What should the PRI do next?
1. Engage companies & policy makers. Achieving goals, challenges, low-hanging fruit.
The PRI has the most to gain by building strong content and loyal membership over the next six-month period. Developing content articulating the PRI to both private sector and policy makers must be the primary goal. While personal speaking engagements may be best for developing the real relationships in influential networks, written materials have the longer half-life in the marketplace for thought leadership in order to institutionalize and generate a longer tail of activity. From my experience in institutional money management, and the development of SRI, I think intersections of academic, foundations and investment industry life must be pinpointed and exploited to maximize the impact. While the project milestones provide the framework, I also expect that the PRI will benefit where it dynamically seizes situational opportunities, for example the interest in “universal ownership” following the conference at St. Mary’s in California. Engagement is the outcome, but activities and outputs may be measured to determine sufficient flow is being created, and the impact measured against the goal. Beyond the effort, the ultimate metric is the number of policymakers and companies that subscribe to the PRI. In order to harvest the “low-hanging fruit”, I believe the lessons from other network and membership organizations are instructive and should form the basis for action: develop content, and incentivize membership.
1. Develop content
Multi-stakeholder projects face many challenges, including failure where they are perceived as intellectually lightweight. The PRI needs solid content delivered via a compelling virtual home online. As a global project, and with intellectual thinking and ideas as a basis, the PRI must be well represented. Using the resources of the UN and the brand of UNEP FI, I would build the web presence beyond the approach currently at www.unpri.org to leverage all current multi-media approaches, using a style that emphasizes simplicity and ease of navigation. The virtual home needs to serve the multiple audiences for the PRI, thinking strategically about what “influencers” when given the best information, will help push the PRI to the tipping point. The website must deliver multi-media [text, graphics explaining the approach, video and audio of speeches and/or events, possible a podcast]. An investor relations approach delivering media packs is a key component, making available chunks of PRI content to be ripped from the site by time-poor, information-hungry media. Other targets include key constituencies within firms, graduate students and academics. Web-measurement metrics must be included in PRI reporting internally, and if positive, in external profiling.
The PRI should also use the mechanism of an online speaker database as a self-nominating approach to maximizing interest in the subject matter, as well as raising the profile amongst peers. From this database, the PRI can increase the pool of available voices, while reducing risk of dispersion of opinions by maintaining ownership of the message through providing talking points and developed slide decks. Audio and video capture for the resources center on the website will also act as an accountability mechanism.
2. Incentivize membership
Choosing membership in organizations is the sum of a risk/return algorithm for any reputation. In order to build the membership, existing members’ decision should be supported and positively reinforced, creating a loyal base. Adopting the old B2B sales mantra, one satisfied institution makes an introduction to many more. The PRI must work through existing signatories to encourage membership, incentivizing existing members to recruit peers. Incentives include profile and reputation rewards, starting with public attribution and using www.pri.org. Critical questions include: are each of the 10 major brands in institutional money manager or investment consulting in each target market signed up, and if not, how can PRI change that? Are the 10 major GLOBAL financial services brands actively engaged, and acting across all their regions to implement the PRI? By using the powerful clusters as influencers, building from the loyal based, the PRI can maximize sustainable relationships invested in the project over the long term.
2. Measurement of PRI implementation. Challenges.
Measurement for this project may rely on the cross-sector approach to measurement, adopting the philanthropy model of input > activity > output > outcome > goal alignment. Measuring the seeding of ideas is more difficult, but the PRI will have to decide carefully how to measure each of these five components.
The primary challenge is mapping back to members’ expectations, established at signing, and their resource commitment and institutional energy devoted to the project. In signing on to the PRI, the list of “possible actions” has left opportunity for the proactive participants to scope out new areas for action, and ambiguity for the passive members to be inactive. Linking to my recommendation regarding the primary importance of content, I believe encouraging content will act as a real-time and longitudinal gauge of effort and effectiveness. The role of the PRI must be to assert the need for frequent information from members, and to remove barriers to action by smoothing the collection, collation and analysis of activity. Activity levels are easily measured, and suggest self-evaluation. Within each of the principles are many examples that lend themselves to content collection and collation, for example policies and their implementation, or developing collaborative initiatives. The online and international nature of the PRI presents some language and information management challenges, but these have been solved elsewhere and may be adapted for use by PRI.
A meaningful framework for assessment must incorporate elements that private sector actors are familiar with: competition, rewards, and sanctions. Competition – whether implicit or explicit – presents a “race to the top” where companies can stretch to achieve better implementation of the PRI. Obviously, some firms will weigh the calculus for success and temper their efforts accordingly. But focusing on the influential actors, especially those with strong brands, may have a multiplier effect. For example, advocating ESG training internally by industry majors is valuable. The PRI benefits when winners are easily measured. Rewards to members who meet or exceed the defined expectations for the PRI across the six principles and action areas should be firstly at a personal level [the effort relies so heavily on networks and relationships], secondly at the corporate level. Understanding the cultural differences in approach to recognition and rewards, diplomacy must be applied to skillfully deal with managing the personal ambitions and the corporate egos. Profiling members [personal and corporate] is an easy, and uncontroversial, approach, for example, the website in a section highlighting “member profiles” with a monthly calendar rotation. The PRI needs teeth. Sanctions must be applied within the membership to at least one outlier in the first review period. I believe the signaling effect is powerful, and immediately establishes the measurement program as being material, with consequences having impact. The degree of sanction and delivery of messages will depend on the dynamics of the situation and the defined metrics established, but the process is critical. A fine line must be trodden between offending members, and keeping their “feet to the fire” as Warren Buffet would say.
Measurement for members and by members can lean on the project management framework of being specific, measurable, actionable, reasonable and time-specific. With multiple actors with different corporate cultures, revenue bases and geographic challenges, as well as the tiered member structure, the performance review I recommend should be driven by PRI members themselves, with relative accountability to appropriate peer groups. Anticipating some inertia at start-up, I think the measurement needs to offer generous timelines, but the specific targets per time period [for example, requesting X companies to apply ESG factors in Y number of conversations over period X]. With new relationships in this “start-up” network, and looking to empower peer-driven assessments, I strongly encourage maximizing face-to-face interactions of members in the early stages, rolling over to web-based video/audio over time [to reduce costs and maximize ease of capture for the PRI content stored on the platform]. The PRI will succeed where influential, smart and ambitious people are committed to its vision, and lead their organizations and professional peers in the direction of the Global Compact and making ESG issues important in investment decisions.
Three weeks from Kofi Annan’s resignation, it was poignant to hear him field questions at the Truman Library in Missouri today, a slight deference, some defiance in his eyes, and a very clear idea that so much needs to be done. There is not much chance the goals for water will be met, but others have better chances of success. The investment case for water keeps growing, even as the US West Coast girds for a snowless winter in the Sierras, and the prospect of a long dry summer [see http://www.gemi.org/water/module4.htm]. Time to review the water investment opportunities for US investors, beyond the exploration by my friends at Generation IM, Goldman Sachs and the odd hedge fund in NYC. See also post at http://plentymag.com/features/2006/12/liquid_assets.php.
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