Long term matters: ISSB, please don’t choose to play small
The International Sustainability Standards Board (ISSB) is a major development. ISSB has rightly made climate risk its initial priority but now has an important choice to make. Will it help investors address climate-related systemic risk or will it continue with ‘business as usual’, enabling investors to play small?
Long term matters: What COP26 means for you
Whether the COP26 glass is half full or half empty is the wrong question.
Long term matters: Vaccine apartheid and investors
This column last covered COVID-19 vaccine inequity in June. Since then, using The Economist’s model of “excess deaths”, there may have been more than 4m deaths globally. That means 37,700 people dying every day, arguably unnecessarily. This number comes with many caveats but it’s possible (indeed probable) that the figure could be much higher.
Long term matters: Commenting from the cheap seats or on the playing field?
Scientifically literate investment executives who care about the future of human civilisation and the ecosystem will be painfully aware that Jean-Claude Juncker’s comment about the euro-zone also relates to the climate crisis.
Long term matters: It’s corporate tax, stupid
Bill Clinton used the slogan “It’s the economy, stupid” to help him win the 1992 US presidential election. The same now applies to corporate tax in 2021.
Long term matters: Grandpa, what did you do in the COVID wars?
Pharmaceutical companies in the West and their host governments are very confident today, and some even speak of “post crisis investing”. Certainly, pharma’s scientific credentials have been demonstrated and the public in the UK and the US in particular are seeing the potential end to lockdowns.
Long term matters: Is your board colluding with E(rratic) S(uperficial) G(reenwash)?
ESG is booming, but the industry risks becoming complacent. Fund managers are creating new products that meet markets’ needs more than those of society and the thin ‘layer’ of ESG in core investment processes is not contributing to the much-needed transformation of our economies and societies.
Long-term matters: Stop investing in autocracy
Europeans observing the US ‘near miss’ constitutional crisis have a choice – be spectators or show responsibility
Long term matters: What kind of decarbonisation matters most?
This article was written on the fifth anniversary of the Paris Agreement. In 2015, the world committed to keep warming below 2°C, meaning decisive annual reductions in greenhouse gas (GHG) emissions. Instead we have had a 7% increase in GHG since 2015 and are on track for about 3°C warming with a high risk of irreversible tipping points.
Long term matters: A time to be hopeful and active?
Jaap van Dam, principal director of investment strategy at PGGM, is right: pension funds need to understand politics. We have two additions. First, the ‘outside-in’ focus – how politics affects portfolios – is a great starting point. But investors cannot stop there, they have considerable influence on politics whether for good or bad.
Long term matters: Addressing autocratic risk
In an email interview, economist and MacArthur ‘Genius’ Fellow, Emmanuel Saez, confirmed what many investment insiders know: “Markets are notoriously bad at anticipating catastrophes.”
Long term matters: Tales of a chance ESG investor
I didn’t intend to get a permanent job in ‘responsible investment’: my pitch for a consulting contract got misfiled in a recruitment folder and the rest really is history. Having held two good jobs in the sector, at USS and Axa Investment Management, I appreciate the 12 years I’ve spent inside the investment world.
Long term matters: Risk calls for universal investors
I’m looking for a senior executive from a major institutional investor who has “systemic risk” in their job description.
Long Term Matters: Time to apply pressure to banks
Remember how the financial sector lobbied against the Financial Transaction Tax? Imagine it lobbies as hard, but for pandemic recovery programmes to include a carbon price. Totally unrealistic? Exactly my point. Failure to price this externality is why capital has not been reallocated and the finance sector’s slow pace of change are two sides of the same coin.
Long Term Matters: Learning from COVID-19
As the tide of the Second World War was turning in favour of the Allies, there was a ferment of discussion – initially bottom up – about how to build a better world when the war was over. While loved ones were fighting overseas and people at home were struggling with rationing and movement restrictions, some made the time to think about the future. The Bretton Woods Agreement, establishing fixed exchange rates, happened ten months before the war ended in Europe.
Long Term Matters: Investing in an age of pandemics
Pandemics are master classes in managing existential uncertainty. Being overwhelmed is ‘normal’. Here are seven actions that we can take as citizens and investment professionals. The focus is on the US and the UK: their governments are floundering. The unravelling in the US is dangerous for investors. Both the UK and the US are very responsive to the financial sector.
