The Thinking Ahead Institute’s climate beliefs group has produced a challenging set of beliefs that, if adopted and applied, would transform institutional investing behaviours. Here Herschel Pant describes the evolution of the output.
The world is, or perhaps feels, more divided now than it has been for some time. We’ve seen a continued state of discourse across many platforms that is driving people further away than bringing them together. It feels that is happening across the globe: Brexiters vs anti-Brexiters or vaxxers vs anti-vaxxers or ‘nationals vs anti-nationals’. I was thinking about whether there is anything or at least one thing, one principle, that both sides could agree on. I believe the 6th and final climate belief, ie we must collaborate / we are stronger together can unify both sides. Whether implicitly or explicitly, all sides do already believe in it. Even those that deny climate change would agree that if there were more of them, then this ‘net zero’ fake climate propaganda would not happen. Collaboration, after all, is a sub-set of the stronger together principle.
The challenge of climate change has many strands to it. From investing, to measurement to equality – all of which, will require action. Collective action. A strong collective desire to solve each of the strands while managing any unintended consequences of doing so will be required. It is a tough task and not easy for any one person, group, committee or society to achieve on their own. The journey will be new and unfamiliar. Just like long journeys or road trips one might have taken, they are a bit more fun if one has some company.
I remember one such road trip back home in India (around 2006). While we were going through central Delhi, a large group of youth were assembling with candles and banners. I read in the paper the next day (mobile internet wasn’t as cheap to avail as now) that the protests were sparked by a recent judgement in a murder case and the youth of India’s reaction to it. A high percentage of this outrage was a result of a Bollywood movie (Rang de Basanti). In summary, it depicted how a group of students fought against government corruption in a manner akin to certain freedom fighters. It was the first time I had seen a story creating actual change in people’s actions – to make a positive change in society (and not just mimic your favourite character). Youth of India doing civilised protests! It happened repeatedly over the years as other social challenges of society were brought to light. Gandhi would have been proud.
Can you imagine something similar with climate? A DB pensioner, who lost their house due to flooding, later realises that his pension money – which he gets regularly with 100% certainty – could have been saved if they had responded ‘yes’ to one of the climate survey’s conducted by the Trustees. It sparks protests by their grandkids – the now DC investors. A candlelight vigil is held outside the offices of the 5 biggest Master Trusts / pension providers at the time, asking them to change their investment strategy to ensure this doesn’t happen again! Even the Colston-four were ‘moved into action’ following the story of someone in the US they didn’t know. We do need more stories (read engagement reporting) to rally the value chain and be comfortable that we have to be on the right side of history – not necessarily the law.
We do need more stories (read engagement reporting) to rally the value chain and be comfortable that we have to be on the right side of history – not necessarily the law.Herschel Pant
Being a revolutionary asset owner isn’t going to be easy. However, to solve for climate change someone (& I would argue each one of us) will have to make the hard choices. If you believe the argument that a pension is worth more in a world worth living, then someone will have to step up and change the way we do things. Collaborate more across investors – not just in our portfolio. Commit to resources to help amplify the voice of the collective. Tell more stories to move people across the value chain. The good news is, we have already started with various investor groups already being formed – Climate Action 100, Net Zero Asset Owner Alliance, Institutional Investors Group on Climate Change et al. To aid that further, we have a Climate Super Team with its guiding questions and beliefs to help in navigating the journey.
There is a big challenge that we must acknowledge however – which is about fiduciary duty and the current interpretation of the laws that govern it. We will explore that in the next article. Just remember, revolutionaries were never known for following the law. They were known for challenging it – Desmond Tutu being one of them.
Herschel Pant is Senior Consultant Solutions at AXA Investment Managers. The document describing the climate beliefs is available here. Click to read the fourth post in the series, Climate tipping points change everything by Tim Hodgson of the Thinking Ahead Group.