This session looked at the expected sustainability policies in 2021 and the important role of a price on carbon as part of that. The winner of the Nobel Prize for his work on “integrating climate change into long-run macroeconomic analysis” outlined the best approach, as well as the idea of an international climate compact to bring countries and policies together.

View Professor Nordhaus’ presentation slides here

Speaker

William Nordhaus was born in Albuquerque, New Mexico and completed his undergraduate work at Yale University in 1963 and received his Ph.D. in Economics in 1967 from the Massachusetts Institute of Technology, Cambridge, USA. He has been on the faculty of Yale University since 1967 and has been Full Professor of Economics since 1973 and also is Professor in Yale’s School of Forestry and Environmental Studies. Professor Nordhaus lives in downtown New Haven with his wife Barbara, who works at the Yale Child Study Center. He won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 for integrating climate change into long-run macroeconomic analysis.
He is a member of the National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. He is on the research staff of the National Bureau of Economic Research and has been a member and senior advisor of the Brookings Panel on Economic Activity, Washington, D.C. since 1972. Professor Nordhaus is current or past editor of several scientific journals and has served on the executive committees of the American Economic Association and the Eastern Economic Association. He serves on the Congressional Budget Office Panel of Economic Experts and was the first chair of the advisory committee for the Bureau of Economic Analysis. He was the first chair of the newly formed American Economic Association Committee on Federal Statistics. In 2004, he was awarded the prize of “Distinguished Fellow” by the American Economic Association.
From 1977 to 1979, he was a Member of the President’s Council of Economic Advisers. From 1986 to 1988, he served as the Provost of Yale University. He has served on several committees of the National Academy of Sciences including the committee on Nuclear and Alternative Energy Systems, the panel on Policy Implications of Greenhouse Warming, the committee on National Statistics, the committee on Data and Research on Illegal Drugs, and the committee on the Implications for Science and Society of Abrupt Climate Change. He recently chaired a panel of the National Academy of Sciences which produced a report, Nature’s Numbers, that recommended approaches to integrate environmental and other non-market activity into the national economic accounts. More recently, he has directed the Yale Project on Non-Market Accounting, supported by the Glaser Foundation.
He is the author of many books, among them Invention, Growth and Welfare, Is Growth Obsolete?, The Efficient Use of Energy Resources, Reforming Federal Regulation, Managing the Global Commons, Warming the World, and (joint with Paul Samuelson) the classic textbook, Economics, whose nineteenth edition was published in 2009. His research has focused on economic growth and natural resources, the economics of climate change, as well as the resource constraints on economic growth. Since the 1970s, he has developed economic approaches to global warming, including the construction of integrated economic and scientific models (the DICE and RICE models) to determine the efficient path for coping with climate change, with the latest vintage, DICE-2007, published in A Question of Balance (Yale University Press, 2008). Professor Nordhaus has also studied wage and price behaviour, health economics, augmented national accounting, the political business cycle, productivity, and the “new economy.” His 1996 study of the economic history of lighting back to Babylonian times found that the measurement of long-term economic growth has been significantly underestimated. He returned to Mesopotamian economics with a study, published in 2002 before the war, of the costs of the U.S. war in Iraq, projecting a cost as high as $2 trillion. Recently, he has undertaken the “G-Econ project,” which provides the first comprehensive measures of economic activity at a geophysical scale.

Moderator

White is responsible for the content across all Conexus Financial’s institutional media and events. She is responsible for directing the bi-annual Fiduciary Investors Symposium which challenges global investors on investment best practice and aims to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. She is the editor of conexust1f.flywheelstaging.com, the online news and analysis site for the world’s largest institutional investors. White has been an investment journalist for more than 20 years and has edited industry journals including Investment & Technology, Investor Weekly and MasterFunds Quarterly. She was previously editorial director of InvestorInfo and has worked as a freelance journalist for the Australian Financial Review, CFO, Asset and Asia Asset Management. She has a Bachelor of Economics from Sydney University and a Master of Arts in Journalism from the University of Technology, Sydney. She was previously a columnist for the Canadian publication, Corporate Knights, which is distributed by the Globe and Mail and The Washington Post. White is currently a fellow in the Finance Leaders Fellowship at the Aspen Institute. The two-year program consists of 22 fellows and seeks to develop the next generation of responsible, community-spirited leaders in the global finance industry.

