EVENT ANNOUNCEMENT | Ethical Finance Round Table: Inclusion and Diversity

Our next Ethical Finance Round Table, taking place on the 22nd February from 14:00-15:30 GMT, will focus on the issue of inclusion and diversity; sign up now. While climate has broken past being a "niche" issue in finance, social issues are frequently neglected in the industry. We will ask whether the finance sector has done enough on inclusion, when it comes to race and ethnicity, as well other social issues including gender and sexuality.

8years on from the beginnings of the Black Lives Matter (BLM) protests, we still seem no closer as a society to resolving the tensions which brought them about. While these issues pervade society as a whole, the finance sector is a part of society, and this event aims to ask the tough questions of those in finance.

Is the sector doing enough, and what is its role?

Should it focus internally (on its own operations) or externally (on the assets it holds or manages on behalf of clients)?

We will be joined by moderator Amy Clarke (Tribe Impact Capital & GEFI Global Steering Group), Gavin Lewis (BlackRock), Lynne Highway (NatWest Group) and Prof. Alex Edmans (London Business School).


Path to COP26 videos available on EFx

After a successful COP26, all of the videos from our events in and around Glasgow are now available at http://efx.global/COP26.

Across the 2 weeks, we organised a series of events covering climate finance, looking at nature, economics, faith and pensions in detail.


“Hope” is the thing with feathers | The Radical Old Idea with Prof. Tim Jackson

In our latest Radical Old Idea, Royal London’s Kaisie Rayner was joined by Professor Tim Jackson to discuss his latest book, ‘Post-Growth: Life after Capitalism’. In a discussion that ranged from Adam Smith to the teachings of Buddhism, to maintaining hope in the face of despair. Professor Jackson called for a complete rethink on how we define prosperity. Watch the full session now on EFx.

While Professor Jackson’s previous book, ‘Prosperity without Growth’, was close to a policy manual for governments, ‘Post Growth: Life After Capitalism’ is a philosophical examination on the failings of our current economic model. Although written during the Covid pandemic and certainly partly influenced by the fallout of the last 18 months, it is more a culmination of years of reflection from one of the world’s leading ecological economists.  

The session started with Adam Smith, the so-called ‘father of capitalism’. Professor Jackson described how the legacy of Adam Smith has been “used and abused” by free-market capitalism. Proponents of lassez-faire capitalism seized on the ‘invisible hand of the market’, as evidence that Smith would be an advocate of today’s economy.

Professor Jackson disagrees, arguing that Smith would have been appalled by the modern markets, and their domination by monopoly power. Smith believed markets relied upon trust and community, and that the state had a fundamental role in countering unrestrained self-interest. The power wielded by conglomerates over governments today was something Smith warned against, not something he would have lauded.

In his book, Professor Jackson also mentions another great thinker who has had one of their ideas take on a life of its own, psychologist Abraham Maslow. Maslow’s 'hierarchy of needs' has been used as evidence that a linear relationship exists between fundamental human needs such as food or shelter, and social or psychological needs.

Without the former, humans do not engage with the latter. Maslow later upturned this hierarchy – something which has been lost in history. Social and psychological needs are not ‘nice to haves’ but fundamental to human wellbeing. Our physical needs can be secondary to our social needs – a lesson reinforced by our experiences over the last 18 months.   

Professor Jackson also spoke of how Buddhism and capitalism start in the same place – the recognition of suffering. The message of capitalism is to escape from this suffering, to struggle to ensure we escape poverty and ensure that we are not the worst off in society, turning life into a competitive endeavour. The recent trend of billionaires to conquer space is perhaps a manifestation of our existential anxiety to get as far away from suffering as possible.

By contrast, Buddhism teaches to face suffering head on and with compassion, not to escape it. We can learn from Buddhism in many ways, finding joy in being human and not from the material consumption essential for a society dependent on growth. If we can change our definition of prosperity to mean health and balance rather than having more, we will see a powerful transformation at every level.  

To finish, Kaisie asked Professor Jackson if he still has hope for humanity. To answer, he drew on the poetry of Emily Dickinson: 

“Hope” is the thing with feathers

That perches in the soul

And sings the tune without the words

And never stops - at all 

 Something in the human soul means that hope will not abandon us. Hope must however turn to action, and action is the antidote to despair.


