Long-Term Matters: Followers will make the money flow

Ed Waitzer - Publications

Long-Term Matters: Followers will make the money flow

JANUARY 2016 [Investment & Pensions Europe MAGAZINE]


“Investment is the most often repeated word in IMF meetings, UN meetings, [the] G20 meeting, IIF meetings,” Angel Gurria, secretary general of the OECD said at the organisation’s recent long-term investing conference in Paris. There is an “enormous responsibility on your shoulders,” he added. “Everyone is asking, why the Dickens don’t you deliver the money?”

Gurria may be an unusually jocular international diplomat but investors are certainly at the centre of a pincer movement. On one flank are governments and intergovernmental bodies. On the other are academics, think tanks, pressure groups, litigators and billionaires. Investors should not ignore where these strange bedfellows are heading.

In the aftermath of the financial crisis, the G20 focused on the banks. Now, investors are in the regulatory cross-hairs. In 2013 the G20 endorsed its high-level principles on long-term investing by institutional investors and asked the OECD to focus on investor transparency. The G20 also recommended that the Financial Stability Board (FSB) produce a report on climate risk, which helped trigger the comments by the governor of the Bank of England, Mark Carney, on climate action, in his position as FSB chair.

There is now widespread awareness that infrastructure and other long-term investment is critical for a successful transition to a low-carbon economy. The Framework Convention on Climate Change has asked the OECD to review how fiduciary duty is interpreted. China has made clear it wants to make long-term finance the issue of its presidency of the OECD in 2016. And in the US, the Department of Labor has reversed earlier guidance and says trustees “should” take ESG into account.

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