Investing in an age of pandemics
Pandemics are master classes in managing existential uncertainty. Being overwhelmed is ‘normal’. Here are seven actions that we can take as citizens and investment professionals. The focus is on the US and the UK: their governments are floundering. The unravelling in the US is dangerous for investors. Both the UK and the US are very responsive to the financial sector.
Long term matters: To investors who care about the climate crisis – act before COP26
Rather belatedly, we have a new president of COP26 in the form of Alok Sharma, former UK international development secretary. But this sorry saga seems quite symbolic – we know that we need to do something big but we can’t quite get our act together.
Long-term matters: Financial sector employees can help win the climate change fight
More than a thousand Google employees have signed a public letter calling on the company to take bold action on climate change. They joined employees in other companies such as Amazon and Microsoft who published similar letters, calling their companies to take real action on climate change in response to the climate crisis.
Long Term Matters: Time to shit or get off the (ESG) pot
The ESG project is well beyond its childhood, even its teenage years. PRI has been going for 13 years and SRI activity pre-dated it by a decade.
Long-term matters: How capitalists can save the Amazon from capitalism
When foundations and wealthy individuals launched their Rapid Response-Able Fund (RRAF) in spring 2020, commentators sneered at the “save the world” motivation while others said it would distract attention from the political changes that were needed.
Greenwish: wishful thinking in the ESG world
Every so often I come across a paper which I think is a ‘must read’ and Duncan Austin’s ‘Greenwish: the wishful thinking undermining the ambition of sustainable business’* is one.
Animal welfare: Probing the global meat complex
Everyone knows about ‘big oil’ and how much influence the global agribusiness sector has. But there is less awareness about the negative impacts of meat producers – the ‘global meat complex’.
Long-term matters: Exxon’s AGM – can investors learn from the slave trade?
English evangelical protestants allied with the Quakers initiated the campaign to abolish the UK slave trade in the early nineteenth century. Two centuries later, the Vatican has said that climate change is a “moral and religious imperative for humanity”. Will the fate of fossil fuel companies be defined by public, sovereign and religious investors? And can other investors watch from the sidelines?
Don’t panic (yet) about populism
When I called for investor engagement with Facebook and the social media giants, I did not expect to see a sovereign wealth fund leading such an initiative just three months later
Long-term matters: Lessons for Climate Action 100+
Fund management is a pretty opaque profession, and no aspect more so than the way investors hold the management of investee companies accountable
Long Term Matters: BlackRock – time to pull your finger out!
Donald Trump is not the only US leader to ignore the climate emergency. BlackRock’s 2019 letter to companies, timed to coincide with Davos, it was equally silent on the crisis
Long Term Matters: What do Facebook’s investors care?
Mark Zuckerberg “is a bigger threat to American democracy than Donald Trump”, says David Runciman, professor of politics at Cambridge University
Long Term Matters: What should investors do about authoritarian governments?
In October, I wrote that investors would soon have to choose between backing social justice or going along with authoritarian- ism. I was not expecting that the choice would come so quickly
Long-Term Matters: Disruptive change is coming – which side will you choose?
Paying good pensions is a noble purpose but much less so if investors, inadvertently or otherwise, help create a world that is not worth living in
Long-Term Matters: What world are we creating by saving the world?
The focus of ESG investment has been moving towards the environmental over several years. Topics like green bonds, carbon indices, green ETFs, portfolio carbon footprinting and decarbonisation are making headway
Long-term Matters: An apocryphal tale for wannabe climate-aware investors
It is impossible to know how today’s CIOs will look back on their actions in the 2010s. But, we still have time to avert the worst of runaway climate change
Long-term Matters: Who decides which engagement is fit for purpose?
