Magazine Issues » January-February 2020

Opinion: New decade, old problems

Fiona_RintoulA new decade has dawned. The roaring twenties are upon us.

The more New Years you see in, the harder it gets to access that bouncy feeling of renewal that biting into a whole new 12 months can sometimes bring. This year, it felt harder than ever.

Even after plunging into the icy Atlantic on New Year’s Day, I struggled to feel invigorated. No sooner had the clock struck midnight on December 31, it seemed, than all the old years showed their ugly faces again. Brexit. The trade war. Populism.

They felt worse than previously. Also, curiously, less relevant.

Perhaps a tipping point has been reached where it no longer feels possible to avert these forces. They must run their course, and we shall see where we are at the end of it. Brexit, whatever it shall ultimately mean (and that remains unclear) shall surely leave the UK a very altered place, with as-yet-unknown consequences for its investment industry. Already, New York has knocked London off its top spot as a global financial centre.

There has been progress in US-China trade relations, but the sabre-rattling is surely set to continue. It’s not really about trade, but about who is the biggest, baddest funkster on the block. This world just isn’t big enough for the US and a resurgent China.

But these geopolitical tensions fade into something like insignificance alongside other concerns, such as the potentially imminent immolation of our planet. In the first month of 2020, manmade disasters of the political sort jostled for space on the news agenda with what insurance companies like to call acts of God. Infernos in Australia. The worsening coronavirus epidemic in China. These are proper problems.

It is pretty clear that the Australian bushfires ultimately are not acts of God, but of man. Climate change denial is becoming a sport for fools, and as 2020 got underway, asset managers were focusing more than ever on this disaster, which can (perhaps) be averted, rather than political calamities they can do nothing about. BlackRock, set the tone when it started the year by joining Climate Action 100+, an investor initiative to ensure the world’s largest corporate greenhouse gas emitters act on climate change. There followed two letters from the asset management behemoth to clients, setting out its new approach.

For some, this is not enough. They are calling for BlackRock to use its proxy voting powers on climate change-related resolutions more effectively as well. But it is at least something.

Meanwhile, a consortium of Axa Investment Managers, BNP Paribas Asset Management, Mirova and Sycamore Asset Management is looking for a partner to develop a tool to measure the impact of investments on biodiversity. This sounds kind of technical but could be an important development.

We have all taken our natural capital for granted, our capitalist economies having largely ignored it because you can only put a price on its exploitation, not on its preservation. Pricing natural capital probably isn’t the solution – it is priceless – but a tool such as that envisaged by the consortium may help to fix some notion of its value in investors’ minds. That would be breakthrough.

A decade ago, I attended a conference on natural capital in Edinburgh. Just one asset management company, Alliance Trust, was present. Were that conference to be recapitulated, we might hope that every major asset manager would be there.

So, perhaps the roaring twenties could be the decade when we wake up to the existential value of the natural world. That sounds like a better idea than revisiting the stain of populism.

Fiona Rintoul is editor-at-large at Funds Europe

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