The case against a growing economy

Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist

When Boulding spoke those words in the 1970s, the environmental movement was but a shadow of what it is now. In the decades since, climate change has moved from fringe concern to being at the centre – rhetorically at least – of how we think about our economies. As the problem of climate change takes centre stage, so the question of growth has followed, with countries including Scotland, New Zealand and Bhutan have made moves towards going beyond GDP in their national accounts.

They are still very much in the minority; since the industrial revolution, finance and economics have taken a constantly growing economy to be both a fact of life and an ideal state of being, something to take for granted and to strive for. But there have been voices of dissent. Before he was tragically killed, Bobby Kennedy had raised concerns about the idea of limitless growth. As Prof. Tim Jackson notes in his excellent new book Post Growth: Life After Capitalism, the younger Kennedy had, in a 1968 speech, raised concerns about the accuracy of GDP measuring social wellbeing, and the impact that pursuing it would have on the planet and its people.

Prof. Jackson, Director of the Centre for the Understanding of Sustainable Prosperity (CUSP) will be appearing in an interview with Kaisie Rayner, Climate Change Lead at Royal London on 14 July at 14:00 BST as part of our Radical Old Idea series. In the spirit of that series, inspired by the Scottish Enlightenment, the ideas discussed go back even further: John Stuart Mill professed a sympathy towards a steady state economy in 1848’s Principles of Political Economy, at the start of the industrial revolution.

Despite the constant presence of economic growth since the industrial revolution, it has changed over time. The 5% rates of growth typical in Western countries during the “golden age of capitalism” immediately following World War II had given way to rates of just 1-2%, even before the Global Financial Crisis.

Why is this? Labour productivity has been in decline. While it grows, social tensions between classes can easily be resolved. As the pie grows, we can all content ourselves with a growing slice. When it stops growing, getting a bigger slice for yourself becomes a zero-sum game. In fact, it is arguable that the astonishing growth rates of the post-war period were in fact only possible due to an increasing exploitation of the natural environment.

Since the 1980s, the social contract that characterised post-war capitalism has been broken, as the embrace of neoliberalism by Thatcher and Reagan removed any restrictions on uninhibited profit. Smith would have disagreed, railed against “those who live by profit” – a Radical Old Idea indeed – and advocated state regulation to guard against their capture of the economy. It had lead to a finance system that, as Lord Turner stated in the wake of the financial crisis, includes a lot of “socially useless” activity, focused on pursuing and capturing rents, not allocating capital to where it is most needed.

Can we continue to grow? 1972’s Limits to Growth pushed this question towards the mainstream. Fundamentally, as Jackson argues, people do not like being told their lives are limited. The idea of limits is anathema to most economists. Green growth is the preferred solution. But is it possible? There is, after all, “no growth on a dead planet”, as Jackson states.

So far, we have not decoupled economic output from material input to a great enough degree. Relative decoupling has been achieved: the carbon intensity of economic activity has fallen by a third since the 60s, but this is not enough. To reduce our impact on the planet, we have to decouple faster than we grow, and that is not happening. The solution, according to Jackson, is a reimagining of what prosperity means, moving beyond simple expansion of material wealth.

Indeed, there have been serious questions raised about whether expanding material wealth truly does entail “true” prosperity. The Easterlin Paradox was the remarkable finding by economist Richard Easterlin that, beyond a certain amount, raising average national income does almost nothing for happiness. Once you cross a threshold of roughly $20,000 per person (which suggests that growth is still important for the poorest countries), and extreme poverty and basic needs are taken care of, an ever-increasing average fails to deliver any meaningful progress.

The work of Pickett and Wilkinson in The Spirit Level perhaps goes some way to explaining this – the pair find that equality, rather than material increases, is a more reliable driver of contentment in industrialised economies. Another explanation lies in the idea of “the hedonic treadmill”, introduced by Philip Brickman and Donald T. Campbell, which suggests that humans quickly adjust to new luxuries, moving them from novelties to things they cannot live without, and losing any increase in happiness in the process.

The challenge for humanity – for finance, and for economics – is to find something other than growth to pursue, and to deal with the social consequences of limiting growth. To return to talk of pensions after discussing the future of the economy might seem mundane, but it is important.

To hear Prof. Tim Jackson in conversation with Royal London Climate Change Lead Kaisie Rayner on Wednesday 14th July, exploring these ideas in the context of the pension industry, click here to sign up. We are looking forward to a provocative debate. Tim's latest book Post Growth can be purchased at https://politybooks.com/bookdetail/?isbn=9781509542512.


