Investors must get ethical – UN
The United Nations has launched its own code of corporate responsibility for the world's financiers.
The UN has been involved in promoting CSR since 2000 when it launched its Global Compact which encouraged the business community to make more ethical choices.
Almost 3,000 corporations have since signed up to the principles of the compact.
But the new Principles of Responsible Investment (PRI) sharpen the focus and make CSR an increasingly mainstream activity, looking at the role of the banks, investment houses and others involved in the financial markets.
The UN secretary general Kofi Annan launched the PRI at the New York stock exchange on April 27.
The principles require those seeking investment from signatories to meet certain environmental and human rights criteria and provide acceptable labour conditions as well as open reporting of activities.
“For ethical, commercial and other reasons, more and more companies are embracing corporate responsibility to help them manage global risks,” said Mr Annan.
“But a serious gap has become obvious. There is a disconnect between corporate responsibility as a broadly stated management imperative, and the actual behaviour of financial markets, which all-too-often are guided primarily by short-term considerations at the expense of longer-term objectives.
“With only rare exceptions, the financial community has not sufficiently recognised or rewarded corporate efforts to respond to environmental, labour or human rights challenges, even though such factors can be directly material to corporate performance.
“I do not mean to suggest that there has been a lack of interest or desire on the part of investors.
“Rather, the predominant factor has been the absence of a set of common guidelines that individual and institutional investors can use to assess risks and opportunities fully.”
The UN hopes its PRI will provide this framework and already some 160 banks, insurers and fund managers have signed up to the principles, with a shared investment capital of US$2 trillion.
The UN itself has agreed to sign up to the principles and practice what it preaches, investing its own US$30 billion pension fund in keeping with the PRI guidelines.
“Not so long ago, it would have been very unusual for a UN Secretary-General to visit a stock exchange and appear before some of the world’s leading financiers and investment professionals,” said Mr Annan.
“Today it is increasingly clear that UN objectives – peace, security, development – go hand-in-hand with prosperity and growing markets. If societies fail, so will markets.
“Far from being strangers or antagonists, today the United Nations and business are natural partners.”