AIQ: The Macro Stewardship Edition

A distorted sense of reality has caused us to disregard sustainability concerns when modelling economies, companies and finance. We can no longer ignore such material issues just because they are too hard to fathom. This is where systems thinking comes in, explains Steve Waygood.

Asset managers and other financial institutions have a duty to act in the best interests of their customers and society. Macro stewardship will be crucial to meeting these responsibilities, argues Mark Versey.

Financial services underpin all economic activity, which itself depends on Earth’s natural capital. Resolving their interconnected issues to bring about a just transition will require a holistic, systems-thinking approach.

A series of market failures have brutally exposed the shortcomings of Modern Portfolio Theory. However, market participants play an active role in markets; they are not mere bystanders. Understanding this could provide a better way to think about and deal with systematic risk.

The UN Climate Change High-Level Champion for the COP26 summit in the UK sets out how the private and public sectors can work together to tackle the climate crisis and other systemic threats. Words by Miles Costello.

The influential academic speaks to AIQ about the flaws in traditional economic thinking and how her revolutionary “Doughnut” offers a fresh approach to solving the world’s greatest problems.

Can society reform the system that has enabled growth but simultaneously brought the long-term health of the planet into question? UN Climate Change High Level Champions Finance Youth Fellow Natalie Mangondo contemplates choices and change with AIQ.

Warnings that natural systems are close to breaking point are not new – but how will we respond? Combining what we know with existing technologies could offer a remarkable opportunity to rethink our world, as Nafeez Ahmed explains.

How can we face existential problems and stay positive? Abigail Herron contemplates simple steps to protect momentum and avoid burnout.

To align with net-zero emissions targets, the financial system needs a radical transformation. Can it get there and, if it does, what should it look like in 2050?

If the world is to achieve the goals of the Paris Agreement, the international financial architecture needs far stronger coordination under a re-tooled OECD, writes Steve Waygood.

For too long, issues of justice and equality have been left out of the climate conversation. But policymakers, companies and investors are slowly beginning to acknowledge the social dimensions of climate action.

With the noise and interest in ESG investing reaching levels that would have been unthinkable a few short years ago, much of the analysis surrounding it is becoming polarised. A more sophisticated conversation and debate is required, argues Mark Versey.

Nearly three decades after it first agreed to tackle climate change, the world has failed miserably to curb the growth in CO₂ emissions. To succeed, it urgently needs to establish an effective price for carbon.

Internalise the climate externality. That is the major task facing policymakers and corporate executives. However, this requires accurate measurement and incorporation into financial accounts and neither are straightforward.

The latest assessments from climate scientists suggest some geographical zones that have been lived in for thousands of years are becoming uncomfortably hot and fire-prone or wet and vulnerable to flooding. How will humanity adapt to new extremes? Rick Stathers assesses the evidence.

Energy majors, cement producers, utilities and financial services providers are among the latest targets of legal action designed to make them move faster towards a lower carbon world. Could this be an inflection point, as the conversation turns to specific responsibilities rather than vague commitments to change?

Some of the world’s biggest companies are setting ambitious net-zero targets, with significant implications for their supply chains. How impactful could the ripple effect be in helping to meet the goals set out in the Paris Agreement?

Interest in ESG investing is expanding at a seemingly exponential rate – and with it the risks of greenwashing only grow. However, Alex Edmans explains why he believes it is possible for companies and investors to create win-win situations for all stakeholders.

Heavy industry and heavy transport are hard to decarbonise, but this must be done to reach net-zero emissions by 2050. Can companies, policymakers and investors join forces to make it happen? The race is on…

Renewable energy has a vital role to play if the world is to combat climate change. But its widespread adoption comes with a price. As older installations come to the end of their useful life, countries urgently need to work out what to do with the waste.

Will a world beset with challenges spin into catastrophic breakdown or spur humanity to change and reach new heights? John Elkington, widely regarded as the ‘godfather of sustainability’, contemplates the future with AIQ.

Commercial and geopolitical forces are threatening to fracture the internet into competing regimes, making it harder for companies to operate across borders and potentially limiting their growth. We explore the implications for investors.

While much of the world’s focus continues to be on tackling the COVID-19 pandemic, the climate crisis also requires urgent attention. The number of countries and companies supporting the move to a lower-carbon world is growing, but practical challenges remain. How can we build back better after COVID, and navigate to a cleaner, safer and sustainable world?

Globalisation’s image problem may have been further tarnished by the pandemic, but can political leaders use the crisis to reform it for the better and resist the urge to abandon it altogether?

While the coronavirus pandemic has devastated livelihoods, it also presents an opportunity for companies and policymakers to reinvent the world of work. The future is full of possibilities – but no easy answers.

In a two-part feature, we look at what asset managers need to focus their engagement efforts on to make a difference on anti-black racism, and why the industry needs to get its own house in order.

As the world starts to emerge from the COVID-19 pandemic, the US’s position as global hegemon will be under mortal threat from a resurgent China that looks to have escaped the virus relatively unscathed.

Global politics are in flux as policymakers scramble to manage the pandemic and revive economies. Can Europe come together and carve a place for itself on the international stage, or will it end up a passive player buffeted by greater forces?

In these data visualisations, we look at whether COVID-19 will achieve something that millions spent on public health campaigning has failed to do.

More than 40 years since a senior NASA scientist told US Congress of concerns about human activities disrupting the climate, experts are warning of an impending climate catastrophe and the financial sector is wrestling with the implications.

As active investors step up their engagement efforts on the climate crisis, discussions need to be at the CEO rather than board level, argues David Cumming.