UK must make its Green Finance ambition work for the whole planet

The UK government has committed to establishing the UK as a global green finance hub, and to propagating consistently high standards around green finance globally. This is a very encouraging move ahead of COP26. At GEFI, we believe very strongly that international cooperation and, in particular, engaging with the global south will be key to developing credible plans for a global net zero economy.

As our co-founder and director Omar Shaikh said:

We welcome the ambition to make the UK a leader in green finance. But Net Zero is a global game and we must use the UK’s financial services position as a global leader to take the opportunity of COP26 to make the green transition fair for every citizen of our shared planet.

Our recent flagship Ethical Finance summit saw a full day devoted to a series of global showcases, bringing in perspectives on sustainable finance from regions including South Asia, West Africa and South East Asia; see our EFx platform to watch all of these and more.

The development and implementation of TCFD and TNFD frameworks must play a crucial role in government and regulatory strategies to ensure climate and biodiversity risks are not only recognised but are measured and reported on by financial institutions. Such developments will drive green finance globally as capital is diverted towards mitigation and adaptation investments.

The emergence of global frameworks provides best practice standards, consistency and transparency the finance sector has been seeking and, in so doing, reduces the threat of greenwashing. You can watch the new TNFD Co-chair Elizabeth Mrema and Mikkel Larsen of DBS Bank, one of the key institutions developing TNFD explain the new nature-focused framework at Ethical Finance 2021.

Ultimately, the financial sector must play a pivotal role in delivering a Net Zero economy, but it cannot do so without international collaboration.

COP26 represents the perfect opportunity for the finance sector to work with governments on a global stage. As the curtain gets set to rise in less than 17 weeks, the UK government must lead from the front to inspire others to commit to a Net Zero and nature positive economy that guarantees both the survival and prosperity of the whole planet. The need to raise awareness and inspire practical action has driven GEFI to convene a powerful group of financial services institutions and stakeholders through our Path to COP26 campaign.

Alongside programmes driving Finance for Nature, and integrating faith perspectives with the SDGs, the campaign aims to unlock the power of ordinary people’s pensions to deliver a better future for everyone, and position both Scotland and the UK at the heart of a global Green Finance that works for the whole planet, ensuring that people (and not simply profit) are allowed to prosper.


Ethical Finance 2021 | Day 3 | Beyond Climate | Round-Up

We hope you were able to join us for the final day of Ethical Finance as planned. We brought this year’s summit to a close with a truly incredible range of speakers and panels, who allowed us to successfully move ‘Beyond Climate’ to the leadership challenges and the ‘S’ in ESGs. The need to implement purpose-lead business models and to apply a macro-economic approach to questions of the fight against climate change came to the forefront of discussions across our illustrious range of speakers and varied panel sessions. With social inequalities thrown into stark relief by the ongoing effects of the coronavirus pandemic, aligning profit with societal and global purpose shone through as a key imperative facing the finance sector as the eyes of the world  turn towards COP26.

The day began with a welcome from Scotland’s First Minister, Nicola Sturgeon, before an interview with UNDP Administrator Achim Steiner by the Scottish Government’s Kat Feldinger. Dora Benedeck and Alexander Ferendec Tieman from International Monetary Fund gave a post-pandemic assessment of the SDGs, assessing how developing countries can finance the SDGs in the wake of COVID-19. A panel session followed with George LittleJohn in conversation with Arshad Mohammed Ismail, Bank Pembangunan, Sarah Norris, Aberdeen Standard Investments, Dr. Hayat Sindi, Islamic Development Bank and Abubaker Suleiman, Sterling Finance discuss financing of the SDGs from a range of perspectives around the world. A session on The UKIFC Global Islamic Finance & the SDGs Taskforce brought together John Glen, Sultan Choudary UKIFC, Stella Cox CBE to launch the UKIFC's new PRB report, setting a case for the role faith finance can play in delivering ESG goals. Read more here.