Private responses to my recent article about investors who do ‘BS’ stewardship have raised two key questions
Long Term Matters: Getting behind the stewardship bullshit on Carillion
Every so often things go so wrong that players are forced to come clean. Which is what has started to happen with Carillion. And it’s not a pretty sight
Long Term Matters: What my illness is teaching me about investment
When diagnosed with life-threatening conditions, we can be devastated, run from the diagnosis or embrace it and adapt. No prizes for guessing the smarter choice. The same goes for investment decision-makers today
Long Term Matters: Investment can be a true profession
Carillion, the UK construction company that collapsed recently, reminds us, once again, that investment is yet far from being a credible profession
Long Term Matters: Time to pay heed to political risk
Speaking plainly but respectfully gets results more often than our ‘inner fence-sitter’ likes to acknowledge
Climate risk: Action on demand
We are winning the war against tobacco, at least in the developed world. Yet, we are losing the war to keep global warming to less than 2°C
Long-Term Matters: Elephants in the sustainability room
Decent folk in the investment world are beginning to ask why our sector is so slow to change. Why can’t it function as a fit for purpose enabler of human prosperity?
Long Term Matters: An Achilles’ heel for buybacks?
Investors are salivating over possible US corporate tax cuts. But evidence suggests this excitement is misplaced, at least from the perspective of the end beneficiaries
Long Term Matters: Climate Change
Divestment advocates or traditional investors – which side will lead?
Climate change: Incentives are the way forward
Generally missing from the discussion on climate change is an identification of the incentives that can drive change
Long Term Matters: Disrupting CEO pay
The former CEO of the Investment Association, the trade body that represents UK investment managers, has made a disruptive proposal on CEO pay
Long-Term Matters Investors are monkeys
Sadly, investors too often see, hear and speak no evil. Their failure to protest at Donald’s Trump’s entry ban is only the latest example.
Long-Term Matters: Be a positive maverick
Trump and I agree on one thing: liberals and centrists love to whinge. If we are clever, we engage in intellectual self-gratification, showing how well we understand the complexity. If now isn’t the time for a big pivot in how we show up in the world, in actions and not just sophisticated banter, when would be?
Long-Term Matters: My inner Trump
Early on Wednesday 9 November we learnt that Donald Trump would be president of the US, and two days later I heard I may have a cancer.
Long-Term Matters: Carbon footprint envy
An explosion of providers and events promise to turn investors into low-carbon heroes. Even campaigners use it to benchmark managers. What will it deliver? Raj Thamotheram writes
Long-Term Matters: The lost decades
Evidence is emerging that the oil and gas sector knew about the risks of climate change for 40 years and buried this information. Had the world started decarbonising earlier, we could have done more to protect biodiversity and human life
Long-Term Matters - Addicted to dumb ideas
With the UK retailer Sports Direct in the news, it is worth recalling what one large investor said only 12 months ago
Long-Term Matters: Have an affair or see a therapist?
An estranged couple, frustrated by their sex life, face a hard choice: have an affair or see a therapist and commit to renewing their relationship.
Long-Term Matters: A world (nearly) on fire
The passion of the Brexiters, Donald Trump supporters and the far right in many countries is a wake-up call for those who think that all is well with globalisation.
Long-Term Matters: Absolutely no excuses
The big US proxy fights – at Chevron, Exxon and Southern Company – over resolutions to publish 2°C climate change stress tests happened in May. Did common sense prevail?
Long-Term Matters: Hug a whistle-blower
Ask any board director or chief executive of a well-run company what they worry about most and the answer is invariably ‘what I don’t know is happening’
Long-Term Matters: A climate culture clash
The Netherlands and the US are both free-market countries with thriving financial industries. But they also are very different and this is an unrecognised risk for large US mutual fund managers.
Long-Term Matters: Value corrosion
Imagine ISIS had poisoned a US city, causing almost certain permanent damage to innocent infants and children. Can you imagine the likely domestic and international repercussions?
Long-Term Matters: COP21 - let’s change the questions
It is clear the COP21 climate change summit was a diplomatic success in the face of powerful vested interests lobbying hard to prevent progress
Long-Term Matters: Followers will make the money flow
“Investment is the most often repeated word in IMF meetings, UN meetings, [the] G20 meeting, IIF meetings,” Angel Gurria, secretary general of the OECD said at the organisation’s recent long-term investing conference in Paris
Long-Term Matters: Call to voting advisers
For Sir Mark Moody-Stuart, former chairman of Shell and Anglo American, the hopeful thing about climate change today is that big investors are getting engaged.
