George Latham, managing partner at sustainable investor WHEB Asset Management, reflects on the need for radical change and long-term, holistic thinking in finance
At tomorrow's BusinessGreen Leaders Summit BusinessGreen will publish a new report, in association with Greenhouse PR, featuring interviews with some of the leading green radicals who are working to reshape the economy and our collective response to the climate crisis.
Following last year's 'Meet the Disruptors' report and 2017's 'Secrets of the Pioneers' report, this year's series of interviews features some of the leading green business figures and activists who have embraced a new form of green radicalism in a bid to engineer a step change in the pace of UK decarbonisation.
As a preview to the report we are today publishing our exclusive interview with George Latham, managing partner at sustainable asset manager WHEB Asset Management.
George has overall responsibility for managing the business and co-chairs the Investment and Risk Committee at WHEB Asset Management, a boutique sustainable investor founded in 2009 which today manages £400m in listed equities focused on the transition to a sustainable, low-carbon economy.
Before joining the B-Corp firm in 2012, he led the award-winning socially responsible investment team at Henderson Global Investors, and also designed Threadneedle Asset Management sustainable and responsible investment strategy in the 1990s.
BusinessGreen: Do you think it is important that we respond to the climate emergency?
Absolutely. The climate emergency needs a response from all quarters of society, and particularly from the business community. Private enterprise is answerable for much of today's emissions and has a responsibility to decarbonise. Huge amounts of private capital will need to be invested to find and develop the solutions to the sustainability challenges we face. So the climate emergency is both a responsibility and an opportunity for business.
Why do you think we need green radicals at a time like this?
Particularly in the financial services industry, so much binds and incentivises people to maintain the status quo and we need change. We operate in an industry which has a herd mentality coupled with an innate tendency towards conservatism. It takes radical thinking and action to break out from the business as usual trajectory.
How would you define a green radical?
Someone who is prepared to break away from the norm in order to develop solutions to the environmental emergency.
Do we need to redefine how markets operate to tackle the climate emergency?
Yes. We need to embed systemic thinking and find a way to break the short-term mentality of markets and unpriced external costs. Far too many externalities go un-costed. We should find ways to measure and price the costs that companies and products have on the environment and society, so that they are properly measured and paid for, and external benefits are accounted for so that they too are fully valued.
We also need to identify the incentives in the value chain which drive the behaviours and actions that lead to bad outcomes, and incentivise positive outcomes instead.
Do you regard yourself/your company as a green radical?
We would like to think so. When we developed our investment strategy in the early 2000's it was certainly seen as radical. Now everyone is trying to copy us.
How has your organisation taken a radical approach to environmental action?
We are building WHEB around an investment strategy focused on positive impact. And we've tried to build our business in a way which is consistent with that. We are proud to be a certified B Corporation, but we've still got lots to learn and much more to do. One of the great things about the B Corporation movement is the collaboration between the community to help each other and to learn from each other.
How do you build the business case for radical change?
It requires longer term, more holistic and systemic thinking. We need to think through the cascading impacts of our actions. Ultimately, we must demonstrate that it can be successful and profitable so we can convince others.
What's the biggest barrier to change?
Short term time horizons.
How do you inspire others to radicalism?
We need leaders and great communicators. But this movement is reaching a tipping point. It used to require bravery to stand up and be counted, and now it will rapidly become riskier not to be a part of it.
We need to make complex and seemingly remote investment concepts positive and relevant to people's everyday lives. In a small way WHEB's impact calculator can do this, allowing individuals to think about real world outcomes linked to the way in which their savings and investments are managed.
What's the secret to taking a radical idea mainstream?
It must be about communication. Being able to explain new concepts in a way that consumers can understand. The green industry is just beginning to work this out. For too long we haven't found ways to make our messages understood in a way which is simple, engaging and attractive.
Which area of the economy do you think is most in need of radical change?
The finance industry. When my colleague, Seb Beloe, first joined asset management having previously been a sustainability consultant, he was shocked by how far behind the investment industry was compared to the real economy. That was 10 years ago, and although finance is now finally starting to catch on, too much of it is still skin deep, and the gap with the rest of the economy has probably only widened. We really need capital markets to work properly if we are to deliver the sustainability solutions we need.
What's the most radical thing you have ever done?
This question makes me feel like a total square. For the first 10 years or so, WHEB's investment strategy was seen as being quite radical and now other large investors are looking to imitate it. Some of the things we've done to embed transparency around our investments has been described as radically transparent - for example, publishing the minutes of our independent investment advisory committee meetings. More recently, in April this year we thought we were being quite radical when we joined a group of businesses which wrote a letter to The Times supporting the objectives of Extinction Rebellion, only for the CBI to come out in support as well the next day.
Who are the other green radicals that inspire you today and have in the past?
Jeremy Grantham, an investment industry legend who speaks with such credibility about the crisis we face. Mark Campanale and Nick Robins, former colleagues who are prepared to be disruptive and for the impact that the Carbon Tracker initiative, which they set up, has had.
B-Corporation and Transition Towns, for having such a positive vision and building coalitions of the willing into movements. John Elkington for being one of the first to see how commerce can be part of the solution. The late Tessa Tennant, for founding so many of the initiatives which make up the sustainable finance movement. Clare Brook, for founding WHEB Asset Management, and today's WHEB team for having the resilience and energy to build the business.
What one radical thing would you like people to do right now to change our future?
Incorporate full impact measurement into every investment decision, both within companies and across financial markets.
This Q&A is one of a series set to be included in the forthcoming report 'Meet the Green Radicals', produced in association with Greenhouse PR.