Welcome to new members joining us for 2021, and a huge thank you to our members who supported and collaborated with us through 2020.
As systems thinkers we have constructed this mindful of how these topics interconnect and the benefits of combining them, as well as the problems of doing one without the other.
The first six months of 2020 were extraordinary in that they delivered three separate defining moments (climate crisis, global pandemic, social / inequality crisis) which reinforce our belief that the world, and investment, will have to navigate a very complex future. We held a member research briefing in January to discuss 2021 research streams for members potential involvement – view recording and presentation deck.
Climate change / sustainability
In 2020 we established the +1.5C working group, and quickly spun out a separate duty of ownership working group. We believe the work started by these groups should continue and develop during 2021.
We see three possible, and overlapping, work areas that will need to be prioritised:
– 3D frameworks are about building better beta
– Net-zero is about new organisational identities
– Innovation with building blocks is about new capital and new products.
We will not be able to make the changes to address our sustainability challenges if our organisations’ cultures are resistant to change. The active management of culture is therefore a necessary, and also exciting part of our future. We describe phase 1 of our culture work, which started in 2015, as a proof of concept – showing that culture could be modelled, assessed and scored. In 2020’s phase 2, we worked with a group of organisations in the power of culture study – written up in a white paper – to test and refine the concept and made it operational and efficient. We will move on to phase 3 in 2021 and extend the power of culture study into more asset owner and asset management organisations.
Our 2020 sustainability summit clearly showed the need for transformational change within investment organisations. Incorporating impact alongside risk and return, and truly incorporating sustainability, will require new investment thinking such as the total portfolio approach and universal owner theory and new organisational thinking such as holistic data management, purpose and cultural excellence to be progressed, blended and applied. Our current thinking is to run a C-level working group to develop this research area.
Outside the formality of the research streams we will continue to think about issues affecting the industry, to connect the dots as best we can, and to offer wider perspectives where we are able.
There is a long list of potential topics to explore – such as technology, increasing allocations to China, evolving business models and much more.