Key takeaways

  • Since 1900, CO2 emissions have increased 2.8 per cent per year. If this path continues, we will get nowhere near our global targets.
  • Unregulated markets have failed because CO2 is priced at zero which is wrong. To increase the price of carbon, we could introduce carbon taxes. Carbon taxes would be a better goal that carbon emissions.
  • History is littered with failings in international negotiation, so we must be patient and not fall victim to short-term thinking.Nonetheless, the path we have been going down for international negotiations is a dead end. We are on square zero. We need to change the goal and change the vision. Current agreements have no sticks and few carrots. We need more of both. We need a set of climate treaties that provide benefits for participation and costs for non-participation. Roosevelt said speak softly and carry a large stick. In contrast, we are speaking loudly and carrying no stick at all.
  • Research from McKinsey shows that CO2 emissions can be reduced by between 10 and 30 per cent for nearly no cost. There are many similar ‘no regrets’ actions that we could all take to improve the status quo.
  • We need to reconceptualise how we deal with climate change on a global level. This is a collective action problem. We need to convince our governments and commercial partners to do more.

Poll results

Would a price on carbon accelerate your investments in the green economy?

This session looked at green stimulus measures and the ingredients of success that will generate economic growth, create jobs and bring about environmental benefits. It studied the lessons of the GFC and the opportunity for greening the recovery from the COVID-19 crisis.

View Shardul’s presentation slides here

Speaker

Shardul Agrawala is head of the environment and economy integration division at the OECD Environment Directorate. He took up duties in July 2013. In this capacity, Agrawala leads the directorate’s work on economic-environmental modelling, empirical analysis of environmental policies, trade and environment, and on resource productivity and waste. At the OECD since 2002, he has previously served as senior advisor to the OECD secretary general, co-ordinator of the OECD-wide initiative on New Approaches to Economic Challenges, acting head of the Climate Change Biodiversity and Development Division, and senior economist, Climate Change. Agrawala has published extensively on climate change. He has led teams of international experts for chapters of the fourth and fifth Assessment Reports of the Intergovernmental Panel on Climate Change (IPCC). He received his PhD from Princeton University and has previously held research positions at Princeton University, Harvard University, Columbia University and at the International Institute of Applied Systems Analysis (IIASA).

Moderator

Tate has been an investment industry media publisher and conference producer since 1996. In his media career, Tate has launched and overseen dozens of print and
electronic publications. He is the chief executive and major shareholder of Conexus Financial, which was formed in 2005, and is headquartered in Sydney, Australia.
The company stages more than 20 conferences and events each year –
in cities which have included London, New York, San Francisco, Los Angeles, Amsterdam, Beijing, Sydney and Melbourne – and publishes three media brands,
including the global website and strategy newsletter for global
institutional investors conexust1f.flywheelstaging.com. One of the company’s signature events is the bi-annual Fiduciary Investors Symposium. Conexus Financial’s
events aim to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable
retirement incomes. Tate served for seven years on the board of Australia’s most high profile homeless charity, The Wayside Chapel; and he has underwritten the
welfare of 60,000 people in 28 villages throughout Uganda via The Hunger Project.

