How can economic actors, who care about increasing shareholder value, truly engage in sustainable practices without oversimplifying it into numbers? In this article, I share results of a qualitative longitudinal study that my co-authors and I conducted on a sustainability reporting and assessment framework of a group of asset management companies that had signed to the United Nations’ Principles for Responsible Investment (PRI).

This framework was created in response to criticism that asset managers were “greenwashing” or merely claiming to be sustainable, without real evidence on whether their practices truly had an impact on society. Launched in 2013, the framework is an annual survey which PRI signatories are required to complete by answering a set of questions related to the following: How do you govern and implement responsible investment? It sounds simple but, in a situation wherein the definitions of sustainability were fuzzy and contested, and where asset managers had been programmed to financialize everything, it was difficult to commit to reporting on indicators which themselves had not been defined. This document was to be filled in online and consisted of 220 indicators across 12 modules tailored for each asset class. Each module contained a mix of mandatory and voluntary indicators. The creation and implementation process of the framework, which spanned more than three years, was the most extensive consultation in responsible investment and possibly sustainability history. It emerged through a lengthy consultation across more than 400 signatories, numerous deliberation meetings, calls and workshops, and pilot tests.

The move towards the structuration of reporting through the framework as well as the imposition of its public disclosure was meant to address the greenwashing critique. In order to achieve this, the signatories of the PRI engaged in a unique valuation process through which they collectively agreed upon why sustainability should be valued (i.e., for societal reasons, not only for financial ones) and how to report on it (i.e., through non-prescriptive evaluation criteria), thereby enabling the presence of a plurality of values in RI practices. Since the valuation of sustainability that took place was chosen by the signatories themselves and ratified by a corresponding accounting device (i.e., the framework), an assessment of RI practices judged legitimate by the signatories could be done by the PRI, potentially leading to the delisting of signatories if their practices did not align with the way their peers valued sustainability. Doing so reinforced the collective identity of the movement and provided signatories with a safe space within which learning could occur.

The generally successful process in which this heterogeneous, multivocal tool was created, accepted, and disseminated in an industry so concerned with numbers is testament to the fact that criteria can be created for sustainability without financializing it. Signatories opted to accommodate the diversity of motives and practices associated with RI. They did so by creating a framework that encouraged asset management professionals to describe their processes and purposes, rather than complying with a set of prescriptive criteria, which might not be applicable to all organizations. Such an approach enabled them to explain whether and how they were pursuing sustainability, without preconceived ideas about how they should be doing this — thus enabling the expression of a plurality of values in the reporting system itself.

Once almost all signatories embarked on the project, the framework started to “perform” the reality it envisioned of valuing sustainability for its societal benefits and not just for its financial ones. In accordance with the non-prescriptiveness of the metrics in-use in the framework, the PRI did not use quantitative figures to assess signatories based on their reporting. It introduced innovative and alternative means of measurement such as the use of stars, relative positioning versus peers, and summary of progress relative to themselves. These rankings — though they could not be put in a financial figure — nevertheless became the new aspiration and evaluation system of RI practices that are separate from the pursuit of financial profit. Signatories took pride in being well ranked, but evaluation was most useful as a learning tool to collectively progress and push the entire RI movement.

Ultimately, we show that economic actors do not necessarily look for what could appear as legitimate in conventional economic practices (i.e., financial metrics). Instead, they might embrace the diversity and multivocality of sustainability and favor an ongoing and collective search through which each organization could envision and practice sustainability in its own way.

“It doesn’t have to be so complicated. It’s just about using it.” (Reporting and Assessment Senior Manager, PRI)

Note: This article is based on a working paper entitled “Valuing Sustainability Without Financializing? The Case of the Reporting and Assessment Framework of the United Nations Principles for Responsible Investment (Un-Pri)” written by the author with Diane-Laure Arjalies of Ivey Business School, Western University (Canada) and Nicolas Mottis of the Ecole Polytechnique Paris. References are available upon request.

Daniela “Danie” Luz Laurel is a business journalist and anchor-producer of BusinessWorld Live on One News, formerly Bloomberg TV Philippines. Prior to this, she was a permanent professor of Finance at IÉSEG School of Management in Paris and maintains teaching affiliations at IÉSEG and the Ateneo School of Government. She has also worked as an investment banker in The Netherlands. Ms. Laurel holds a Ph.D. in Management Engineering with concentrations in Finance and Accounting from the Politecnico di Milano in Italy and an MBA from the Universidad Carlos III de Madrid.