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AQR, UNPRI team up on responsible investing framework

AQR Capital Management has teamed with the United Nations-supported Principles for Responsible Investment to publish a new framework for discussing and applying responsible investing terms and approaches, the firm said Wednesday.

"One thing that became apparent to us is that there is a lot of use of responsible investing terminology, but not always consistently," said Christopher Palazzolo, principal and head of Europe, the Middle East and Africa, in an interview.

"We think this is a framework that should apply to everyone and every place. The intent is to apply it to asset owners, asset managers, and across all asset classes," Mr. Palazzolo said.

He thinks the framework will be a useful tool for clients, especially investment staffs and boards, "for them to be able to develop their own views. Investors are currently thinking about what responsible investing should be," and the framework gives them something to start with, Mr. Palazzolo said. "Perhaps this could help further that discussion."

One source of confusion that the framework aims to clear up is the misconception that responsible investing requires a standard, static approach to screening, such as excluding tobacco or coal. The new framework offers three broad categories of asset screening within responsible investing that in addition to static norms-based screening includes dynamic screening by environmental, social and governance scores or factors and thematic screening such as green or impact investing.