Sharpen Your Spikes

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    Let me tell you about my new year’s resolution: I will aspire to make the Snap spikier in 2023. Now, those of you of a more confrontational disposition might not find such a vow particularly challenging, but for me, it will entail venturing way out of my comfort zone, I assure you. Any budding spikes that might have once adorned the surface of my rather agreeable temperament have been effectively polished by years spent in a chummy, conflict-avoiding Swedish working milieu. As you can imagine, in my line of work, this is not always yielding the best of results. To properly scratch some green veneer or puncture an overinflated statement, spikes are of the essence.

    The idea of shedding off my habitual good-cop role has been brewing for a while. However, I would like to give the credit (or blame) for the actual formulation of this new year’s resolution to a provocative but also inspiring speech by Dr Ellen Quigley[1]. Addressing a cosy Christmas gathering of the local sustainable investment community in Stockholm in late December, the Canadian scholar had a sobering message. To be fair, the light and informal tone of her talk, accompanied by a disarming smile and self-deprecating humour, was perfectly tuned not to spoil the party mood. It did not fool me, though. Oh no, she was definitely pointing a finger at us all, accusing us of being too nice, i.e., not spiky enough to affect real change.

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    Quigley is known to openly question whether responsible investing in its current guise really is fit for purpose. According to her research, ‘universal owners’ (the professional investors at our Christmas party included) are failing to affect change in corporate behaviour or diminish companies’ contribution to externalities such as climate change or inequality. Our feeble efforts are obviously not working, she argues; why else would such problems be growing worse instead than improving? Hence the urgent need to get louder, and sharper.

    Predictably, my immediate reaction is denial. Surely things are changing! I hear, for instance, that in 2022, for the first time ever, more money was raised in the debt markets for climate-friendly projects than for fossil-fuel companies. According to data compiled by Bloomberg, environmentally responsible ventures attracted about USD 580 billion, while the oil, gas and coal industries turned to lenders for “only” USD 530 billion. Amazing! Unless you factor in the high oil prices, which have effectively weaned off energy companies from their dependence on capital markets. Conveniently for them, they can now turn to private investors who seem eager to finance their strategy, which can often be summarised as “expand fossil-fuel production now and decarbonize later”.

    I have interviewed droves of finance professionals in the past couple of years who assure me that they can see the proverbial ’tectonic shift’ eloquently described by Larry Fink happening. Exhibiting a varying degree of humility, they all feel proud of their own contributions to a more sustainable world. How come the results are such a no-show, then? In hindsight, I wonder if I should have poked and prodded a little more.

    And so, while others eagerly commit to a new workout routine, stock up on healthy superfoods or set off to conquer the intricacies of an exotic language, I head to the local florists instead and buy myself a tiny cactus. I intend to keep it on my desk, just a quick glimpse away, as a reminder to stay spikier.

    Ultimately, though, I know it is my readers in the investment community, the foot soldiers confronting daily the reality of sustainable investment decisions, who should sharpen their spikes. To that end, I shall aspire to present them with as many verbal cacti as I can muster in 2023.

    [1] Dr Ellen Quigley is a Senior Research Associate in Climate Risk & Sustainable Finance at the Centre for the Study of Existential Risk (CSER) and the Special Adviser (Responsible Investment) to the Chief Financial Officer at the University of Cambridge

    Image courtesy of Ulrike Leone from Pixabay
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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