The next session covered social issues - the S in ESG - and began with a keynote from HE Dr Reza Baqir, governor of the State Bank of Pakistan, who described how the role of central banks has shifted through the Global Financial Crises to the pandemic. Next, a panel saw Thom Kenrick of NatWest in conversation with Andrew Cave of Bailliee Gifford, Elena Espinoza of the PRI, Leslie Swynghedauw of MSCI and Lesley-Ann Vaughan of Mojaloop Foundation. The panel discussion some of the challenges around social finance, with insights including how MSCI use nutritional data to better understand food companies' health impacts. The session concluded with a spotlight on Tobacco Free Portfolios with GEFI’s own Gail Hurley, Dr. Bronwyn King, CEO of Tobacco Free Portfolios and Ruben Zandvliet from ABN AMRO.

The final session of the day, and of Ethical Finance 2021 saw a series of keynotes around leadership. In one of the most unique presentations we have ever had at our Ethical Finance Summit, Louai Al Roumani taught us the lessons he learned from leading BANQUE BEMO SAUDI FRANSI through the Syrian Civil War. You can find his book, Lessons from a Warzone, here. We shifted our focus to a different type of purpose-led leadership which saw Farmida Bi interviewing Sir Howard Davies, Chair of NatWest Group about the development and implementation of the bank's purpose-led strategy. Our Fireside Chat: Steering a path to Net Zero was moderated by GEFI’s own Allan Watt, and drew on the extensive expertise of Keith Anderson from Scottish Power and Vivenne Yeda Apopo from the East African Development Bank and Kenya Power. Dr. Rhian Mari Thomas OBE lead our penultimate session, a conversation with Lord Mayor of London, William Russel, before George Hay of Reuters Breakingviews interviewed UN Special Envoy on Sustainable Investment and Innovative Finance Hiro Mizuno. Click here to watch the session, which covers the GPIF sustainable finance journey, the importance of governance and whether short-selling can ever be ethical.

With the Summit done for this year, our commitment to financing a sustainable future sees us turn our attention now to COP26 in Glasgow, which is just months away. We are committed to continuing the valuable conversations from Ethical Finance 2021, and encourage you to be part of this conversation at Path to Cop, to follow us @Finance4Change on Twitter and at on Linkedln to be part of this exciting next stage of the journey.


Ethical Finance 2021 | Day 2 | Sustainability | Round-Up

Day 2 of Ethical Finance 2021 was a jam-packed day of fascinating exchanges, unpicking the complex challenges of delivering Net Zero and the macro-economic factors underpinning them. Our sessions and speakers all pointed towards the need to shift global focus to issues of sustainability, prevent further nature loss and make a business case of biodiversity preservation. Together, they have layed the ground for our focus on Day 3 of our Ethical Finance Summit: How to move beyond climate to achieve long-term, sustainable solutions in finance and beyond ahead of COP26.

We started off with Kirsty Britz Director of Sustainable Banking at NatWest Group, highlighting how the #EthicalFinance2021 is an opportunity for NatWest Group and others to learn collaboratively. Next, Inger Andersen, Executive Director at United Nations Environment Programme Finance Initiative (UNEP FI), outlined her four-step action plans for financiers (watch now). Dr Werner Hoyer, President of European Investment Bank (EIB), then outlined the daunting set of challenges we face globally from the COVID-19 pandemic to the climate crisis, emphasising that this is our last chance to make real change. Bill Winters, CEO of Standard Chartered Bank launched a new Carbon Dated report looking at the impact of MNCs’ #netzero intentions on suppliers in Asia, Africa and Middle East - read it now at sc.com/carbon-dated.

We then moved on to our 'Global Trends in Sustainability' Panel with Dame Susan Rice from FSCB, Tan Sri Dato’Zeti Aziz, former Governor of Bank Negara Malaysia and Katie Murray, Group Chief Financial Officer at NatWest Group, who unpicked some of the challenges around sustainability finance globally. Our last session of the morning saw Dr. Sarah Ivory from University of Edinburgh Business School in conversation with Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, spotlight the International Platform for Climate Finance (IPCF), and its work building consensus ahead of COP26.

