Rob Lake: A conversation that is waiting to happen – voices from the first year of Authentic Investor

The frustration and challenges of working for sustainability in investment organisations

For the last year or so I have been exploring the theme of values, purpose and authenticity in responsible investment and indeed investment as a whole. Under the banner Authentic Investor, I have written several articles and posted thoughts on LinkedIn and Twitter; convened two retreats; facilitated a worksho on personal values for pension trustees; presented to financial analysts; moderated conference discussions; and held numerous conversations one-to-one and in small groups with people at all levels in the investment industry.

This exploration started out as a series of questions I am asking myself after working in sustainability for thirty years and in responsible/sustainable investment for seventeen years – driven by my own personal values. Why is explicit acknowledgement of personal values – of ethics or morality – almost completely taboo in the investment industry? And why is this the case in the responsible and sustainable investment community of all places? What can we do to close the gap between what we care about most and what we are allowed to talk about at work? How can authentic reconnection with our values and purpose be a source of new energy to help us find solutions to the huge sustainability challenges the world faces – solutions in which finance and investment have such an important part to play?

As I began to discuss these questions with others, I discovered that this is a conversation that has been waiting to happen. Just beneath the surface of day-to-day life in the office and the familiar conference agendas of climate risk, valuation of human capital and the latest approaches to ESG integration lies a swirling current of frustration and pent-up energy. Frustration that the ‘story’ of ESG has lost touch with its roots in personal values and commitment to sustainability, and that the culture of investment organisations disregards and represses our inner, personal world. And energy that is waiting to be harnessed to do (more) good in the world.

Asking the questions has allowed this current to flow out into the open. It is as though the questions have given people permission to say things that are profoundly important to them, but which they have not felt able to say before.

The ‘Authentic Investor conversation’ of the last year – in person, by email and on social media – has been rich, inspiring and moving. I am deeply grateful to everyone who has taken part in it. It gives me hope that much, much more is possible to re-tune investment and finance so that they truly serve sustainability and society.

The conversation will continue in 2018 – e.g. at a retreat in Scotland in August. Please do contact me if you would like more information on that. In the meantime, below are some direct quotes from emails I have received that illustrate the frustration and challenges of working for sustainability in investment organisations, and some which point the way towards positive change.

The Challenge – where are the values and the heart?

‘We take the heart out of responsible investment at our peril. If it’s all reduced to picking a few data points that have predictive power, then we’ve won the battle but lost the war. The RI industry (back before it was even called RI) started off as very ethical indeed. In order to become mainstream, it has very aggressively and consciously distanced itself from these roots to ‘prove’ its worth in purely financial terms. And now the mainstream is almost running ahead – leaving RI feeling a little rootless.’ — Head of RI, Asset Management‘In our industry the default response to someone leaving is “how much?” And there’s no Plan B when the answer is not numerical. I have been in a similar boat on several occasions myself.’ — Head of Sustainable Investment, asset manager

‘By failing to set clear values in relation to investing, organisations leave it to individuals to apply their own which will be varied, with many not aligning with what trustees and members would expect. I see this all the time, working in a diverse investment organisation it is very difficult to make progress on an issue when you don’t have a common set of values and expectations as a starting point. Instead it goes back to an analyst or PM’s mostly subjective view of whether it is financially material (only to the company), their role as an investor or the role or the company in relation to the particular issue.

‘While they will know the company far better than me they will normally have a narrower focus and not have the expertise on the ESG issue in question. An organisation stating that RI is only about the financial outcome is a ‘values’ statement itself, just not a very good or well thought through one. I think it is fair to speculate that many of the scandals we have seen in financial services are an outworking of these values. Reading Daniel Kahneman (‘Thinking, Fast and Slow’) it is clear that applying a financial frame will tend to result in more selfishness and less ethical conduct.’ — Head of RI, asset management

‘I have managed a team of sustainability analysts for various organisations. It’s the emotional investment of the desired outcome (responsible investment leads to sustainable planet) which is at the heart of making the job “tough”. One can see it in the desperation of almost every junior analyst who first puts together the grand equation of climate, depletion of ecosystem services, population growth, the lobbying of corporations and the incapability of political/regulatory systems to deal even with the direction of travel, together with the rejection of your ideas and essentially the outcome of the grand equation in the investment community.’ — Head of ESG, asset manager

‘I’ve been working in the RI field for 15 years now and have witnessed the gradual shift from ethical investing, to SRI, to RI, to sustainable investments and now to ESG integration, which cannot be a more loosely defined concept. I fully agree that the backbone, strength and meaningfulness of the industry rely on deeper values that the industry has seemingly made a point of avoiding to talk about, for fear of scaring away mainstream investors and gaining their buy-in. The result is that we -as an industry – are not too sure of what we are doing anymore…and would benefit from reconnecting with the source of inspiration that are these core moral values. It seems to me the impact investing trend is where this energy is flowing now.’ — ESG analyst, research provider

The Opportunity – towards a new way of working

‘These ideas (on values and authenticity) will help infuse our work in the investment business with more authenticity, and also more innovation which is often deterred by lack of courage to challenge the status quo and to dig deep.’ — Head of Sustainable Investing, asset owner

‘When I had left [ASSET OWNER]’s public markets team to join [NGO] to work on impact investing about 2 years ago, I was surprised by the authentic values shared amongst the staff at [NGO] vs my investment colleagues at the fund, who also had the same values but did not necessarily bring those intentions with them to their work. It also quickly became apparent that authenticity and values without a proper execution cannot get us there either. The balance between the two is tricky and I know we are all still working to figure this out.’ — Millennial, impact investing

‘Finding purpose in my job is essential to me (yes, I am a millennial, I can’t help it). Many investment managers seem to think that their own behavior does not matter. It doesn’t make sense to reduce driving your car or flying around the world when you invest millions in fossil fuel companies. “My individual footprint is too small to even bother.”‘I think people working in finance should become aware of the positive butterfly effect that every individual can cause. And I believe it is important to align personal convictions with professional behavior, so that the contribution of the financial sector to a sustainable world will become a matter of course.’ — RI analyst, asset owner

‘Passionate about making a difference, I have worked in the area of sustainability for almost 20 years now and of that for almost 10 years in responsible investment. More and more I have come to realize that to realize the full potential of responsible investment in contributing to a more sustainable world, we need a different way of working, providing purpose and appealing to people’s personal values and intrinsic motivation. And we need to create the organizational culture that is encouraging and ‘safe’ enough to really bring your personal views into the workplace.’ — RI analyst, asset owner

Rob Lake is the founder of Authentic Investor.