“Values-based investing?” I interrupted the chairman of the insignificantly-sized investment company Kermitted Asset Management mid-flow when we caught up the other day. “What on earth is that?” “Clearly, it’s when you invest according to your own particular values,” he replied primly. “The look on your face suggests you disapprove – though I’ve never had you down as someone who was against consumer choice.”
“I’m not,” I replied. “But of all the things ESG investing is in dire need of right now – a common vocabulary, reliable benchmarking, evidence of words turning into action – I’m pretty sure ‘yet another name for it’ shouldn’t be on the list. Referring you back to last month’s conversation, the People’s Front of Judea has just split again.”
“If you don’t make peace with the idea ESG investing still has some fragmenting to do before it reaches maturity, then our conversations are going to become wearyingly repetitive,” the chairman warned. “Plus, I think you are missing the bigger picture of values-based investing.” “A hundred different portfolios for a hundred different investors?” I suggested.
“So you haven’t missed the bigger picture,” the chairman conceded. “But can you grasp the charging potential for a platform where punters get to build their own portfolios from lots of tiny funds reflecting an individual value each? Not to mention a whole new set of template products where, instead of ‘Active’, ‘Balanced’ and ‘Cautious’, say, you have ‘Puritan’, ‘Dinner-party conscience’ and ‘Absolutely no values at all’?
“Seriously – Kermitted is going to rewrite the investment handbook.” “Again?” I sighed. “And after how it worked out all the other times? Still, if we could back away from the quite scary Ghost of ESG Future and cosy up to the vaguer, less threatening Ghost of ESG Present, I’ve been hunting for ways responsible fund managers have been walking the walk rather than talking the talk. Do you have any concrete examples from Kermitted?”
“I can offer you one from just this week,” replied the chairman proudly. “You know the little pub across from our office, which our team had grown quite fond of before everything locked down last year?” “You mean the one they call Meeting Room B; the one Mrs Chairman now telephones before trying the Kermitted switchboard; and indeed the one we are sitting in at this very moment?” I clarified.
“The same,” nodded the chairman. “Well, it recently occurred to me lockdown had prevented us spending comfortably north of a hundred grand in here so I persuaded the bean-counters to sign-off a £10,000 cheque, which we have presented to the landlord to help his cashflow, pay his staff and so on – and which we will drink back on account over the coming months – maybe sooner. Seriously, how much more ‘S’ could we be?”
“That is one brilliant and creative idea,” I said in admiration. “I sincerely hope other businesses follow your example. Still, it is not quite what I meant when I asked how you were walking the walk. Let me give you a ‘for instance’ – the other day I read an interesting piece about how housebuilders have huge banks of land with planning permission but are keeping their margins up by controlling how much they use to, well, build houses.
“Now, given how that has to be hurting buyers – especially of the first-time variety – one might imagine a responsible sort of an investor would want to engage and ask them to rethink their policy.” “You might indeed,” said the chairman, puffing out his cheeks. “Then again, one might imagine a fund manager shying away from a course of action that risked blowing a big old hole in the profits of a business they own.”
“Even a responsible fund manager?” I wondered. “Ethically speaking, we are in a bit of a grey area here,” said the chairman. “Greyish-green, even – or ‘Green Smoke’, if you know your Farrow & Ball.” “If you think about it, at a stroke it could solve the government’s headache with electors’ unease over the proposed new planning laws,” I prompted. “Boris would be ever so grateful.” “Housebuilders taking advantage of the Great British Public, you say,” exclaimed the chairman suddenly, jumping to his feet. “Not with my values they don’t.”
