Yesterday we pointed to the fact that there was relatively little analysis and self-criticism coming out of the ESG/SRI community or the broader financial community with regard to the current crisis. So it was refreshing to see an article from the WBCSD President Bjorn Stigson, in today’s FT Sustainable Business section, on the parallels between the climate change negotiations and the financial crisis.
Stigson sees the current financial crisis “as the result of unsustainable business models in the finance sector.” In his opinion, “the finance industry has lagged behind in addressing sustainability issues” and “the current financial crisis is shedding light on the flaws of the current business models in the finance sector and the enormous extend to which public trust has been damaged”.
He goes on to say that “to regain this trust, the finance industry will need to revisit its role in society and deliver updated business models that consider current societal expectations of open and transparents businesses that demonstrably deliver value to society”.
Whilst some of this rings true, it fails to capture the complexity of the finance industry and financial services. Do fund managers share the same responsibility as hedge funds, investment bankers, traders, mortgage lenders or credit rating agencies? As Hendrik du Troit, CEO of Investec Asset Management, pointed out recently in the FT “the attack on Wall Street is indiscriminate”. Yet he also admits that “we’ve been part of pushing banks to make more profits instead of making sure they were building more stable businesses.”
So there is a need for a little more soul searching in the industry. And this also present a significant opportunity for the SRI/ESG community to assess the robustness of their research model and investment philosophy. Surely there are some lessons to be learned for all of us involved.
here is a very interesting video interview with George Soros giving his view on the financial crisis : http://www.pbs.org/moyers/journal/10102008/watch.html