Related reading

Building back better – A sustainable resilient recovery after COVID-19|
OECD environment working paper #164

Key takeaways

  • As of early June, almost USD$10 trillion had been committed by governments worldwide to combat COVID-19 in the form of loans, stimulus and bailouts. This figure included up to 1 trillion in green related packages.
  • Our preliminary assessment is that the stimulus response so far has been more brown than green and that should be a big concern to all of us.
  • Large, timely and well-designed green stimulus can generate economic growth.
  • To build back greener, we should resist the urge to cut and paste the response measures put in place during the Global Financial Crisis.
  • More work is needed to ensure the ESG ratings are fit for purpose. We need to make sure the E component continues to get adequate attention and adequate weight.
  • A more precise common understanding of the criteria for ‘green’ and ‘sustainable’ would help facilitate a green recovery.

September 2020 marks the fifth anniversary of the Sustainable Development Goals which have become a roadmap for investors to engage in the bold ambition of transforming the world while leaving no one behind. This session looked at the ambition of the SDGs and spurs investors into action.

Speaker

Gilbert Van Hassel has been chief executive and chair of the executive committee of Robeco since September 2016.
He has over 30 years’ experience in the financial services industry, mainly in asset and wealth management, with broad experience in Europe, Asia and the US. Until 2013 he was global CEO ING Investment Management and member of the board Insurance and Asset Management of ING. Before joining ING in 2007, he worked for JP Morgan where he held various executive positions in Europe, Asia and the US.
Van Hassel has a Bachelor’s degree in Applied Economics from the University of Antwerp St Ignatius (Belgium), an MBA, with a major in International Finance from the Catholic University of Louvain (Belgium) and a Master of Science in Finance from Purdue University (US).

Moderator

White is responsible for the content across all Conexus Financial’s institutional media and events. She is responsible for directing the bi-annual Fiduciary Investors Symposium which challenges global investors on investment best practice and aims to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. She is the editor of conexust1f.flywheelstaging.com, the online news and analysis site for the world’s largest institutional investors. White has been an investment journalist for more than 20 years and has edited industry journals including Investment & Technology, Investor Weekly and MasterFunds Quarterly. She was previously editorial director of InvestorInfo and has worked as a freelance journalist for the Australian Financial Review, CFO, Asset and Asia Asset Management. She has a Bachelor of Economics from Sydney University and a Master of Arts in Journalism from the University of Technology, Sydney. She was previously a columnist for the Canadian publication, Corporate Knights, which is distributed by the Globe and Mail and The Washington Post. White is currently a fellow in the Finance Leaders Fellowship at the Aspen Institute. The two-year program consists of 22 fellows and seeks to develop the next generation of responsible, community-spirited leaders in the global finance industry.

Related reading

Appointing directors of climate change
Linking economic activities with the SDGs
Navigating the ESG labyrinth
Shell escalates net-zero goal on carbon emissions
SIX magazine – So you think sustainable investing is easy? Think again.
Sustainable Investing Expertise
The big book of SI
The link between ESG and performance: SDG Credits stands the test

Key takeaways

  • All of our planetary crises are inter-dependent.
  • We need to take bigger and bolder actions towards a more sustainable future.
  • The SDGs provide the perfect all-encompassing blueprint for economic development.
  • The SDGs do not discriminate. They apply to all countries equally regardless of wealth.
  • USD$2.5 trillion need to be invested into the SDGs each year if they are to be achieved.
  • Urgent action is required – 1 million species are currently threatened by extinction.
  • Let us not be pessimistic. There are many silver linings, for example 20 per cent of all the world’s energy production comes from renewables, 70 per cent of the world’s ocean is now protected and 70 per cent of corporations have now placed SDGs into their goals and communications. I am optimistic about the potential for a sustainable recovery and a sustainable future.
  • We need more legislation, not less.
  • ESG and SDGs are complex, so therefore we need to ensure we understand them and their interconnectivity better, not least because solving one could negatively impact another.
  • As investors, we need to make our money speak through active engagement to ensure companies exhibit the right behaviours. Engagement requires care, consideration and collaboration.
  • The biggest challenge for investors is the requirement for a material shift in mindset – wellbeing maximisation must be considered alongside wealth maximisation.
  • We don’t have the luxury of picking and choosing which SDGs to tackle. We must solve them all.
  • Over the past 5 years we have made a lot of progress but we need a lot more action. We have to walk the talk. Each individual investor needs to set their own goals and contribute to a better world.

