Future proofing - staying relevant in a changing industry

by Olivia Bowen

The UK Sustainable Investment and Finance Association (UKSIF) is the membership association for sustainable and responsible financial services. They promote responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment.

Olivia challenges our industry to strive for a better economic model IMG_1662I was asked to join a panel at UKSIF's annual sustainable investment and finance event, which was organised in partnership with PRI. The event is aimed at industry professionals, and included representatives from the banking and asset management field, as well as researchers and consultants.

Our panel was called Future proofing - staying relevant in a changing industry and UKSIF asked that I comment on changing trends in retail investment and what the sustainable finance sector needs to know to keep up. I therefore sought to represent our clients, and to provide an insight into their views.

Below is an excerpt from my presentation: "Our clients tend to have strong personal beliefs, but will accept the compromise of fund ownership – as long as they understand that there is a real commitment at Management level, to the improvement of society and the environment. They want to know what the investment managers & senior management themselves believe, whether they “walk the talk”. We have moved money out of funds when the ownership structure of the parent company changed for the worse, although the funds were left untouched.

We have long been an advocate of Responsible Share Ownership – given that we have a capitalist model, where shareholder is king, it’s vital that shareholders push for responsible management and not financial profit at any price.

However, one word of warning - as the industry moves more towards an Engagement model, I think it's very important that we don't lose track of the importance of screening; that our funds don't become too bland, or that we accept investment in all sorts of nasties under the guise of Engagement.

It will be important for the industry to be able to continue to justify why they are investing in contentious industries, and to show real progress with Engagement.

At client reviews, we talk about financial performance of course, but the main discussions we have are regarding the impact their money is having in the world; and concerns we share about consumerism & destruction in the name of progress and profit. Most want their hard-earned savings to provide modest growth above inflation – not super high returns.

Our clients may drive cars, but that doesn’t mean they want their savings to invest in oil & gas extractives. We have discussions around compromise, and how life is complex, and they want to add their money to the growing funds around the world that are doing the least damage. But the industry must retain its integrity as it grows, to encourage more people to join the movement that is ethical investment.

Clients want to avoid the worst greed of free market/neo-liberal capitalism, and not profit personally from others' misfortune, or the destruction of the planet. They are deeply concerned about the proposed TTIP agreement, and how businesses funding government makes a mockery of democracy. As shareholders acting for our clients, please vote against these issues where possible.

I take this quote from George Monbiot, on company leaders of large corporations: "The more corners they cut, the more profitable their business will be. In other words, the less they care, the better they will do. The perfect chief executive, from the point of view of the shareholders, is a sociopath." It is up to the SRI community to ensure that this doesn't prevail.

My challenge to our industry: What sort of capitalism and world do we want? One that encourages the behaviour mentioned above, or one that prevents it?

We must move beyond the current purely financial approach ~ for example our obsession with GDP as the economic yardstick ~ to where every analysis considers the triple bottom line of society, environment and finance.

Given that we only have one planet, it would seem evident that we need a "steady state" economy. So, how can ethical investment thrive in a post-growth world?"

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