our six principles.

So we can track every single question we're asking now back against one of those responsible areas and the principals.

And by doing that, we're hoping that it will enable them to report to the pri, but in a much smaller way.

We will come on to voluntary reporting because that's also important.

But the mandatory reporting obligation goes from 240 odd questions down to 40.

Hey, Kate.

I think I used the word fine tuning in my question, but I stand corrected.

It's an overhaul, right?

Yes.

Is that also something that is based on insights from signatories?

Have you talked to signatories and understood how they use reporting and how they ideally would like to use reporting?

Yeah.

So today we have about 4,000 signatories every year who do the reporting.

And the theme that keeps coming up over and over again is this cost versus value piece.

So the piece that they keep saying to us is we really value it, but the cost is very heavy for us.

And so we've been really focusing on how do we maximize value but minimize the cost impact on them from a human and cost perspective.

So those are the two things that we went into it with.

The other aspect of it is how do we enable that true value, particularly between the asset manager and the asset owner?

How do we enable this ecosystem to keep moving forward?

All right, thanks, Kate.

Looking ahead, and I'm afraid I'm going to play back the words that you chose to use.

What's BRI going to do in the future to give better insights to its signatories?

This is a really good question.

So in taking from 240 questions down to 40 questions, there's quite a lot left.

They become the basis of what we want to start thinking about for pathway insights.

So in understanding how you can compare yourself versus your peers, reporting would be a really valuable way of doing that.

And so we're starting to think about how and starting to design based on the co design work that we had with Nathan, but also all of the reporting surveys that we've done over the last few years and what's worked for signatories and what hasn't worked for signatories.

Both of those things are very important to drive out how can we design a reporting tool which then enables people to start figuring out where they are versus peers, but also how they can improve versus those peers.

So it's not good enough to just give somebody a score.

It's important to enable people to see how that score has been derived and how that score would be different if you were in public markets versus private markets or you were in Japan versus America.

There are different market norms that we need to weave into the reporting.

So a one size fits all is not going to work for us anymore.

All right, thanks, Nathan.

I've been talking to Kate now for about 10 to 12 minutes.

Anything I forgot to ask, anything that jumped out that you feel like adding to.

If I'm a user, I guess I'm wondering how much of this great stuff am I going to get in the first few months when we go out later in the year?

So maybe I would like to know that if I was listening to this podcast.

That's a very good question.

So in November, we'll be launching our foundation signature portal, my pri.

But it's a continual evolution, so it will have quite a lot of content in it, it'll have quite a lot of third party content, it'll have the mandatory reporting accessible through the portal.

We will start to draw in over time, over the next two to three years, other aspects of our work.

For example, the collaboration platform, the data portal, they will all be accessible via MyPRI and we'll make them hang together better.

But it's an evolution.

It's not something that we just do once and once forever.

And the evolution of it fits very well with your concept that you originally had around pathways on progression.

It's a continuous journey.

All right, thanks for that question, that was helpful.

Allow me to zoom out a question that we have on this podcast every time.

The podcast is titled roi, the Responsibility of Investing.

We're trying to.

We're trying to change that in the financial world.

And my question then is, what is it you see as a responsibility of investors?

Can I start with you, Nathan?

Yeah, of course.

So I think that we're now in an age of investing where all these factors, these sustainability factors we've been researching and preparing for are playing out in our economies as economies transition with new policies, with new investment opportunities, and of course, some investments of the past becoming challenging.

So the responsibility in this age is to step into that.

Luckily, investors, that's how investors make their money, by knowing these trends.

So that's that part we always did.

The responsibility part, I think, is to recognise that there are going to be some winners and losers, economically and financially, and for us to keep up with those developments in policy, in the science, in the expectations of our beneficiaries and clients.

That's the responsibility part.

Staying on top of those expectations and needs as our economies change and adjust.

So in a way, the responsibility is to do what we've always done as investors.

But then there's this extra piece cause we're in the age of consequences now on sustainability factors and stepping into those, understanding them and stepping our clients through those trade offs that we're going to face in allocation of capital and risk management.

So that's what it means to me next.

And Nathan, is that also what it means for the pri?

Yeah, I think it does.

So if we're trying to serve signatories in that transition, then we need to provide as many examples as much learning, supporting our service providers to communicate what they're learning.

We become a way to share and advanced practice for the whole community and recognizing that we've all, we've grown something quite large here as a community of experts and investors managing these issues.

So PRI has an obligation, if you like, to serve that community, I think including the service providers and the investment managers who have to go and implement every day.

So that's our responsibility as we support our signatories through the transition.

All right, Kate, I have the same question for you.

What, what do you see as the responsibility of an investor?

I'd like to almost pull from what Nathan said.

He was talking about the age of consequences and of course he couldn't be more right.

The age of consequences is absolutely upon us and we can see that in what happens around the globe on a daily basis.

Fires, floods and so on.

But I would also say that people need to make conscious decisions about what they're doing.

A thoughtful decision.

There's often not a black or white answer.

It becomes somewhere in the middle.

And so we need to be able to enable investors to express where they are and why they're making that decision.

So how those decisions have been consciously made in this age of consequence.

Thanks, Kate.

Thanks, Nathan.

Thank you for joining us on this episode of the Responsibility of Investing.

We hope that today's conversation gave you a clear picture of how the PRI is evolving.

Evolving to better support signatories through pathways and through my pri, both set to launch, as we said, in November.

I asked Kate in the beginning what to remember and I think she came up with three words and I'm going to try and one up her by trying to capture it in one sentence.

I've been taking some notes and my sentence would be pathways and my PRI are the tools of your choice leading to insights that can make you a better long term investor.

Take that away.

I think that's all right.

That was it for now.

If you found this episode valuable, please subscribe wherever you listen to your podcast.

That way you won't miss future discussions on how investors are adapting responsible investing practices in a changing market.

Until next time, I'm Paul Van Heinde.