Poll results

Do you think the COVID-19 crisis has accelerated the need to address the SDGs?

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Businesses have a huge role to play in containing global environmental risks. And because they have great leverage on companies, so too do investors.  The idea of “ethical” or “green” investing has gained ground in recent years, but it is hampered by a lack of quantitative definitions.

We propose that the Planetary Boundaries framework, devised by Rockstrom et al. in 2009, is a good starting point.

The framework takes nine dimensions of planetary health – measurable criteria such as concentrations of greenhouse gases, or biodiversity loss. It then attempts to establish how far each of these can change without risk of provoking sudden, irreversible damage to the environment. We have also developed a way to apply the Planetary Boundary framework to investment decisions; specifically, we quantify the environmental impact for every USD1 million of annual revenue businesses generate.

If a company’s activities lie within the safe levels for each of the nine dimensions over the whole of the product value chain, then the firm (and potentially its stocks and bonds) can be viewed as being environmentally sustainable; if not, then the business is likely to be speeding up global environmental degradation.

The nine dimensions of the Planetary Boundaries framework are: climate change, biodiversity loss; biochemical flows; chemical pollution; land-system change; freshwater use; ocean acidification; ozone depletion and atmospheric aerosol loading.
We will examine each of them in turn, suggesting changes that we think are necessary to make the metrics more relevant to the investment process.

Investment is often focused on short-term metrics, while planetary health demands a long-term horizon. We have chosen short-term, local metrics that have long-term, globally systemic consequences. But we acknowledge that this also implies an assumption that incremental changes are sufficient to maintain planetary health.

Click here to read the full paper.

A cohort of ESG risks like climate change, lost biodiversity and poor working conditions have pushed sustainability centre stage, a roundtable of industry-wide experts who connected via video conference recently discussed.

In a passionate and detailed discussion that spanned solutions, to investors’ role in driving policy and the rise of impact investment, the tragic events of recent months have one silver lining.

“Sustainability has never been so popular,” said Fiona Reynolds, chief executive of London-based Principles of Responsible Investment. “It has taken a long time to be an overnight sensation.”

Maria Elena Drew, director of research of responsible investment at T Rowe Price (pictured), one of 13 roundtable participants, also calling in from London, explained how the pandemic has driven the investment firm’s conversations with investee companies in recent months.

“We have had a lot of discussions about COVID-19 with our companies. Obviously, it’s a key topic for any company we are invested in right now,” Drew said.

T Rowe Price has developed its own proprietary model which integrates the social, ethical and environmental profile of companies into its research platform and flags any controversies that companies may be involved in.

Employee safety and treatment is one of the categories T. Rowe’s proprietary model evaluates. It can help the investment firm’s portfolio managers identify potential employee related risks, which can be significant and financially material, said Drew, who explained how the pandemic has exposed social risks around the lack of sick pay for employees and catalysed inequality issues, particularly around race.

“We have built a framework that flags any controversies. Over the last couple of years our team would flag controversies that companies have had with employees. Some analysts would wonder how this was that financially material to the investment case but when COVID-19 happened they started to understand the value of that,” Drew said.

“It gives you a really good insight not just into how they deal with employees but how they run the whole business,” she continued. “If that is how you are willing to treat your employees where else are you taking shortcuts?”

Another outcome from the COVID 19 has been for a lot of inequality issues to be catalysed, particularly in the US around racial divisions, the group discussed.

“This is an area we have been quite active in our engagement with companies. We have a lot of growth funds and invest heavily in tech companies and we’ve been concerned about the development process of AI technologies and whether they are really reflecting all of society or embedding biases,” Drew said.

