Responding to the War in Ukraine: Ethical Finance at a Time of Crisis
Finance sector experts discussed the role of finance in responding to the war in Ukraine in a special joint event hosted with the CFA UK's Scottish Committee, focusing on the need to respond to the energy supply shock, the "economic war" being waged against Russia and the options open to investors.
On Wednesday 16th March, Lord John Alderdice, a key figure in the Northern Ireland Peace Process and Director of the Centre for the Resolution of Intractable Conflict, Jeremy Lawson of abrdn, Helen Thomas of Blonde Money and Graham C. Cook, CFA of the Environment Agency Pension Fund joined our event 'Responding to the War in Ukraine: Ethical Finance at a Time of Crisis'.
Lord John Alderdice opened the event by emphasising the need for finance to play a role in securing a just - and peaceful – world: a sentiment all the more acute in the context of the ongoing war in Ukraine. The shadow of the conflict underpinned Jeremy Lawson, Chief Economist at abrdn’s opening intervention, where he explained that the conflict has highlighted that central banks are behind the policy curve: they have few policy levers left with which to respond to the conflict and the resultant energy supply shock.
Helen Thomas of Blonde Money echoed these sentiments, as she proceeded to unpack the finance (and UK’s) policy response to the conflict in Ukraine. She explained that the last few weeks had, in fact, laid bare two wars that are happening in parallel: a land war, and an economic war that goes beyond mere sanctions. Finance has become another front on a complex war, and no investor can truly be neutral as a result. This was a position that was echoed by Lord Alderdice, who cited the difficulties of aligning private financial flows with broader geopolitics and policy as the conflict in Ukraine unfolds.
The question remains, however: what investors can therefore do in response to the conflict? Whilst there might be pressure to divest, as Graham Cook commented, the market isn't necessarily there. In fact, for many investors, their Russia-based holdings had been relatively low due to existing governance concerns - many of those with robust sustainability and governance policies were simply not deeply invested in Russia, in contrast with some of the kneejerk divestments of recent weeks.
Jeremy Lawson suggested that the conflict is ultimately symbolic of a tendency towards fragmentation that has been in place for a decade, but could end up strengthening the NATO alliance: the decrease in globalisation over the past decade has been underlined by the conflict but its impact is not linear. We could, for example, see climate change policy undermined by return to coal, or see the flexibility of EU ETS promote renewables as source of energy security as the war unfolds.
As Helen Thomas ultimately argued, when thinking about the war in Ukraine we need to be mindful of longer term history when we think about the moral and practical steps the finance sector needs to take during this crisis. Both Helen Thomas and Jeremy Lawson were keen to point to political economy as a fundamental driver of investing, with formal modelling a crucial potential aid to decision-making. There was broad agreement that China is key, not just in terms of the effectiveness of the economic war now being waged against Russia, but on climate action and the shape of any reshuffle of the geopolitical order provoked by this war.
John Alderdice was interviewed about the event on BBC Radio Scotland following the event; you can listen here.
We would strongly encourage you to make to make a donation to the Red Cross Ukraine Appeal.
Diversity and Inclusion | Ethical Finance Round Table | Summary
Finance experts shared academic research, personal perspectives and technical expertise on the integration of diversity and inclusion concerns into finance. They emphasised the need for a process that goes beyond mere representation toward a deeper appreciation and integration of diverse voices. Watch now.
For our first Ethical Finance Roundtable of 2022, chaired by Amy Clarke, Chief Impact Officer at Tribe Impact Capital, we were delighted to welcome Prof. Alex Edmans, Professor of Finance at London Business School, Gavin Lewis, Managing Director, UK LGPS at BlackRock & equality campaigner and Lynne Highway, Director of Colleague and HR Experience at NatWest Group to discuss Diversity and Inclusion in the finance sector and beyond. Whilst the discussion showed that the sector must strive to improve, there is a clear appetite for progress on diversity and inclusion from across the financial sector and beyond.
Opening the event, Prof. Alex Edmans explored the business case for diversity, showing that many claims are based on flimsy evidence that is accepted uncritically and emphasising the need to be aware of our confirmation biases when making the case for diversity. Ultimately, while the evidence doesn’t support a business case for boosting superficial diversity metrics, it does support a business case for diversity and inclusion – as Professor Edmans highlighted “it involves far more than putting a few token minorities on the board to tick a box. It is much harder to create a culture where everybody feels psychologically safe at work”. As he powerfully stated, after sharing some of his personal experiences with racism and age discrimination in the workplace, “maybe making more money is not the real reason to do this. Maybe we just agree it’s the right thing to do”.
The question about the moral case for action on diversity and inclusion carried over into a fascinating intervention from Gavin Lewis. Lewis, who co-founded the #TalkAboutBlack’ movement to break the taboo surrounding conversations about race, noted that whilst progress has been made to foster inclusivity, finance had not gone far enough. For example, while hiring practices have improved markedly, retention still lags behind for myriad social, cultural, and economic reasons.
One fundamental problem, he argued, lay with the tacit expectation that firms would do the right thing, and that there was a straightforward business case for doing so. If there was, he said, it would have been done by now, and as he aptly commented, “The right thing didn’t happen when George Floyd was murdered. The right thing has been here all along and it hasn’t worked”.
Lynne Highway shared some of the work that NatWest have done to foster an inclusive culture within their ‘organisational DNA’ in order to not just meet, but exceed, statutory requirements on diversity. She said that NatWest is proud to be nurturing a fair and inclusive bank where they champion potential, helping people, families, and businesses to thrive.
Having a diverse, equitable and inclusive workplace is essential to achieving our purpose, as it enables the Bank to work together to achieve great things with our colleagues, communities, and customers. Improving representation, Lynne argued, requires creating an inclusive environment where colleagues feel able to bring their whole self to work. One way that NatWest have done this is via reciprocal mentoring, to allow for an open dialogue between colleagues from different backgrounds, and at different levels of an organisation.
The roundtable then moved on to a lively audience Q&A which included discussion on:
- Whether we might see a TSFD (Taskforce on Social-Related financial disclosures)
- The need to be aware of – and compensate – the emotional labour that might be expected of colleagues from underrepresented groups in the process of improving workspaces
- Whether it is more important to focus within (on the internal operations) or outside (on investee companies or clients)
- How the sector can learn from the relatively successful process of integrating climate-related concerns
Click here to sign up to our next event, the launch of the Scottish Taskforce for Green and Sustainable Financial Services, on Monday 28th February.
