Barcelona (NordSIP) – There is a common theme running through all the presentations during the opening sessions of this year’s PRI in Person conference, the first one in a while to gather crowds of responsible investors under the same roof. In his welcome remarks, Victor Matarranz, Senior Executive Vice President and Head of Wealth Management & Insurance at Banco Santander, representing the event’s lead sponsor, Santander Asset Management, summarises it rather well. “It’s not easy being green,” he exclaims, quoting the title of a popular British show. Investing responsibly is, indeed, becoming increasingly complex in these troubled times when humanity must face multiple and equally urgent challenges.
PRI in search of vision, mission, and purpose
Helping investors navigate this complex environment is precisely where PRI has a role fulfilling. In his opening remarks, David Atkin, the CEO of PRI, reminds the delegates that they shouldn’t view the organisation as a service provider. It is a collaborative effort with the members that aims at helping them improve their investment decisions over time. As a signatory-based organisation, the PRI encourages all signatories to participate actively in its governance and strategic direction and provide feedback on strategically important matters. Atkin has high hopes for the upcoming consultation “PRI in a changing world”, which should inform the direction in which PRI is headed. He urges the delegates to take the time and participate in the survey to be sent to all signatories shortly.
According to Atkin, as the scrutiny of ESG has intensified, the organisation also has the task of changing the evolving narrative and showcasing the admirable work that many sustainable investors are doing. In his short but poignant address to the investor gathering, António Guterres, Secretary-General of the United Nations, warns the audience that there is no room for “slow movers, fake movers or greenwashers” if the industry is to preserve its credibility.
Failure is not an option
The coming of age of responsible investment is discussed at some length by a panel of distinguished investors and members of PRI’s board of directors: Sharon Hendricks, Vice-Chair of the Board, CalSTRS, Takeshi Kimura, Special Adviser to the Board of Nippon Life Insurance Company, Wilhelm Mohn, Global Head of Corporate Governance at Norges Bank Investment Management, and Renosi Mokate, Chairperson of the Board of Trustees of the Government Employees Pension Fund (GEPF).
The question on everyone’s mind is how responsible investors can withstand the disruptive energy in the world. Hendricks has a straightforward answer. According to her, you need to remain “slow, steady and methodical” and attempt to disregard the political noise. It means being consistent, long-term and disciplined. “There are always going to be challenges,” she adds. It does not absolve investment professionals from their duty to the beneficiaries.
Mohn agrees that investors have to stay the course, prioritise causes that matter and safeguard the societal values that have brought her so far. He points out that geopolitics may be disruptive, yet the facts of climate change and the evolving solutions to environmental problems are also changing the geopolitical landscape.
Meanwhile, Mokate, propagates a holistic approach to responsible investing. The transition is difficult for the emerging world, and it is essential to embed the ‘S’ aspect of ESG to ensure inclusive socio-economic development. According to her, it is not the first time the world has faced a challenge prompted by a crisis, and it will probably not be the last.
According to Kimura, investors need to recognise our differences and accept that no solution is one size fits all. In fact, reverting to exclusive and extreme solutions simply stokes the anti-ESG movement. Responsible investors should be ambitious, he urges, even though green finance alone is not enough to solve the problem. He also mentions the importance of increasing transparency and accountability as a means to counter the industry’s fragile credibility.
What all the panellists agree upon is that failing is not really an option for PRI and its mission. Responsible investors simply have to figure out a way to work together and accelerate the pace of transition.
Net zero in an insecure world
Fatih Birol, Executive Director of the International Energy Agency (IEA), sets up the stage for another engaging panel discussion. He is adamant in his belief that the triple drivers of energy security, climate commitment and industrial policy concerns are a powerful combination that is changing the world. According to Birol, the golden age of gas is over now, being displaced by increasingly cheaper renewable energy solutions.
The head of the IEA also raises a warning finger against the current scepticism about the 1.5 degrees target. Everyone seems to agree nowadays that the goal is not achievable, from scientists to fossil fuel companies. “I don’t buy it,” exclaims Birol. According to him, 1.5 degrees is difficult, but it sends the wrong message to declare it dead.
His comments are taken up by a knowledgeable panel consisting of Wendy Cromwell, PRI Board member and Vice Chair at Wellington Management, Guenther Thallinger, Allianz SE Board Member & Chair UN convened Net-Zero Asset Owner Alliance, Sue Reid, Senior Finance Advisor at Global Optimism, and Benjamin Deng, Chief Investment Officer, Ping An Insurance (Group) Company of China, Ltd. A brief summary could hardly do justice to all the topics the experts touch upon. Cromwell and Reid provide valuable insights on what is happening in the USA, whereas Deng contributes with a view from China.
A common theme for all panellists is the need to be specific in their work towards the net zero target. Pragmatism, ambition, and political support are also highly sought after by investors.
And yes, this panel, too, agrees that it is a challenging point in time to be a responsible investor. However, it is the words of Sue Reid that make the biggest impression and reverberate long after the discussion is over: If you are not feeling the pain, if you are not feeling slightly uncomfortable as an investor right now, then you are probably not stretching yourself enough.