Shifting the dial

The roundtable discussion focused on the role of investors in shifting the dial in sustainability issues, and the areas where investors should use their influence is shaping ongoing policy.

The pandemic has underscored the potential of governments to change the policy landscape, the group reflected. From lockdowns to massive stimulus packages, the policy response has ushered in radical measures with a wide-ranging impact for markets and industries.

“If push comes to shove, governments can do extreme things,” Tim Conly, head of responsible investment at the Australian investment contulting firm JANA, noted.

In a call for more investor action to influence the debate, panellists discussed how global investors are beefing up their stewardship from traditional engagement with investee companies to applying wider pressure on policy makers.

Stewardship’s traditional focus on working with companies to make sure they do the right thing is increasingly running alongside robust engagement with governments around aligning the stimulus (between $10-20 trillion) to climate change goals and job creation.

Investors should use their influence to ensure the unprecedented government stimulus in response to the coronavirus finances a sustainable recovery rather than funnelling money down traditional high carbon pathways, said the PRI’s Reynolds. For example, government bailouts to the airline industry should be linked to conditions that they cut emissions, she said.

Elsewhere, panellists reflected on the need for investors to help drive policy to encourage innovation and create a level regulatory playing field. In contrast to Europe where a new green deal will drive investment – described by Helga Birgden, partner and global business leader of responsible investment at Mercer, as “a light in the darkness” and a model for others – policy in the US and Australia is not encouraging enough innovation.

 

 

Left to their own devices, markets are bad at pricing negative externalities, lamented Chris McAlpine, investment analyst at WA Super, while Susheela Peres Da Costa, head of advisory at Regnan, agreed that policy is essential to spur companies – and investors – into action. “Regulation alters what is profitable,” she said.

T Rowe Price’s Drew agreed and pointed to the example of recycling which is not profitable without rules in place to encourage it, while carbon capture technology needs a high enough carbon tax.

“When you think about performance in climate change and sustainability there are three different tracks. Those investments that are profitable today like renewables versus fossil fuels – you see the valuations in renewables much higher than in fossil fuels. Then there is the whole innovation category that could be profitable in the future but have a lot risk. Then there is a third category that is regulation dependent,” she explained. “It’s one of the things that makes sustainability tricky from an investment point.”

Stop the lobbying

Delegates also touched on the need for investors to do more to stop Australian industries negatively affected by regulation pushing back on policy change.

“Regulation is influenced by corporates,” said Peres Da Costa, who urged investors to dig beneath headline figures on a company’s emissions to analyse their policy stance and impact on the policy agenda.

Industries wanting to preserve the status quo will try and “manufacture” a climate friendly narrative, warned Stuart Palmer, head of ethics at Australian Ethical Super, naming Australian gas group Santos as one culprit. He said investors should engage more with polluting companies to force root and branch reform. It involves investors not buying their story, saying it is not aligned with net zero by 2050 and urging companies to come up with another strategy, he said.

Some corporates are not only lobbying to prevent policy change around climate. Palmer also voiced his concerns that companies lobby against policy change that is meant to improve wealth distribution and tax policy. Vested interests risk obstructing big picture, systemic reforms in this area, he warned.

Positively, panellists also noted how some of Australia’s listed companies are taking a more active role engaging with government and helping to drive public debate. Companies have withdrawn advertising from Facebook because of the company’s inability to police hate speech, observed Peres Da Costa who said the traditional idea of corporate citizenship and philanthropy amongst listed companies is evolving into a realisation that they have a bigger impact on the world.

Integrating impact, SDGs and social issues

Increasingly investors are integrating impact and aligning investments with the SDGs, the discussion heard.

Contrary to expectations that investing for impact is difficult, at WA Super, one of the first superannuation funds to introduce an impact investment option, integrating impact proved less contentious than seemingly straightforward exclusion strategies. ESG integration at the fund already includes factor tilts in the passive allocation, explained McAlpine. Yet expanding strategy to exclude the worst ESG offenders from the index proved contentious with the fund’s trustees and the investment committee.