To kick off our Net Zero session, Kaisie Rayner FRSA Rayner, Climate Change Lead at Royal London interviewed Manuel Pulgar-Vidal Global Energy and Climate Practice Lead at WWF and former COP President, who advised Alok Sharma to "be the DJ", mixing all the avenues for climate action together to create the right sound! Our approaches to 'Delivering Net Zero in Banking and Investment' Panel discussion was lead by David Pitt-Watson, Visiting Fellow at Cambridge Judge Business School. He challenged Deirdre Michie OBE, CEO at OGUK, Masja Zandbergen-Albers , Head of Sustainability Integration at Robeco, Kaitlin Crouch-Hess, Sustainability Manager at ING and Joanne Manda, Regional Advisor, Climate Change and Innovative Finance at UNDP Indonesia on greenwashing, practical tools for Net Zero, the role of the fossil fuel sector, transparency, and the responsibilities of the financial sector. Our Initiative Spotlight profiled the Institutional Investors Group on Climate Change (IIGCC). Clare Foster, Head of Clean Energy and Green Recovery Lead at Shepherd and Wedderburn was joined by Daisy Streatfeild, Investor Practices Programme Director at the Institutional Investors Group on Climate Change (IIGCC) and Dewi Dylander, Deputy Executive Director at PKA, who outlined how the framework grew from a small group of investors interested in the Paris Agreement, to a vital tool in assessing investment portfolio alignment to science-based targets.

Our Nature session opened with Greg Ritchie in conversation with Prof. Partha Dasgupta, author of the review into the Economics of Biodiversity, who called for a 'World Bank for Biodiversity' (read more in Bloomberg or watch now). Our last session panel saw Andrew Mitchell from Global Canopy bring together Antoine Sire from BNP Paribas,  Charlotte Kaiser from NatureVest, Madeleine Ronquest from First Rand and Reza Marvasti from ISS ESG, for a lively panel exploring the routes to practical action on biodiversity from a range of viewpoints. The day closed with and initiative spotlight lead by Natalie Jackson, which highlighted the work of TFND, which launches tomorrow, drawing on the expertise of Elizabeth Mrema from UN Biodiversity and Mikkel Larsen from DBS Bank.

Tomorrow, we will be looking ‘Beyond Climate’ which will be opened by The Scottish Government First Minister herself Nicola Sturgeon at 09.20 BST.

Remember to sign in using our EfX Global login: https://www.efx.global/ethical-finance-2021-sign-in/

You can find more ore information about all of sessions and speakers at ethicalfinancesummit.com


Ethical Finance 2021 | Day 1 | Regional Showcase | Round-Up

We hope you were able to join us for  our regional showcase Day 1 of Ethical Finance 2021 as planned. In a fitting tribute to broader conversations around  World Ocean Day 2021, Day 1 of Ethical Finance 2021 brought together a fascinating range of discussions featuring experts from Australasia, South East Asia, South Asia and West Africa. Common global challenges such as inclusion and diversity (notably around gender), as well as ongoing Covid-19 recovery emerged across the panels. The global steps needed to implement sustainable finance strategic and integrate ESG frameworks into investment models were equally prevalent across each of panel sessions.

Like many of you, we were impacted by today's global web outage which also affected Amazon, The New York Times, Reddit, The UK Government, and the Guardian. We would like to apologise to those of you who were impacted by our technical difficulties experienced at the start of the South Asia session. Unfortunately, our video platform Vimeo was impacted by the global internet outage. We hope you were able to access the backup stream that we quickly implemented, and that the rest of the summit will proceed with any issues.

You can find summaries of each of our sessions below.

 

Session 1: Australasia

 

We kicked off the Australasia Regional Showcase session with a keynote from Chris Whitehead, the CEO of FINSIA drawing on Australasia's economic recovery post COVID to increasing Climate Change concerns in the area. The panel was led by Giles Gunesekera, the CEO of the Global Impact Initiative. Panel members included Katherine Tapley, Head of Sustainable Finance at ANZ; Lucy Thomas, Head of Investment Stewardship at NSW Treasury Corporation; Talieh Williams, Head of Investment Stewardship at VFMC; and finally Dr Stuart Palmer, Head of Ethics Research at Australian Ethical Investment. Topics discussed included frameworks for measuring sustainability and social impact, systems thinking, defining ESG, and the importance of regulations.

 

Session 2: South East Asia

Cecile Thioro Niang, Lead Economist at the World Bank Group began the showcase with an overview of the South East Asia region making a clear economic case for financing climate action and increasing finance for transition, as well as the importance of Green Finace in ASEAN nations.

You can see the whole of Cecile’s Thioro Niang’s speech on YouTube.

