Katherine Garrett-Cox, one the UK finance sector’s most high profile figures as CEO of venerable investment and financial services company Alliance Trust, has issued a passionate plea for the industry to take a role in valuing natural capital.
In a wide-ranging address at London’s Mansion House yesterday (June 23), Garrett-Cox also touched on the role of investors voting at company general meetings (AGMs) and short-termism generally.
“One way for the City to innovate is to lead the way in redefining how we value natural capital,” she told delegates at the ‘Finance as a Force for Good’ event organised by the Tomorrow’s Company think tank and hosted by Lord Mayor Fiona Woolf. “For us, it represents the nexus between people/planet and purpose.”
Alliance Trust, which is involved with the World Business Council for Sustainable Development in a pilot programme to create a common set of valuation principles for natural capital, wants to “shine a light on the economic invisibility of nature”, Garrett-Cox said.
She went on: “It’s a move away from quarterly earnings reports, away from ‘sustainability screens’. It’s a move towards integrated valuation models which place higher value on businesses with better integrated performance of their combined financial, natural and social capital.
“If our analysts pay attention to social and environmental externalities, all businesses will follow. It’s this kind of sustainable solution that will make finance a force for good.”She said the firm’s Investing for Generations strategy had given it “a renewed purpose, a soul”.
Garrett-Cox, a member of the Supervisory Board of Deutsche Bank, is a former Chief Investment Officer and Executive Director of Morley Fund Management (now Aviva Investors) and Aberdeen Asset Management.
“The nexus between people/planet and purpose.”
Dundee, Scotland-based Alliance Trust acquired Aviva’s Sustainable and Responsible Investment funds group headed by Peter Michaelis in 2012. Garrett-Cox told the event how shareholders in Alliance Trust have quizzed her about “wasting our time and effort” on sustainability at the expense of performance and profits. She said: “It’s just that we see performance and profits as an outcome of these additional efforts.”
Garrett-Cox said it was “deeply frustrating” that that many institutional investors shirk their duty to vote at AGMs; the bottom line was that they have “a clear responsibility to their clients” to take their stewardship responsibilities seriously.
Referring to issues as wide as money laundering, the Rana Plaza building collapse in Bangladesh and the fact that the presidential palace in Ukraine was part owned by a British company, she said: “We need to care more about the transactions we facilitate, about how the capital we allocate is used and we hold people to account. We might be smaller in relative terms, but we have a big voice.”