Maitland/AMO Sustain – In the Hot Seat with James Alexander, Chief Executive at The UK Sustainable Investment and Finance Association (UKSIF)
Welcome to ‘In the Hot Seat’, a fortnightly series where we tackle some of the biggest questions facing sustainability professionals across a range of industries. We’ll also explore what sustainability means and how it is interpreted across different sectors and geographies.
This week, Zara de Belder, Head of Maitland/AMO Sustain, caught up with James Alexander, Chief Executive at The UK Sustainable Investment and Finance Association (UKSIF). UKSIF is a membership organisation for the UK’s sustainable finance industry and is committed to growing sustainable and responsible finance in the UK.
1. UKSIF has been very vocal on the benefits of active ownership strategies and stewardship among asset owners, in particular pension scheme trustees. How can trustees practically assess climate-related risks and engage with beneficiaries on climate change?
Active ownership is a key characteristic of many sustainable finance approaches and something UKSIF strongly supports. If we are to achieve net zero across the economy by 2050, it is not enough for investors to simply invest in naturally low carbon sectors such as tech, but to engage with companies and assets across their portfolio to drive the transition to net zero across the economy.
Many of the services provided by industries at the heart of the 20th century’s economy are essential for the 21st century, but have to change dramatically as part of the global transition towards a sustainable future. Examples include energy supply, vehicle manufacturing, food production, construction and aviation.
The extent to which active investors can drive these companies to transition will have a significant impact on the likelihood of the world decarbonising in time to avert catastrophic climate changes.
Investors are in a unique position to act, but for too long have been kept in the dark on the climate risks, and opportunities, facing their investments. UKSIF has long campaigned for TCFD disclosures across the whole economy, and is delighted that the UK government is now driving ahead with this. However, the full benefits of these disclosures will not be maximised until portfolio managers and other decision-makers can develop the necessary skills to more explicitly take TCFD reports, transition plans and sustainability information into account when making investment decisions.
2. You recently partnered with CCLA for a webinar to discuss investor engagement and modern slavery. Forced labour is not a new issue, but historically has been largely overlooked by the investment community. How can investors work with companies to tackle the issue?
Modern-day slavery is a shocking reflection on society and something we should all be more alert to. UKSIF’s insightful webinar with CCLA and Impactt highlighted the enormous scale and corrosive effect of forced labour and the extent to which it permeates the whole global economy.
Research suggests almost all retailers will have some forced labour in their supply chain, with 40 million people believed to be trapped in this way globally and more than 130,000 victims in the UK alone.
UKSIF members are taking this seriously and working actively with investee companies to encourage much greater scrutiny of supply chains and workers’ conditions, promoting steps to immediately end forced labour identified and ensuring appropriate measures to compensate victims are taken.
CCLA highlighted in the webinar their approach of not immediately divesting from companies identifying modern slavery in their operations. Of course, divesting is the ultimate sanction, however CCLA and other investors have delivered an extremely strong impact by actively working with company management to prioritise remedying occurrences of forced labour.
3. On UKSIF’s website, there is a glossary that has “industry speak translated into everyday language.” Do you think there is a language disconnect between the financial community and the general public and if so, how can we tackle this problem?
UKSIF’s consumer research conducted for 2020’s Good Money Week shows that 75% of Brits don’t know what ethical investing actually means, despite a strong upward trend in the numbers
of people reporting their willingness to actively choose products and services based on their positive environmental and social impact.
There is clearly a need, and an opportunity, for sustainable finance firms to improve how they communicate and connect people to the investments that will help build the future they wish to see. Whilst financial labels may not be the primary problem, it is clear that retail investors – who are otherwise interested in sustainability – need greater support to reflect their values in their pensions and investments.
Solutions include educating savers on the impacts their investment choices can make and highlighting examples of ESG investing, making it easy to switch to sustainable products. It is also vital that public trust in funds labelled as ‘sustainable’ is boosted and we welcome steps by the FCA to begin work on guiding principles on the labelling and design for ESG funds.
4. If you had one piece of advice for someone considering a career in responsible investment, what would it be?
The drive towards sustainability is the megatrend of the 21st century – grab the opportunity with both hands! This is an incredible growth area, represents the best in financial services innovation, will define the future of our financial sector, and will hold you in good stead for a rewarding and impactful career.
Take time to understand the issues, read up on the solutions, consider the human side and think about where the future of sustainability should be focused.
5. Finally, what does sustainability mean to you?
Sustainability is about active consideration of more than just the ‘here and now’. It’s caring for people and planet, recognising the boundaries of the environment and society, considering what effect actions today might have on tomorrow, and believing that your actions – however small – can make a difference. Most of all it’s about living out these values in both a personal and professional context and considering how each decision you take can drive us collectively towards the future we want.
About the Author
Also by this Author
- Maitland/AMO Sustain – In the Hot Seat with Michele Giddens, Co-Founder and Co-CEO of Bridges Fund Management
- Maitland/AMO Sustain – In the Hot Seat with Jovana Stopic, ESG Manager at IK Investment Partners (‘IK’)
- Maitland/AMO Sustain – In the Hot Seat with James Alexander, Chief Executive at The UK Sustainable Investment and Finance Association (UKSIF)
- Maitland/AMO Sustain – In the Hot Seat with Kensey Biggs, Senior Vice President, ESG and Corporate Social Responsibility at Truist
- Maitland/AMO Sustain – In the Hot Seat with Lisa Beauvilain, Head of Sustainability & ESG at Impax Asset Management