The panel was led by Prasad Padmanaban, Chief Executive of AICB. He was joined by Dr Hamim Syahrum, Deputy Director of Islamic Banking & Takaful, Bank Negara Malaysia; Lavanya Rama Iyer, Head of Policy & Climate Change at WWF Malaysia, Cedric Rimaud, Fund Manager at Earthwake Green Impact Fund, David Smith, Head of Corporate Governance, Asia Pacific at Aberdeen Standard Investments, and finally, Rafe Haneef, Chief Executive Officer of Group Transaction Banking & Group Chief Sustainability Officer at CIMB.

You can head over to our twitter page to see snippets from our panel discussions throughout the session.

Session 3: South Asia

 

 

Madame Sima Kamil, Deputy Governor at the State Bank of Pakistan began our South Asia session with a regional overview of South Asia.

Watch Sima Kamil’s speech in full on Youtube

The panel was led by GM Abbasi, Director of Islamic Banking Division at the State Bank of Pakistan. The panel members in this regional overview are Azhar Aslam, Head of Islamic Banking & Governance Head Central & North Region at Standard Chartered Bank; Mujahid Zuberi, Head Corporate & Investment Banking, Pakistan at Dubai Islamic Bank; Dr. Shah Md. Ahsan Habib, Bangladesh Institute of Bank Management (BIBM); Muhammad Shoaib, CEO at Al Meezan Investment Management; Khawlah Usman, Director of Marketing & Sales at The Institute of Bankers Pakistan.

Session 4: West Africa

 

Arise News Anchor  Boason Omofaye, and Al Hamdou Dorsouma, Division Manager, Climate and Green Growth at African Development Bank provided a regional overview of West Africa to begin our showcase, emphasising the need for finance, particularly private finance, to contribute to climate resilience in West Africa and offsetting the devastating impacts of climate change on major industries across the region.

The session was led by Abdelkader Benbrahim, Partnership Coordinator for Making Finance Work for Africa. Panel members for the West Africa regional showcase are Elsie Addo Awadzi, Deputy Governor at Bank of Ghana; Garba Mohammed, Group Head Sales, Non-Interest Banking at Sterling Bank Plc.; Karima Ola, Partner at LeapFrog Investments; Jules Ngankam, Group CEO at African Guarantee Fund; and finally, Hajara Adeola, CEO & Managing Director at Lotus Capital.

Tomorrow, we will shift our focus to nature and climate ahead of the crucial COP26 UN climate summit for Day 2 of Ethical Finance 2021 ‘Sustainability’. With sessions exploring global trends, net zero and nature and biodiversity, the day will be an opportunity to understand both the macroeconomic issues facing the world beyond World Ocean Day,  and will position some of the key tools available to address them.

Read the full agenda for Day 2 here.

Remember to sign in via EFx.global


Ethical Finance Round Table Summary: Leadership is crucial in driving better economies

Leadership is crucial in driving better economies. From fighting the climate crisis, to driving inclusion across business and society, we cannot build a better world without effective leadership. The pandemic, combined with the threat of the climate crisis, has created a uniquely challenging set of circumstances for leaders across the spectrum.

In the latest Ethical Finance Round Table, taking place on 5 May 2021 and entitled ‘Leadership: Embedding Responsibility’, Michael Cole-Fontayn, Chairman at the Chartered Institute for Securities and Investment (CISI) and the Association for Financial Markets in Europe (AFME); Helen Cook, Chief HR Officer at NatWest Group; and Karina Robinson, CEO at Robinson Hambro joined moderator Graham Burnside of GEFI to discuss the role of leadership in driving social and environmental responsibility in organisations. Despite the scale of the challenge, the panel offered optimism that leadership in the finance sector is moving in the right direction.

While the current global health and economic crisis has tested the resolve of leaders throughout finance, Michael Cole-Fontayn emphasised that climate change, biodiversity loss and social inequality offer a challenge many times greater. He added that, on top of these existential pressures, managers in the finance sector are facing increasingly complex demands from clients, governments and regulators.

Helen Cook discussed NatWest Group’s journey to put their purpose at the centre of the bank’s strategy, stressing the importance of action over words. While the NatWest journey began 5 years ago, it has become the bank’s ‘North Star’ during the pandemic by providing a guiding purpose through its three core tenets: enterprise, learning and climate. One manifestation of this has been the shift towards hybrid working, likely to continue after the pandemic. Helen also remarked on the ways in which her role has changed over the years, with investors more concerned than ever about the practical steps companies are taking to look after their employees.

