A/HRC/4/99 page 13 Secretary-General of the United Nations invited a group of the world’s largest pension funds to join a process to develop the Principles. The process was coordinated by the United Nations Global Compact Office and the UNEP FI. Today more than 100 asset owners and investment managers accounting for more than US$ 5 trillion of assets have committed to the PRI. The WCW is a platform aimed at the implementation of principles such as the PRI in day-to-day business. Its goal is to advance best practice and develop tools and methodologies, focusing on enabling investment managers, financial analysts and investment brokers to integrate ESG considerations in their daily work. Discussion 42. Discussion initially focused on the issue of the fiduciary duty of financial institutions and whether non-specialized investors who manage assets on behalf of their clients have the mandate to consider human rights issues. A socially responsible investor may include human rights in its prospectus and therefore have a legal obligation to consider related issues, but it was suggested that fiduciary duty does not impose a barrier to other kinds of investors considering human rights issues. For example, public pension funds have no such explicit mandate, but have deemed that there are no restrictions and that it is in fact appropriate to engage on labour and other human rights issues. 43. The concept of materiality of human rights issues was highlighted. It was suggested that from an investor perspective, human rights was unlikely to comprise a significant risk variable in a large diversified public Western company, as opposed to a project-specific company in the developing world. There was uncertainty among some participants about what enhanced analysis on human rights issues would yield, although examples were shared of research that showed links between human rights issues and financial performance.8 It was further suggested that human rights issues could be considered indicators of the quality of management, i.e. a good record on the environment and diversity indicates a strong management team. However, examining human rights issues at the company level could have limited impact, as many investors now hold broad market indices and therefore do not consider the specific record of individual companies. There was a warning against reducing everything to financial metrics, since it could lead to companies worrying more about other issues such as climate change than about human rights. 44. The role of rating agencies in human rights, for example with respect to the materiality issue, was highlighted, and reference was made to some rating agencies that are exploring ESG issues. 45. It was suggested that it is difficult to screen stocks on human rights criteria due to lack of data, which means that such issues are addressed more through engagement. Companies can be influenced in many ways, for example proxy holding, and leverage is dynamic, i.e. a company may be encouraged to meet higher standards at one point in time, but investors can always sell their shares at a later date. Some parts of the investor community do not screen companies but 8 See e.g. sristudies.org, Marc Orlitzky, Frank L. Schmidt and Sara L. Rynes “Corporate social and financial performance: a meta-analysis”, Organization Studies, 24, 2003.