Psychological barriers can prevent people from acting to avert the climate threat, even when they recognise the problem. So how can we best engage individuals, companies and communities in the quest for solutions?

Until recently, many investors made light of dire warnings of the risks posed by assets becoming “stranded” by climate change. However, as the threat becomes reality, fears are mounting that whole industries could be wiped out.

With governments urged to do more to tackle climate change, carbon taxes are being touted as a politically expedient solution.

Poor land management contributes to rising global temperatures. But solutions are emerging as new technologies improve farming efficiency and consumers shift towards climate-friendly diets.

As the challenges posed by climate change continue to loom large, due attention should be given to oceans, not just the solid ground under our feet and the air we breathe.

Despite deafening calls for countries and companies to step up to fight the climate crisis, research suggests individuals – especially in the developed world – could also make a massive difference if they committed to getting by with less. But will they?

Big data is heralded as the answer to almost every problem, so why not the climate crisis?

As the old saying goes, desperate times call for desperate measures. Despite lingering public anxiety around safety, there are growing calls for the world to look again at nuclear power as part of the solution to the climate crisis.

Despite the increasing clamour for a global ‘Green New Deal’, Steve Waygood explains why a complementary International Panel on Climate Finance (IPCF) is also needed if we are to rise to the challenges ahead.

Over 100 billion people have walked the planet, making a gigantic stamp on the Earth. Around three quarters of the land and around two-thirds of the marine environment have been significantly altered by humans, impacting the carbon cycle and changing the prospects for many species.

Economic development is at a crossroads for emerging markets, and the road ahead will need to be paved with environmental, social and governance considerations.

How China deals with the challenges of rising debt, a transition to a consumer economy and the technological ‘arms race’ with the West will have big implications for investors.

The Chinese economy is attracting more foreign capital due to structural changes and its belated entry into major bond and equity indices. These shifts could have significant implications for other emerging markets.

We speak to the political scientist about the long-term themes affecting emerging markets, from the trade war to technological automation to climate change.

How we frame things deeply affects how we process information and subsequently act on it. So much so that, despite convincing evidence to the contrary, it can be extremely hard to shake off a fabled preconception. It seems that once a label sticks it can be very hard to dislodge.

The emerging market debt universe offers investors an expanding pool of opportunities that may be better assessed when integrating environmental, social and governance factors.

The trade war between the United States and China is intensifying.

As the Brexit deadline looms, the impending rupture between the UK and Europe threatens to become the defining political issue of a generation.

As economist Kenneth Boulding once put it: “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist". Some economists have indeed argued it is possible to ‘de-couple’ economic growth from environmental damage.

If Google or Baidu didn’t exist, would we have search engines? If Mark Zuckerberg hadn’t dreamt up Facebook in his dorm room, would we have social media platforms?

In search of clarity, we set out to provide a wayfinding tool for investors by trawling through the academic literature, interviewing the experts and contrasting the theory with reality. And while our focus is on equity markets, we also touch on some of the key factors to consider in fixed income and real assets.

GDP: a wealth of meaning is crammed into those three letters. Gross domestic product is our principal index of economic welfare. It is the subject of conferences and hand-wringing editorials. It is the metric by which the success or failure of government policy is judged.

In this latest episode of the AIQ Podcast, we interview Steve Waygood, Chief Responsible Investment Officer, in search of some clarity on investing responsibly.

Aliens invaded America on October 30, 1938. Radio announcers feverishly described the progress of Martian war machines across the country. Giant robots stalked the streets, firing heat-rays and releasing clouds of noxious smoke.

The year was 2007. Alan Greenspan, who had recently retired from his role as chairman of the Federal Reserve, was touring Europe to promote his memoir The Age of Turbulence, a book he famously wrote in longhand on yellow legal pads while sitting in the bathtub.

A series of elections in emerging markets may bring unwelcome uncertainty for investors in 2018.

This latest episode of the AIQ Podcast investigates the battle for innovation between China and the West.

Millennials are maligned as a generation of self-absorbed tech-addicts. But their distinctive approach to spending and saving is set to reshape companies, markets and economies.

Millennials are maligned as a generation of self-absorbed tech-addicts. But their distinctive approach to spending and saving is set to reshape companies, markets and economies.

This latest episode of the AIQ Podcast explores the fall and rise of the millennial generation.

The US economy is enjoying its third longest span of uninterrupted growth since records began. While some argue it is a matter of time until the next recession arrives, the alarm bells are not ringing just yet.

The economist and author speaks to AIQ about the new technological breakthroughs reshaping economies and societies in both East and West.

While the recent launch of Bitcoin futures on two leading derivatives exchanges may have given the world’s first ‘digital currency’ a stamp of legitimacy, doubts remain whether it, and other cryptocurrencies, will become a mainstream investible asset class.

New technologies that would once have seemed the stuff of science fiction fantasy are quickly becoming reality; in the process transforming cities and creating investment opportunities.

The apparent breakdown in the Phillips curve has left economists puzzled and created a dilemma for policymakers. However, the relationship between inflation and employment remains very much alive, meaning the Fed has a lot more work to do yet.

AIQ speaks to the Conservative party politician and peer about his research into intergenerational inequality.

In our Big Interview, economist and best-selling author Andrew Scott considers the implications of increasing life expectancy for individuals, companies and policymakers.

Once dismissed as the home of copycats and knock-offs, China is now a hotbed of technological innovation - and fast catching up with the West.

Tech stocks have risen sharply in value in recent years. Jason Bohnet explores whether these high valuations are justified.