Karina Robinson gave an optimistic view of the future: while the finance sector is in no way perfect, there is an effective ‘carrot and stick’ across the industry, with incentives to perform well allied with much-needed effective regulation. Even prior to Covid-19, Karina argues that there was general dissatisfaction with capitalism, consistent across generations and even income levels, and only by addressing this dissatisfaction can the business sector make the case for capitalism.

The session ended with a Q&A; one particularly interesting question asked about the challenge of leading hybrid workforces, creating cohesive teams while some employees are in the office and others work remotely. Michael pointed out that those physically present tend to unconsciously exclude virtual participants, with Karina arguing for effective education to resolve this issue and Helen highlighting the role of behavioural scientists employed by NatWest Group to understand the psychology behind the challenges of a hybrid workforce. “Middle manager” might be a term with negative associations, but as Helen pointed out, it is becoming an increasingly difficult job as working patterns become more complex.


The Radical Old Idea with Keith Skeoch | The ESG Enlightenment | Event Summary

Keith Skeoch spoke about the ‘ESG Enlightenment’ and the power of finance to translate ordinary people’s savings into a powerful force for good in the world.

In the latest Radical Old Idea session from the Global Ethical Finance Initiative, the former CEO of Standard Life Aberdeen and interim chair of the Financial Reporting Council sat down with Royal London Climate Change Lead Kaisie Rayner to discuss the legacy of capitalism, the challenge of the climate crisis and what we can learn from Adam Smith. Watch the session now, or read the summary below.

At the start of the session, the audience of finance sector experts were polled on their views around sustainability. Over 40% of respondents said that their organisations had only started putting sustainability into their decision making in the past 5 years, with a further 17% saying that they had yet to do so, while 75% of respondents felt that the finance sector was not on track to support the massive economic transformation needed to deliver climate action.

Capitalism has, over its 400 year history, been a success story, argued Keith. It has collectivised savings into a force far more powerful than individual savers could ever be. “There has never been a more important time to invest in your future and the economy’s future and it’s your savings that will facilitate those investments”, said Keith, adding that this was “a story you only usually hear during wartime.”

Reflecting on Boris Johnson’s recent claim that greed drove the development of the new COVID-19 vaccines, the former Standard Life Aberdeen CEO agreed that it represented a victory for capitalism, but argued that the real story was the success of regulated capitalism, not unfettered greed. By tailoring the approval process for the vaccine to the unique circumstances we find ourselves in, the state and the market worked together for the good of humanity.

This is a story, as Keith and Kaisie discussed, that would have been familiar to the intellectual father of capitalism himself, Adam Smith. While some of Smith’s modern advocates paint him as a proponent of pure, unregulated capitalism, this was far from the truth. Smith’s most well-known work is the Wealth of Nations, but he also wrote at length about ethics in his other great work, the Theory of Moral Sentiments, which provides the moral purpose to the Wealth of Nations.

The point of the metaphor of the invisible hand – which he only used once in the entire Wealth of Nations – is not that markets should never be regulated for the good of society; in fact, Smith was in favour of this. Seen in the context of the fragmented markets of his time, the metaphor was simply an argument not to restrict foreign trade.

In fact, context has often been a driver of economic theory, suggested Keith. From Keynes’s response to the Great Depression in the 1920s and 30s, to Friedman’s theories about runaway inflation in the 1970s, economics has always responded to the situation it finds itself in. Ironically, however, in the years since Smith, average long-run growth rates have remained roughly stable. More than anything else, economic theory has affected the distribution of resources in society, rather than the total size of the pie.

While theories have responded to economic stimuli, over time they become intellectual straitjackets, confining thinking to a narrow policy paradigm until an external shock forces a re-evaluation. With the instability we have seen over the past few year, Keith argued that, in fact, “time is ripe for a fundamental paradigm shift” in economics and finance. The question, he suggested was “what should be the future of the new policy paradigm”, outlining 5 key factors needed in this new paradigm:

  1. Economic models which reflect the relationship between finance and other parts of the economy
  2. A responsible and sustainable corporate sector
  3. A view of regulation as something which helps markets by aligning them to the public interest
  4. A recognition that good behaviour minimises the cost of regulation by building trust
  5. A finance sector committed to putting substance into the mantra of “build back better”

Finance has a huge opportunity to make a difference as we build back better. It is the only way we can build trust and the only way that it will be delivered is by everybody taking personal responsibility: sustainability is everybody’s business.