Good work Gov!

With Good Money Week about to start now seems like a fitting time to mention some of the positive work taking place in government and beyond that are likely to drive progress in SRI  – sustainable, responsible and ethical investment – over the coming year.

(In the interest of sanity I will stay away from commenting on wider political events – as gossip worthy as they might be!)

Recent reviews, consultations and rule changes vary significantly both in terms of their ‘audiences’ and intended ‘outcomes’ – however for the individual investor or pension scheme member I would suggest the details matter rather less than the overall direction of travel.

But first some background. With fast approaching 30 years of retail investment experience under my belt I should start by admitting that my inclination is normally to allow market forces prevail…

However, over recent years it has become painfully clear that constructive, forward looking and intelligent government and regulatory regimes are crucial – both in terms of encouraging things that are ‘socially useful’ and to maintain the ‘market growth’ that investors rely on to save for a rainy day, pay their pensions etc.

The financial crisis of ten years ago sadly illustrated this – as does the (snails) speed at which we have collectively ‘addressed’ climate change  (remember the Kyoto Protocol – in 1997?).

It is in this context that I have taken much time out over recent months to contribute to relevant consultations – both on behalf of sriServices and by chipping in to other organisations responses.

In brief, what I believe we have started to see over the last year or so is governments, professional bodies and others in positions of influence starting to commit resource to understand and encourage the financial markets to contribute more positively towards social, ethical and environmental challenges.

The list below gives cause for optimism…

• FSB Task Force on Climate Related Disclosure (TCFD) –  chaired by Governor of the Bank of England – has set out new guidance for reporting climate risk to investors.  (Further information and links here.) (The TCFD was recently endorsed by the UK Government).
• EU established high level expert group (HLEG) to consult on the expansion of Green Finance (to include fund labelling) – an overview of my response to this ongoing consultation is here.
• PRIIPS consultation on ‘Environmental and Social’ investments. February 2017
• IFoA warns Actuaries of Climate Risk – May 2017, (my recent article  in Investment Life and Pension Moneyfacts explains further.)
• The Law Commission has been working on a Review of Pensions and Social Investment (Information and links here.)
• Government (BEIS) launched a plan to accelerate growth of ‘Green Finance’ on 18 September – including a green taskforce. (Link here)
• The UK’s Office for Civil Society is in the process of commissioning research into how to expand Social Impact Investment.  (October 2017)
• The UK government has announced new corporate governance reforms to improve accountability (link here.)
• The Pensions Regulator clarified that pensions can and should (to précis) consider ‘ethical’ issues. (See here).  In September 2017 UKSIF convened a letter signed by leading consultants in support TPR guidance to ‘consider environmental and social issues’.

My hope is that the UK retail financial services sector grasps the opportunities these present with both hands… the public mood is clearly shifting.  So should we.

Financial advisers now have both the tools and the incentive to change the way they operate – and Good Money Week will shift this area up the PR agenda.

As usual at this time of year, as one of its proud founders, I am looking forward to a lively Good Money Week – #GMW17 – which starts this Sunday (8 October).

You can read about What’s On here.

Our fund information tool Fund EcoMarket has been designed to support the integration of issues of this kind into the financial advice process. Thanks to our sponsors it continues to expand and improve – and remains free to use! 

Our ‘Good Money Week’ EVENT is being held on 19 October at the Museum of London.  You can read about it and (IFAs /industry professionals only) sign up here.

Read my related Parmenion article here.

Published 6 October 2017