Contention turned to consensus when “negative” screening was replaced with a “positive” focus on impact, however.

“By framing discussions in terms of a portfolio that supports rather than excludes, progress returned. This was a far easier discussion to have with our trustee board,” said McAlpine, enthusing how investing in line with the SDGs bought both “best in class” ESG integration, positive outcomes and returns. “We are backing companies that are competitive, it is not philanthropy, we are pursuing market returns,” he said.

 

In another sign of growing momentum behind impact, T. Rowe Price is actively developing an investment framework that links to the SDGs, aiming to launch its first global impact fund linked to SDGs in the first quarter of next year. One of the challenges of developing an impact investing framework is showing clients exactly how the fund is delivering positive environmental and social impact in a listed equity universe. It is easier to measure impact in smaller, less complex private investments in comparison to the listed and large cap world, said Drew.

“We have three pillars that all link into the SDGs. One is environmentally focused, the other is more socially focused and one around innovation. We will show percentage of companies within the portfolio that are linked to each one of these, as well as more anecdotal indicators.”

 

At First State Super, one of the largest investors in Australia and recently renamed Aware Super, investing for impact is increasingly focused on the challenge of integrating impact in large passive mandates according to the fund’s head of responsible investment, Liza McDonald.

Aware Super recognised climate change as a risk to its portfolio in 2015 and established a plan to respond to these, although this did not include specific targets around that. It has since aligned its portfolio with the target of net zero by 2050 and a 45 per cent reduction by 2030.

Another target is by 2023 to have a 30 per cent reduction in carbon in its listed equities.

“A lot has changed over the past five years and we felt our response needed to change also. To really shift the dial we need to see action and leadership now. We are starting to see more industry funds, like us, turning their minds to this and setting some clear targets. While we can go this alone, it is so much more powerful when investors collaborate to engage with companies to encourage them to set meaningful targets to deliver real and lasting change,” McDonald said.

“We are focussed on increasing the impact we are making and the policies and frameworks we need to support this. We have a lot invested in passive mandates by market cap – which effectively means a company do do as it likes and this will not impact the investment. Increasingly though we are considering whether we should be rewarding companies that we think are contributing positively (or neutrally) to our community based on their ESG credentials? How do we move capital into those strategies and indexes and send a clear signal to companies that we want to invest in sustainable organisations that create positive outcomes for our members and their community?” she asked.

Mercer’s Birgden, who heads up the firm’s sustainability effort globally, noted that the pandemic’s heightening of social risk has led more investors to begin to integrate SDG 5 which focuses on gender equality, and SDG 10 which looks at reduced inequalities.

“We are seeing many investors focus on the SDG’s to help them navigate here,” she said.

Over the course of the conversation the investors also discussed how the pandemic has raised the profile of social risks within ESG.

“We had a visceral experience of being constrained, and as Mark Carney said, what has bought the economy to its knees was a social issue,” said Mercer’s Birgden.

Time is now

Panellists discussed the importance of long-term investment and warned that extreme climate events will usher in the same volatility as the pandemic triggered. Mercer’s Birgden suggested investors decide now what assets to bring into and take out of their portfolios to successfully navigate the transition to net zero. She suggested investors think about their portfolios in terms of grey (risk) and green (solutions) – as well as those investments that fall between the two (companies capable of transition). She also referred to the importance of decarbonisation “at the right price,” flagging the need for a portfolio that both delivers on investment objectives and decarbonisation.

Successful ESG policies that provide a robust enough framework to navigate extreme events are enshrined in beliefs and purpose. It’s the kind of framework put in place at $125 billion Aware Super and McDonald spoke of how climate change was singled out as one the biggest risks and opportunities to the portfolio over a decade ago.

