George Möller, the former Chief Executive Officer at Robeco, the Dutch fund manager, today chairs the supervisory board of the Dutch financial markets regulator, the Autoriteit Financiële Markten (AFM).
During his tenure at Robeco from 2004 to 2010, the manager bought into the Swiss-based sustainable investment boutique SAM. Möller was also previously on the Managing Board at Euronext, the Paris-based exchange, and a member of the Tabaksblat Committee which formulated the Dutch Corporate Governance Code.
Now, unfettered from having to run a business on a day-to-day basis, he’s in a perfect position to survey the aftermath of the global financial crisis. He’s taken the opportunity to write a book called ‘Banking on Ethics’ – which he says was “an intellectual journey”.
In it, he argues that a lack of ethics was a root cause of the crisis that is still, in one way or another, affecting the broader economy and investment more specifically.
He defines ethics as “being aware of the long-term effects of the actions you take”. He points, as an example, to the Libor-rate fixing scandal. And he’s not afraid to use the term “the morality of markets”.
Getting down to specifics, he argues that investors should use their influence much more to direct company policy.
They should, he says, be aware of companies’ lobbying activities, for example, against reducing carbon emissions. And if they’re not happy, he says, they should divest from those same companies because, he argues, they are using shareholders’ funds to work directly against the same investors’ long-term interests.
“Big businesses make use of substantial resources, which are the property of shareholders, in order to wage a political war on measures designed to help us act in a sustainable way and keep the planet fit for human habitation for future generations,” he says, citing mining and extractives companies.“Shareholders need to speak up; it is after all their money, and is not their opinion that is being reflected with that money.”
“An important role is reserved for the voice of international capital, of shareholders united in pension funds or represented by asset managers that act on behalf of collectives consisting of private or institutional investors,” he says. “Unfortunately, investors and shareholders do little to oppose the use of more or less public funds to influence political processes.”
“Being aware of the long-term effects of the actions you take”
He told Responsible Investor that lobbying expenditure should be should be discussed at corporate annual general meetings (AGMs), as well as be a requirement under International Financial Reporting Standards (IFRS). He welcomed the suggestion that a register of corporate lobbying should be developed.
By the same token, Möller says shareholders also need to find ways to reward companies that behave well.
Looking ahead five years, Möller reckons there will be less reliance in finance on “models and rules but instead more on principles”. Banks, he says, should be better capitalized and a “safer place” to invest.
The next crisis though shouldn’t take anybody by surprise, according to Möller. He is wary of the huge level of personal debt that has accrued in countries via student loans and the like. But after the crisis of companies and countries, he sees the next tumult as “the crisis of civil society”, where he says there will be limited room for developed economies to grow their way out of trouble because of population demographics that are working against them.