Renewable investing: The launch of the European Responsible Investment Network

ERIN Launch

Each time I visit Berlin, I get a strong sense of optimism and renewal. So it’s only appropriate that the launch of the European Responsible Investment Network (ERIN) took place in this city which has undergone so much change. Like the renewed Berlin, the responsible investment field is trying to emerge from its historical identity, redefine its purpose and reimagine the way in which capital markets can serve society.

The event’s topics ranged from the challenges of engaging investors on environmental, social and governance (ESG) issues, the steps investors have actually taken to better incorporate these non-financial considerations, through to the ways in which campaigners can be more effective in influencing policy makers and fund managers. Instead of giving a linear impression of “what went on” at the conference, I’ll focus instead on the key themes that I took away from it. These themes included the function of finance, the challenges of overcoming short-termism, the intersectional nature of individual ESG factors, in addition to how campaigners can more effectively promote change.

There was a general recognition of gaps between the finance industry’s understanding of its responsibilities compared to the issues of most concern to NGOs and CSOs. These gaps can be overcome, but it will require empathy, finding common ground and persistence from all parties involved. All this effort will be for a worthy prize: a financial system which nourishes a sustainable real economy, with the needs of society at its heart.

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Renewable investing: The launch of the European Responsible Investment Network

Quarterly capitalism: The pervasive effects of short-termism and austerity

Quarterly Capitalism

Instant gratification is usually associated with limited attention spans, temptations to eat unhealthily or the tech-enabled on-demand economy in which many of us live. Each of these behaviours has known side-effects which we have identified and tried to limit.

However, in the complex economic system which is capitalism, the problems associated with the tendency to prioritise short-term over longer-term gains has only recently started to gain traction. Part of this slow uptake is attributable to the gradual recognition of the problematic symptoms, including increased inequality, dissatisfaction towards government policies of austerity and a general distrust of corporations. The side-effects have taken time to become noticeable.

In this blog post, I’ll take a look at the consequences of short-termism, ranging from financial and economic dimensions to the social implications. The unfortunate irony is that short-term behaviours often have the longest lasting effects.

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Quarterly capitalism: The pervasive effects of short-termism and austerity

CSR and tax avoidance: Two sides of the same coin?

CSR and Tax

As consumers and activists have increased their focus on the impact of corporate behaviours on society, companies have responded by upping their emphasis on their corporate social responsibility (CSR) initiatives. This is an undoubtedly positive trend and should be applauded.

However, at the same time headlines relating to corporate tax avoidance have become increasingly frequent. Household names including Google, Starbucks and Vodafone have sparked concern over their “tax planning” practices, despite some of their commitments to improve their environmental and social impacts.

Are CSR initiatives effectively being funded by tax avoidance? Does this actually matter to firms’ stakeholders? In this blog post, I will take a closer look at this relationship, consistent with the findings from research published by academics at the University of Oregon’s Lundquist College of Business. A holistic triple bottom line approach to corporate strategy has become embedded in the minds of many mangers. The concern is that tax avoidance is an equally ingrained logic.

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CSR and tax avoidance: Two sides of the same coin?

Pensions and inequality: Mind the gap?

Pensions and Inequality

The romanticised view of retirement is one of long walks on the beach and living happily ever after. Unfortunately, the changing structure of pensions systems may mean that this dream will become a reality only for the privileged few.

Pensions are becoming less secure. As these systems evolve away from employer-sponsored plans to individual savings schemes, risk is increasingly transferred from corporates to their employees. This is ultimately to the benefit of the shareholders of those corporates. Additionally, incentives to save for retirement are skewed towards higher income earners. Further still, pension investments often benefit directly or indirectly from structures that reinforce inequality, to the detriment of workers in developing countries.

Ultimately, pension systems are developing in a way which increases inequality, both within and between countries. Intentional or not, seemingly common sense policies enacted today may have some dramatic impacts on the future global distribution of income and wealth.

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Pensions and inequality: Mind the gap?

Incoherence: The contradiction of subsidies, aid and philanthropy

Incoherence

It’s a natural human trait to focus on celebrating the good while giving less thought to the harmful. Reconciling contradictory behaviours can be difficult, especially when good intentions are challenged by uncomfortable questions about the problems we’re trying to solve.

Two areas where this is especially true relate to foreign aid and philanthropy. The provision of both undoubtedly improve lives and lift many out of poverty. Many problems addressed by these forms of giving are highly complex and difficult to solve. Generosity is vital to developing lasting solutions.

But is it a case of giving with one hand while taking more with the other? Whether it’s through agricultural subsidies, tax regimes that favour multinationals or profiting from low wage workers, it’s useful to reflect on a simple question:

Is it better for me to give more, or take less?

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Incoherence: The contradiction of subsidies, aid and philanthropy

Divestment dilemma: Resolution, revolution or evolution?

Divestment

Climate change is currently the most pressing issue uniting socially responsible investors globally. Responses by different investors have varied from outright divestment of fossil fuel producers, engagement through shareholder resolutions seeking further disclosure, to measuring the direct carbon exposure of investment portfolios.

Each of the approaches used by large institutional investors has advantages and disadvantages in trying to effect corporate change. This blog post attempts to summarise these issues, weighing the arguments and counterarguments from a range of sources. Ultimately, the most appropriate course of action will differ on a case-by case basis.

However, the present debate on divestment has largely ignored individual investors. The existing investment architecture needs a rethink to enable individuals to have a stronger say in how their investments are managed when it comes to environmental, social and governance (ESG) issues.

Innovation is possible and necessary, and I suggest three approaches to aid engagement by individual investors, namely: a “building blocks” approach, look-through proxy voting and standardised ESG exposure metrics. Responsible investing is simultaneously personal and universal. The investment industry has an important role to play in evolving its infrastructure to let the voices of all investors be heard.

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Divestment dilemma: Resolution, revolution or evolution?

Better Banking: Reflections on the Triodos UK Annual Meeting

Triodos

When you hear the word “bank”, what’s the first thought that pops into your head? Crisis or scandal? Unethical or heartless? Perhaps something more sinister? The banking industry isn’t usually positively associated with social values. However, it doesn’t need to be that way: change is often led by innovators willing to challenge the status quo.

On Saturday, I attended the Annual Meeting of Triodos Bank’s* UK operations in Bristol. It was refreshing and enlightening to learn more about a financial institution set up with human values at its core. A common thread throughout the day was the combining of people, planet and prosperity – issues not normally associated with the profit-focused banking industry.

I couldn’t help but think that this was a glimpse of the future of finance. Or rather, maybe it’s a return to the original purpose of finance and banking: to enable humans to create a greater shared prosperity.

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Better Banking: Reflections on the Triodos UK Annual Meeting