“Beliefs helped clarify what we want to be known for and how we want to lead to ensure we deliver for our members while being a force for good in our community,” she said.

The need for collaboration to drive change to solve interconnected, systemic risks was another roundtable theme.

The pandemic has highlighted that today’s challenges are all linked – it is impossible to have a healthy economy without a healthy population, or planet.

“We can set targets and do what we can do, but when investors collaborate we really achieve so much more,” McDonald said, urging more investors to lead on meaningful engagement with companies.

The $10 billion Statewide Super is working more and more on integrating ESG into its portfolio, working closely with consultant JANA and recently appointed a dedicated person to cover this.

Con Michalakis, chief investment officer of the fund, said that the virus has had terrible consequences for people less well off.

“My concern in the shorter term is that they are looked after and have jobs. The longer this goes the more people will be worried about making ends meet in terms of the bigger picture this is a concern,” he said. “In a crisis you can get short term behaviour and that’s a little bit of my fear at the moment.”

Michalakis also cautioned that effective engagement and global collaboration outside Australia’s “small market” is more challenging. He noted that growing enthusiasm for ESG aside, building back better is threatened if governments use the stimulus to prop up failing industries or prioritise tax cuts over long-term sustainability.

“In a crisis you can get short term behaviour, this is my fear,” he said. The need to act for the long-term is more important than ever, Michalakis concluded, drawing the passionate two-hour panel to a close.

After spending an hour with Ray Dalio discussing the United States’ wonky political and capitalist system, the country’s growing wealth and prosperity gap, debt, overspending, political polarity, and of course global financial markets, monetary policy and the direction of markets, I came away reflecting on the importance of leadership and simplicity.

My interview with Dalio, co-chair and co-CIO of Bridgewater Associates, the world’s largest hedge fund, is for Top1000fund.com’s Sustainability Digital Conference to be broadcast live on Tuesday and Wednesday this week. Asset owners can reserve a complimentary pass to the broadcast here.

I pre-recorded the interview for the conference but have decided to share a few takeaways today.

This Covid pandemic has absolutely created a crease in time to reset, rethink, re-evaluate and ultimately to re-emerge. What new rules and values we re-emerge with will determine the society we live in and the world we pass on to the next generation.

The last time the world had an opportunity of this magnitude to reset and re-emerge was after the Second World War, Dalio ventured during our conversation. In 1944 a dollar-based monetary system was created and in 1945 the United States created what essentially what was a new world order or a “clean slate” to move forward from, as Dalio described.

Fast forward to today and it seems clear we are all witnessing the implosion of what began as an experiment 75 years earlier.

Capitalism is broken, according to the man with the biggest and perhaps the most sophisticated capitalist machine in the country. You can read some of the points he raises with me during our conversation in his LinkedIn post from April entitled ‘Why and how capitalism needs to be reformed’.

The system as it has played out in the United States created incredibly wide wealth and opportunity gaps, a society without a bottom – meaning there’s no safety net to account for people who fall through the cracks or for those who are most vulnerable. Possibly most distinctive is the polarisation of views and a vacuum of leadership it’s created, something the rest of the world will be watching play out in real time during the presidential election between Democratic Candidate Joe Biden and President for re-election Donald Trump.

During the conversation with Dalio I couldn’t help but wonder: if we are so clear on the problems, then why can’t we get more clear on the solutions?

We went on to talk about markets and investing – a part of the conversation you’ll have to tune into the live broadcast to catch – but it became clear to me the opportunity really is at the feet of asset owners and managers globally to engineer the kind of society we want to live in.

Dalio said he believed ‘sustainability’ was the word of the 21 Century, and I don’t think he said it just to please me or because it’s the name and the theme of the conference.

He knows as I believe many of us know that now is the time to be thoughtful, to be inclusive, to be empathetic and possibly most importantly to ditch the polarising bipartisanship and start working on solutions together to serve the common good.

For more information on the Sustainability Digital event click here.