Long-term Matters: Learning from coal
Last month the chief executive of Norges Bank Investment Management, Yngve Slyngstad, offered an implicit admission of error
Long-term Matters: Speak with one voice
Ahead of the Papal Encyclical on climate change last month, an NGO video went viral. Playful but clever, it conveyed the message well: be forceful stewards of God’s kingdom and get fit for the fight
Long-term Matters: Human capital dilemma
Institutional investors are being asked to take sides in corporate/union disputes, the latest being National Express and Teamsters
Long-term Matters: Can investors be part of the solution to Brazil's crises?
Investors in Brazil have been largerly absent from the separate crises over water and corruption shaking the country
Long-term Matters: Dear Finance Minister
In March 2015, leading investment consultants gathered at the residence of a leading UK financier to discuss dangerous climate risk. This is a hypothetical letter from one of the participants.
Long-term matters: Of herds and bubbles
There is much talk in the investment community of the long term and fundamentals. Yet behaviour remains rather short term in practice
Long-term Matters: Taxing questions
Tax wasn’t a material issue for ESG – let alone traditional – investors a few years ago, but now it is. So how did this happen and what does it tell us about other issues which are currently dismissed as non-material?
Every lesson helps
Here are 12 things arising from the Tesco accounting debacle that pension funds could deploy which would help prevent, or at least mitigate, similar implosions.
Crony capitalism
The public gets it. Academics and financial analysts get it. In fact, many experts say it is the most important governance and democracy issue of our time. So why do investors have so little to say about political donations and the corporate capture of politics?
Learning disabilities
Who would invest in a sector that has lagged the Stoxx 600 by 1.1% in overall growth and by 0.3% in EPS growth for the last 19 years on an annual basis?
Is divesting working?
OK, it doesn’t work very well. We’re still on track for runaway climate change, according to Fatih Birol, chief economist of the International Energy Authority.
M&A medicine
The debate about Pfizer’s proposed takeover of the UK’s AstraZeneca – which should have resolved itself by the time you read this – reminds us that there are some big unanswered questions relating to institutional investors and M&A activity.
Body of evidence
When I was training to be a doctor, the advent of evidence-based medicine (EBM) was a major step forward.
ESG lacks something
No, I haven’t had a damascene conversion to become an ESG critic. Rather, my argument is that the ESG (environment, social and governance) community needs to add another ‘E’, for economics.
Lessons from Davos
Who would have thought that Davos would take over from the dormant Occupy movement on the issue on ‘inequality’? Or that five years after the crisis the financial sector would still be top of the WEF Global Risks register?
The twain shall meet
The figures speak for themselves when it comes to the development of defined contribution (DC) pension assets. Defined benefit (DB) pensions accounted for over 60% of the total assets in Towers Watson’s annual Global Pension Asset Study 10 years ago but that share is now 53% and falling; the annual growth of DC assets was 8.8% over the past 10 years compared with 5% for DB assets.
Are they taking my job?
Had anyone told me that McKinsey and the Canada Pension Plan Investment Board (CPPIB) would challenge the institutional investment system as I’ve been doing, I’d have laughed. But when tipping points are reached, paradigm change can happen fast. Coming hard on the heels of the Kay review and the UK fiduciary duty review, two insiders have acknowledged that institutional investor behaviour is harming business performance and society.
Opposing oil divestment
Divestment from oil companies to stop climate change will not work. But by being largely disinterested, the investment industry has given clients and NGOs nowhere else to go. So how should investors push back against divestment?
ESG 2.0 – let’s get serious
The responsible investment community has done something very important. It has raised awareness that institutional investors who define their job as beating the peer group benchmark are being irresponsible – stewardship responsibilities for the long term are now on the agenda. But the current trading-oriented model of investment is impossible to align with these responsibilities.
PE’s planetary alignment
‘Men are from Mars, Women are from Venus’ describes gender differences in cognition. Having attended three major private equity events – PEI Responsible Investment Forum (for ESG-friendly PE), Coller Institute Private Equity 2013 Symposium (for mainstream PE) and PEI Operating Partners Forum 2013 (for portfolio companies) – we propose transposing ...
Whose risk counts?
Paul Woolley – a successful academic economist, regulator and fund manager – gave sustainability investors a direct challenge at the recent Responsible Investor conference.
