The artwork adorns a wall at St. Giles Hotel in London, close to Centrepoint, a homeless charity of which the princess was a patron. "All I want to do is try and fill the holes my mother has left", the 32-year-old said.
Graham Smith, the CEO of Republic which wants the monarchy abolished, told Julia Hartley-Brewer: "In the long term I think [Diana's death has] actually probably put [the Royal Family] in a very unsafe place, because they're sort of now relying on sort of the celebrity game.
When the project was announced in January William and Harry said: "'It has been 20 years since our mother's death and the time is right to recognise her positive impact in the United Kingdom and around the world with a permanent statue.
Diana's funeral was held at Westminster Abbey on September 6, 1997, drawing a United Kingdom television audience of 32.1million viewers.
Performer Wayne Sleep remembered Diana, his friend and former dance partner, during a service of celebration and remembrance staged by east London's Mildmay Mission Aids hospital, which she visited regularly when it was a hospice caring for HIV patients.
Outside the palace looks a lot different than it did 20 years ago, when it was the scene of mass mourning and tribute for Diana, reports CBS News correspondent Mark Phillips.
"She was very softly spoken, and she was also engaging as well".
Princes William and Harry have viewed tributes left at Kensington Palace's gates on the 20th anniversary of their mother's death.
While there are many conspiracy theories about Princess Diana's death, French investigators say driver Henri Paul was speeding and driving drunk.