Responsible investing has been around for a long time. However, I have seen it move into the mainstream in my role as an Investment Consultant for Invesco Limited. This blog is about my experience witnessing the transition at an industry level, and the opportunity this created for me to develop my own responsible investment skills.
One of my favourite aspects of my role is staying abreast of economic and market developments and scanning the horizon for opportunities and risks. It soon became apparent that climate change was the defining risk of our time, and that sustainability was the key tool to manage this risk. At the beginning, I found it easy to be overwhelmed by the scale of the challenge; recognising I had a knowledge gap in the area was a key step for me to address it.
Responsible Investment Going Mainstream at an Industry Level
Climate Change and Sustainability were critical topics for the industry long before I became an Investment Consultant. When I took up my new role four years ago, responsible investment solutions were available mainly as a specialised investment approach for charitable and religious organisations. I am fortunate to have witnessed momentum grow on this approach, to the extent it is now a cornerstone consideration for all organisations.
Greta Thunberg’s speech in 2019 and the global climate protests that followed won the hearts and minds across the world. Given the investment industry’s primary role is to manage money on behalf of others, this was a critical development, as responsible investing would not happen without investor demand. Pleasingly, many investment managers responded to this demand, and promptly: they launched new funds and fine-tuned investment strategies on existing funds.
I also saw action taken at a political level. Notably, the EU set a strategic objective to put sustainability at the centre of the financial system and the regulators provided support with a range of sustainability related regulations. Without going into the details of these regulations, they provide a foundation for responsible investment to move into the mainstream and to thrive.
Whilst acknowledging this progress, much work remains to be done. Many investors are at the early stages of reviewing and introducing responsible investment in a manner that fits with their existing investment principles. The impact from new regulations is rarely felt overnight. There are practical limitations on the speed at which investment managers can make changes at a wholesale level.
My Personal Development of Responsible Investment Skills
As I started my new role, I mainly sought information that addressed my immediate needs, such as getting up to speed with new regulations. As I witnessed the scale of the changes taking place at an industry level, I became curious and wanted to learn more. I watched webinars, subscribed to sustainability topics on my Financial Times feed, and arranged updates from leaders in the industry.
My greatest learning experience came on the job. I was involved in a range of responsible investment projects, and it became a major topic at almost all of my clients’ trustee meetings. My learning grew exponentially.
I have seen how the transition has created more opportunities throughout the investment industry, with many investment managers creating new roles for responsible investment experts. I believe actuaries have the skillset for many of these new green jobs: we possess the ability to analyse complex risks over the long term.
Recognising the importance of the topic, I set a goal to build on this knowledge in 2021.
Firstly, I joined the Sustainability and Climate Change Steering Group (SCCSG) in December 2020. From my short tenure, I have been really impressed with the work the SCCSG is carrying out. I can see the Society are dedicated in helping members upskill, with a goal of making it easier and more time efficient. It has been great to see the website go live: it will help disseminate work from this group throughout the Society.
Secondly, I recently took advantage of Sustainable Finance Skillnet funding to register for a responsible investing course. I am already seeing how an ESG course can provide more structure to my learning experience (although I do not want to comment any further until I complete it!). The Society will keep members up to date on any funding available on courses here.
My Final thoughts
The transition I have witnessed over the last four years is very positive. I feel fortunate to have seen responsible investing move into the mainstream, and to have received good professional support from Invesco, and professional bodies like the Society.
We are at the early stages of this green journey and we need to set ambitious targets. However, Rome was not built in a day: it will likely take time to build the green future we seek, from electrifying the motor industry to building wind turbines and decarbonising other industries.
Neil O’Reilly
Neil is a member of the Society’s Sustainability and Climate Change Steering Group
Published October 2021
The views of this article do not necessarily reflect the views of the Society of Actuaries in Ireland, the Sustainability and Climate Change Steering Group, or the author’s employer.