Dimon’s status quo risks
No one says star gazing is easy but let’s be brave. JP Morgan Chase (JPM) is a preventable surprise in the making.
Tipping point for ESG?
Over 16 months, a trust-building initiative between major private equity limited partners (LPs), private equity associations, and general partners (GPs) has delivered a ground-breaking environmental, social and governance (ESG) disclosure framework that could provide the transparency that LPs say they want. The framework shows that asset owners care about extra-financial risks and opportunities and can send aligned signals. Could this exciting guideline be a tipping point? Five challenges will define its success.
End s-factor blindness
Sustainable capitalism is now in vogue. This is very welcome but advocates would have more credibility and impact if they paid greater attention to the ‘s’ (social) of ESG.
Put the bee back in beta
What is the price of a bee? And more generally, where does the extinction of bee populations – and with bees much of agriculture as we know it – fit into discounted cash flow and other investment/risk decision-making tools?
A dozen reasons to be hopeful
The Chinese word for crisis has two characters – ‘danger’ and ‘opportunity’. Holding apparently contradictory ideas together is not easy. So here are 12 reasons to be hopeful in 2013.
Let’s measure advisers
Investment consultants are so easy to blame. But on ESG matters, they are now doing some very important work – perhaps a result of prodding in earlier years. Now it’s time to reward consultants for faster progress and help them become the powerful facilitator for sustainable investing that they could be, and also help their leaders deal with the immunity to change that they face.
Long Term Matters: A preventable surprise
The world has been hit recently by a tsunami of corporate disaster. Then came the LIBOR scandal.
Can PE save the world?
When private equity players come together to discuss how to be more responsible, that is noteworthy.
Long-term Matters: Kay - make your voice heard
The Kay review is the best thing we’ve had on short-termism for decades
Long-term Matters: Hedge fund concerns
Hedge funds have, without doubt, delivered ‘loadsamoney’, especially for their staff and their richest and smartest customers over the past few decades. And there is also no doubt that short-selling can send a useful signal to the market about hidden risks.
Long-term Matters: Starting in their back yards
Foundations often exist to do public good. Their mission should be both to invest and provide grants. Protecting capital should be a priority; foundations do not need to be liability driven, have no reason to herd, and could use their long-term nature as a source of competitive advantage.
Long-term Matters: Shareholder Spring?
The recent AGM votes on executive pay at UBS, Barclays, Aviva and Citi are obvious signs of fundamental change, no?
Long-term Matters: RI talk wastes time
The time and money spent on long-term, responsible investing has not been very productive. Don’t get me wrong – we’ve made important progress and our common-sense approach to change was the right (only?) place to start. But if we can learn from experience, we could be making much deeper, faster progress.
Long-term Matters: Climate a major beta risk
Last week in Istanbul, I heard the International Energy Authority’s chief economist say the world’s on track for six degrees warming by 2100. This “catastrophe for all of us” is the mother of all preventable surprises.
Long-term Matters: Stop enabling corruption
My invitation to Prague last November had one drawback. The seminar was about corporate and political corruption. How depressing. Still, invited by the liberal Brookings Institution and the conservative American Enterprise Institute and convened by a leading US ambassador, how could I refuse?
Long-term Matters: Learning from bailouts
Why do bankers still not get their part in, to use Ken Rogoff’s phrase, the ‘Great Recession’? And what have institutional investors learned from these bailouts? An interesting CFA Institute blog shows that bailouts today are more frequent and more destructive than ever before. Unsurprisingly, the ‘why’ is deeply contested. Here’s my diagnosis to balance orthodoxy.
Long-Term Matters: Executive Pay
Why should investment professionals care about the ‘#Occupy’ protests? The majority of the public – ie, our customers – share some of the protesters’ views, even if they are not on the streets. One potent driver is the huge growth in income inequality over recent decades. With this comes disgust with politicians for being the primary ‘enablers’.
Long-term Matters: Musical chairs
In recent years, environmental, social and governance (ESG) teams have tried to get closer -– both intellectually and in seating arrangements – to the company’s active equity portfolio managers. And for good reason: these were the company’s stars. All this led, quite naturally, to a heavy focus on ESG alpha. ...
