Economy
Ethical investment pioneer: Simon Howard, chief executive of UKSIF
National Ethical Investment Week (NEIW) starts on Sunday. On each day, we’ll be publishing an interview, conducted by Greenhouse PR, with a different ethical investment pioneer.
Kicking off the series with a preview of the week is UK Sustainable Investment and Finance Association (UKSIF) chief executive Simon Howard.
Tell us about National Ethical Investment Week 2013 – what’s its aim and what do you personally hope it will achieve?
I want the week to flag to more people that: a) they are investors. I don’t think, for instance, that everyone with a pension realises that means they have exposure to shares and companies and bonds and so forth; b) they can use that money to make a better world; and c) they have real value at risk if companies they are invested in and fund managers acting on their behalf don’t consider sustainable and ethical factors.
What motivates you to do what you do?
I have been worried about climate change for some while. Then when I was predicting asset class returns for insurance companies I began to feel that there would be one set of outcomes if we carried on damaging the planet and another if we started doing better. At that point it made sense to switch to the sustainability side of things.
I want to stress that doesn’t mean everyone in the City or all firms there are bad – UKSIF’s wide membership shows that’s not true – it’s just that we need a higher priority on the sustainability agenda.
What are the biggest challenges in building momentum for ethical finance?
It’s complex at all levels. We need to educate on: the problems (such as climate change, resource depletion and human rights); the investment implications (asset returns, volatilities, correlations); and on some legal issues, notably fiduciary duty.
They are all are big challenges.
What trends or developments are you most excited about in sustainable and ethical investment?
I am consistently impressed by the IFA community when individuals get it and choose to specialise in this area rather than taking a conventional (and probably easier) approach.
At the institutional level I sense people beginning to see the issues as real and financial rather than purely academic or purely ethical. This means more people are beginning to consider environmental, social and governance (ESG) factors in investment.
What one thing could change the future of finance?
When people see ESG factors more obviously affecting company performance and valuation, that will drive hard data and that will drive investment behaviour in fund management and banking.
Where do you want to take NEIW in 2014?
Bigger and better! Potential sponsors ring me via UKSIF’s head office…
What can we, as individuals, do to make a difference?
Check how sustainable your investments are and tell your friends this all matters. Once it is (more) acceptable to raise it in conversation, more people will, and that change will be picked up by politicians and product providers.
If you were prime minister for a day, what would be the first thing you’d do?
Ask how we can realistically get to a stated 2050 decarbonisation target without some targets midway.
Can you recommend a life- or game-changing book for our readers?
The sustainable economy in 2040 on the Forum for the Future website played a big part in convincing me that ESG factors would hit investments. Unfortunately it won’t necessarily cheer the reader.
What’s the best advice you’ve ever been given?
In a tricky conversation, remaining silent can be very powerful. Machiavellian, but useful.
Can you leave us with who’d be your ethical investment hero?
I wasn’t around when it all began so don’t know the individuals, but I’ll name the unknown campaigner who very early on got laughed at and still kept going at it.
Further reading:
A new beginning for sustainable investment in the UK
Penny Shepherd: my UKSIF departure is ‘au revoir’ not ‘farewell’
New chief executive unveiled for sustainable investment trade body