THE BUSI­NESS CASE

Element - - Business -

Sov­er­eign In­surance chief ex­ec­u­tive Charles An­der­son says he wants to get his com­pany’s $2 bil­lion in­vest­ment fund more in line with its li­a­bil­i­ties. He’s re­view­ing the way its in­dex is con­structed, to for ex­am­ple lower its ex­po­sure to car­bon. He wants it man­aged pas­sively, to re­duce bro­ker­age and trad­ing costs, and to re­flect the sort of val­ues an in­surance firm should model. An­der­son, who was one of the few New Zealand ex­ec­u­tives to at­tend last year’s Rio+20 cli­mate sum­mit, says it’s clear the world’s re­sources are be­ing used at a rate that is to­tally un­sus­tain­able. “If you have fam­ily and are in­ter­ested in a for­ward view of the world, you have to recog­nise some­thing has to change,” he says. “There is no sense for us to feel good about in­vest­ing in things we know have neg­a­tive medium or long-term con­se­quence. It’s par­tic­u­larly crass to do it sim­ply on the ba­sis you could make a bet­ter fi­nan­cial re­turn if you do that.” He be­lieves it will make for bet­ter long term re­turns. “It’s a fun­da­men­tal abil­ity of busi­ness to read the sig­nals from the en­vi­ron­ment they are op­er­at­ing in and trans­form their models. “If you look through an in­vest­ment lens, com­pa­nies that are ac­tively fac­tor­ing in to their busi­ness models th­ese sorts of en­vi­ron­men­tal, so­cial and gov­er­nance is­sues are po­si­tion­ing them­selves to per­form bet­ter in fu­ture than peo­ple who aren’t.” Syd­ney-based Hunter Hall is the largest fund in Aus­trala­sia ded­i­cated to re­spon­si­ble in­vest­ment, with $1.2 bil­lion un­der man­age­ment Its head of re­spon­si­ble in­vest­ment re­search, Michael Walsh, says when Peter Hall launched the com­pany in 1994 there were few eth­i­cal funds around. It is now an in­dus­try, with bench­marks, re­search, guide­lines, in­ter­na­tional stan­dards that funds can sign up to. “I think there are two core ob­jec­tives in this space. The first is to align in­vest­ments with the way peo­ple align their val­ues in life – they may not like gam­bling, drink al­co­hol in mod­er­a­tion, care about the en­vi­ron­ment, they don’t want peo­ple to be treated cru­elly,” Walsh says. “In­vest­ment can also in­flu­ence cap­i­tal mar­kets for good. There is de­bate in ac­count­ing and cap­i­tal mar­kets about com­pa­nies not pick­ing up the bill for the en­vi­ron­men­tal con­se­quences or their ac­tiv­i­ties.

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