Inclusive capitalism can change the world
The tug of war between profit and purpose is finally coming to an end. With both sides now realising that pulling in the same direction, rather than against each other, means there are only winners. Ahead of the G7 meeting of world leaders, Legal & General joined
34 global businesses and the OECD to back Business for Inclusive Growth – a ground-breaking public and private sector collaboration across the G7 nations. This provides an opportunity to work together to address common challenges and drive the opportunities of inclusive growth. “Inclusive capitalism” has been at the heart of Legal & General’s strategy for years.
There is no doubt that across the UK and overseas, there is an immense amount of work being undertaken to drive forward social value. However, many of these projects lack the financial firepower to make them truly scalable and have significant domestic and global impact. Similarly, there are businesses with huge commercial resources yet are only investing in side projects focused on enhancing our society through corporate social responsibility departments, while their corporate machinery rumbles on untouched and unevolved. This binary thinking where “doing good” and “making money” sit separately is not in itself a problem – but it is also not a solution to our societal challenges. Bringing the two together so money is made while good is being done is far more powerful.
As the largest institutional investor in the UK with over £1.1 trillion of investments, Legal & General joins like-minded global businesses in this new coalition convened by the Organisation for Economic Co-operation and Development (OECD). From shareholder activism to
direct investment strategies, Legal & General has been recognised as combining growing shareholder value with driving social progress. Inclusive capitalism must recognise that every person wants a better life for themselves, and for the next generation.
This is our recipe for inclusive growth: injecting patient capital into partnerships with expert public bodies based on sound long-term thinking. This is what builds the capacity we need to get out in front of the fourth industrial revolution and, ultimately, to create societies better than the ones we inherited and drive our shareholder value as we grow our business.
Legal & General has so far invested £28bn into building UK capacity and capability. Our investments have upgraded ports; funded state-of-the-art trains; regenerated huge urban areas; created science research hubs; funded a project to build houses for homeless people in Croydon; and invested in the hotel and conference centre at the FA’S National Football Centre in Burton.
This matters to me personally as well as professionally as it confirms the importance of inclusive capitalism and its role in rebuilding the region in which I grew up. One of the proudest days of my career was signing the £400m deal that saw Legal & General partner with Newcastle University and the city’s council to build more of “Science City”. The North East blazed the trail that the world followed in the first industrial revolution and I know that inclusive growth is the path for the region to excel in this century.
There is $14 trillion earning negative nominal returns across the globe – why should we accept that our money goes down in value? Inclusive capitalism can deliver better returns by unlocking this money and putting it to work building better societies, tackling the climate emergency, reducing inequality, closing the infrastructure gap and fostering a new intergenerational contract.
The real significance of this approach is the equal value placed on the “inclusive” and the “capitalism” – it is about business acting in a way that is both economically and socially useful. This is an area where the UK can take a global lead. Growing numbers of British companies are responding to the challenge from their customers, and the wider public, to demonstrate that business is doing its bit to help tackle some of the big issues society faces, whether it is inequality or climate change. And business needs to show that this is a genuine, meaningful response to the problems we face – not a handful of token social initiatives tacked on to their annual report.
It’s time to look beyond political, geographic, generational and economic divides. Capitalism and social progress aren’t opposing forces. Quite the opposite. Inclusive capitalism can change all of our communities for the better while enhancing our business performance. All it takes is a longerterm view, a more inclusive attitude and for everyone to get on board.
‘It is far more powerful when money is made while good is being done’