The Shareholder Revolution?

by Adam Woodhall — At the recent The Crowd event, the title was "The Shareholder Revolution?". The question mark was particularly important because, as was made clear through the discussion, there is an opportunity for a shareholder revolution, but it is still largely hypothetical. The main direction of the debate was therefore how to support the latent transformation.  

 

Opening the event, The Crowd’s CEO, Jim Woods, introduced the keynote, Omar Selim (pictured), and his business, Arabesque Funds, described as the “Tesla of finance”.  The soft-spoken Selim was surprising forceful in his views, in both his speech and in the panel that followed.

 

Joining Selim on the sustainable finance expert panel were Catherine Howarth, CEO of ShareAction; Steve Waygood, Chief Responsible Investment Officer of Aviva UK; and Sue Garrard, SVP Sustainable Business Development and Communications of Unilever.

 

As with many of the recent discussions at The Crowd, big data appears to be driving sustainability conversations. Omar’s keynote followed this trend, capturing the attention of many in the audience with his main headline about how his business aggregates massive amounts of data related to sustainability and then offers to investors the opportunity to correlate their ESG (Environmental Social Governance) and financial performance in a way that wasn’t possible before. As @DaveWorthington said on Twitter: “Amazing use of 100bn data points by Omar Selim @ArabesqueFunds to demonstrate outperformance of Sustainable Finance #crowdforum”.

 

It seemed appropriate that Selim’s speech was being held in the shadow of St Paul’s Cathedral at Bank of America Merrill Lynch, as for many months the Occupy demonstrators had set up camp just a stone’s throw away. The challenge he was opening our minds to consider had similar roots to the Occupy movement’s grievances: how do we create a (much) fairer society?  The protestors’ revolutionary desire was to directly challenge, even overthrow, the system from the outside.  Arabesque Funds, and the assembled Crowd, were considering how to generate a revolution by engaging directly with the system as it is, and transforming it from the inside out.

 

The particular challenge highlighted by the panel was how institutional investors exert a major influence over our economic system, but have given little support to progressive management teams and rarely questioned anti-social companies. The message is getting out that sustainability is a key driver of company performance, but considering the evidence, it is a slow build. Therefore, whilst it was fantastic to have Aviva and Unilever represented, it must be noted that they are currently the exceptions rather than the rule.  

 

The day job of the panel’s moderator, Alex Threlfall, as a journalist, meant that he likes to have two sides to a story, but as he observed, it is sometimes difficult to achieve this at The Crowd as there is often considerable agreement across the panel: there was no “revolution” in this particular area. However, this didn’t detract from the debate, as this is such a rich, deep and broad topic for discussion.

 

It is the role of Howarth and her organisation ShareAction to agitate for the revolution. She had a number of candid observations, among them that considering people want to invest in doing good and there are great returns, that pension funds have been sluggish at best, negligent at worst, in embracing the sustainability agenda. 

 

Steve Waygood of Aviva had questions to stimulate the Crowd, and a good dose of honest reflection regarding his business and some inspiring observations.  Regarding the former, he asked for a show of hands from the audience as to who knew that their pension fund is pursing sustainable values? (Few was the answer.)  Waygood also asked why aren’t the basics of the financial system and personal investing taught at school, suggesting the revolution will happen when people understand how the markets work. He demonstrated honesty by observing that no company, his included, can say their investments are truly sustainable. However, he did give us hope, reporting that he thought it was incredible that the G20, UN and EU all said this year that sustainable finance mattered.

 

Looking from the perspective of one of the biggest corporations in the world, and certainly the largest organisation that is driving sustainability, Garrard of Unilever had much to say about how important ESG is to the company’s business.  She made clear that she believed that sustainability is a way for enriching human lives that goes way beyond ‘green’, and felt that making it ‘cool’ is trivialising a profound shift in what it means to be a global citizen today. 

 

If you are interested in being part of the revolution, and taking further action in your organisation, then Elina Yumasheva of The Crowd has drawn up “Seven things you can do to drive the shareholder revolution”.