Former Bank of England Governor Mark Carney recently spoke at the annual BBC Reith Lectures, entitled How We Get What We Value (https://www.bbc.co.uk/programmes/articles/43GjCh72bxWVSqSB84ZDJw0/reith-lectures-2020-how-we-get-what-we-value)*.
*By clicking this external link you are departing from the Scott Fyffe Wealth Management Website, neither Scott Fyffe Wealth Management Ltd nor Lyncombe Consultants Ltd accept any responsibility for the accuracy of the information contained within the linked site.
He spoke passionately about how value has been commoditised, principally determined by market price rather than collective expectation as it had in the past. This has led to a concentration on the present and the drive for short term financial returns. The present has a price, one we now all recognise and understand.
The horizon of the future has been retreating, full of significant challenges for us all such as climate change, the widening gap between the wealthiest and the poorest and the challenges of technology and automisation to labour. The problem became that these future challenges had no price and therefore no value, hindering our engagement through financial markets.
This seems a touch esoteric perhaps, but what we have seen in the last decade or so is a drive to price these challenges, to give them value. ESG investment strategies are leading the financial industry in enhancing this reappraisal of value, assessing performance principally against the UN’s 17 Sustainable Development Goals. The UN has identified 17 key issues, as ‘a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030.’ (Sustainable Development Goals | UNDP) These are issue such as:
This holistic assessment allows the very best ESG investment teams to identify the disruptive innovators who are seeking profit with purpose. These companies are identifying the challenges of the future and generating growth by creating solutions to address these global challenges. Not only does this create funds which have enhanced performance and returns, but builds funds with a future resilience built as they are on the value investments of the future.
By investing in these innovative disruptors your investment will be contributing to this renewal of value, tackling the challenges of tomorrow today.
