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Will Oulton plans top slot for First State responsible investment



First State’s Will Oulton speaks to Alex Blackburne about stewardship, engagement and being in the sustainable investment community’s favourite band.

Will Oulton doesn’t like to talk about responsible investment, which for a man who is global head of responsible investment at First State Investments is perhaps a bit unusual. When he says this, he is – of course – referring to the term and not the approach. He prefers “sensible investment”. Why? Because that’s essentially in his view what it is.

Oulton joined First State in 2012 with a brief from chief executive officer, Mark Lazberger to build on the firm’s existing responsible investment strategy with the aim of becoming a global leader in the field. First State was already leading the way in Australia (where it is known as Colonial First State Global Asset Management), but this wasn’t being reflected in other regions. For First State, responsible investment – or ‘sensible investment’ to embrace Oulton’s phrase – stands on three pillars. The first is quality – and the absolute belief that unless it integrates environmental, social and governance (ESG) factors, the quality of its investment process is suboptimal.

The second part is about stewardship and remembering that the £105.5 billion managed by the global firm belongs to clients – and not First State. In 2013, the firm unveiled a set of global stewardship principles that Oulton says reinforce the fact that its clients’ interests come first.  This is a subject that Lazberger, First State’s CEO, is particularly keen to entrench deeply within the business.

The third pillar that underpins First State’s responsible investment credentials relates to the culture of the organisation. Oulton describes this as “the most interesting, the most difficult and the most critical” aspect of all. First and foremost, it’s about attracting talent whose investment philosophies are aligned with First State’s and are driven to be good stewards of people’s assets and have a long-term investment horizon.

For Oulton, these three commitments made his decision to join the First State – in 2012 – an easy one. At the time, he was managing the responsible investment team at financial services firm Mercer, where he had worked for two years.

Will Oulton, First State

Prior to that, he was influential in getting FTSE4Good – the socially responsible offshoot of the FTSE 100 index – off the ground. The fledgling index had been met with criticism from some companies who were excluded from the initial launch. This included Tesco, whose chairman at the time – Oulton recalls – “was rather disappointed” at a full-page advertisement from a competitor in the Financial Times that stated it was the only major UK retailer to be included in the new FTSE4Good ethical index.

What [excluded companies] didn’t understand is that there was a process of selection and criteria, and essentially the problem was disclosure with many of them”, Oulton says from First State’s office on Cannon Street, London

They really didn’t say much about what they were doing, so disclosure was poor and that was the main source of information. We went back to them [the excluded companies] and said if they improved their disclosure, the chances were they would be included in the next review. And that’s what happened.”

His time working on FTSE4Good was his first foray into the world of responsible investment. He quickly became more and more interested in the subject, and began to recognise the value environmental, social and corporate governance considerations can add to the investment process. The transition also represented a return for Oulton to his zoology past – a subject he had studied and enjoyed at university.

I’ve always wanted to work with animals and I’ve maintained that throughout my career”, he jokes.

“It felt like I was coming back a little bit to understand how environmental issues could interact with companies, and what that means in terms of the investment value. It felt quite natural.”

Away from his life at First State, though, Oulton is perhaps best known as the guitarist in the post-punk/new wave covers band 51st State. You’d be forgiven in thinking this was the asset manager’s house band, but the naming similarities – he assures me – are completely coincidental (the name is from Heartland, the 1986 single by the band The The, which contains the line, “This is the 51st state – of the USA”).

They do covers of bands like The Smiths, The Cure, Echo & The Bunnymen, The Clash and The Sex Pistols, and Oulton uses it as an opportunity to unwind (though he quips that the band is his “mid-life crisis in all its glory”).

I can’t think about the next supply chain risk that we might be faced within a portfolio when I’m trying to work out whether I need to play a G or a C minor chord. You just can’t do the two”, he says.

It’s just a really great way to mentally relax, and also have something that keeps your brain firing away. It’s hard and takes a lot of work. I’ve got a huge amount out of it, as have the other guys.”

There must be a space for a sustainable investment-themed band, I say to him, writing catchy songs about ESG and the carbon bubble. “I like to say we’re the sustainable investment community’s favourite band – though clearly hardly anyone knows about us”, he replies.

As we look out of the First State meeting room window at the towering buildings that make up the City of London, Oulton reflects on how his mainstream peers approach responsible investment. The risk is that this is seen simply as a box-ticking exercise, he argues; a means of competing with those genuinely taking it seriously.

He calls this “cosmetic responsible investment”, adding, “That’s not integrated, into-the-business-philosophy responsible investment, with deep understanding about how ESG factors can affect the value of a business. It’s taken spectacular blow-ups over the last decade and beyond to just remind people that that’s the case. Back to sensible investment; if you don’t look at these things, then you’re going to miss something. I think there’s still that issue.”

He adds that his job as First State’s global head of responsible investment – or “conductor of the orchestra” as he describes it – is only going to become more important. But what would it take for the box-tickers to truly take responsible investment seriously? Clients choosing to work with Manager A over Manager B because of Manager A’s competency in ESG, approach to responsible investment and commitment to Stewardship, Oulton says.

As for his dislike of ‘responsible investment’ as a phrase, he says, “There are so many times I’ve had peers in various organisations who have said they prefer irresponsible investment because it was much more fun. That kind of thing’s not only irritating, it’s just not helpful.

We talk about the quality of investment, we talk about stewardship and we talk about the engagement and culture within the organisation. That’s responsible investment to First State. It’s those elements. And people understand that.”


Will Oulton is the global head of responsible investment at First State Investments based in the UK. He was previously head of responsible investment for Mercer Investments across Europe, the Middle East and Africa and director of responsible investment at FTSE Group. In February 2012, he was appointed vice-president of the European Sustainable Investment Forum (Eurosif) and, in the same year, was also appointed to the board of the UK Sustainable Investment and Finance Association (UKSIF). He is a fellow of the Royal Society of Arts, an honorary associate professor at Nottingham University Business School’s International Centre for Corporate Social Responsibility and sits on several investment advisory committees. First State is due to publish its seventh Responsible Investment & Stewardship Report on March 26.

Further reading:

First State boosts responsible investment prowess with first stewardship principles

First State annual review highlights importance of responsible investment

FTSE: sustainability at the world’s leading investment index provider

From ethics to sustainability: shifting the investment debate for 2014

The Guide to Sustainable Investment 2014