Radical Old Idea webinar

30 March 2021

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We've partnered with Global Ethical Finance Initiative (GEFI) on their 'Radical Old Idea' webinar.

In the run up to COP26, our Climate Change Lead Kaisie Rayner FRSA spoke to Keith Skeoch about the factors behind the ‘ESG Enlightenment’ that has taken place in the past few years, as socially and environmentally aware finance has moved from the margins to the mainstream.

Allan Watt: GEFI has been bringing the global financial community together for over 10 years, and over this time, the financial profession has been asking the question as to whether only unfettered markets deliver the best outcomes for society. Sometimes, it helps to look backwards to go forwards, and building on the amazing legacy of Scotland's great thinkers of the Scottish Enlightenment, the Radical Old Idea has created a platform to drive this debate in financial markets, and the role of the financial profession, its bankers, asset owners and managers in shaping a sustainable future.

Today, we're looking at the ESG enlightenment and its progression from the side-lines to the mainstream. We could ask, was it a 15-year-old Swedish girl who accelerated an awareness that I know our audience today has had for much longer than two years?

With COP26 in Glasgow in November, GEFI has created a series of events on the path to COP. The finance sector needs to act together to achieve decisive action at COP26. We need to decarbonise at a rate of 11 per cent a year, a scale of transformation that's never been seen before. ESG will have to move from being a reason to stop doing things to being front and centre in the thinking that drives this transformation.

GEFI has united over 40 leading stakeholders committed to action at COP26. We're very pleased and I'd like to thank Royal London, one of our strategic partners, for supporting this Radical Old Idea series.

I'll give you a heads-up on some other upcoming events after today's discussion, and I'm also pleased that the Chartered Banker Institute has designated this event as qualifying for continuous professional development for the banking profession.

Whilst I'm introducing our speakers, I wanted all of you to consider two questions; one on your own organisation's ESG enlightenment, and a further question whether the finance sector is on track to deliver the action we need to deliver the climate action we need in our economy. Sam will display these questions now while I'm introducing our speakers. Please vote and we'll see the results at the end of the session.

To give us maximum time, and we're going to finish properly at 3:00pm, I want to introduce our speakers. Today, we have Keith Skeoch. He is currently chair of the Aberdeen Standard Investments Research Institute, chair of the Ringfencing and Proprietary Trading Review Panel, he's chair of the Financial Reporting Council, chair of the Investment Association, and a member of the UK Takeover Panel. A long history with Standard Life and Standard Life Aberdeen. He stepped down as CEO of Standard Life Aberdeen in September 2020.

Kaisie Rayner is with us today, and her mission in life is to help financial institutions understand sustainability and the role in enabling the transition to a low carbon economy. She's currently the climate change lead at Royal London, a commissioner of the Edinburgh Climate Commission, a fellow of the RSA and a lecturer at the Cambridge Institute for Sustainability Leaders. Kaisie has a long history and has been a very active part of the GEFI programme over the last few years.

Keith will start with the presentation and Kaisie I know has some great questions she's been developing that she'll take him through. We'll then invite questions from our audience today though the Q&A function.

So, without further ado, Keith, many thanks for agreeing to join us, and please go ahead.

Keith Skeoch: Great, and thank you very much and I hope you can both hear me and see me. Thank you for that very kind introduction and also the opportunity to participate in today.

As I get underway, I just wanted to make a couple of important observations. First of all, I'm very much speaking in a personal capacity today rather than on behalf of any of the organisations that I serve. The second thing is I want to declare upfront, state at the outset, that I actually believe capitalism is a good thing and it has served society well over the last 400 years, and at its heart is the collectivisation of savings that's turned into investment and created growth, wealth and prosperity.

So, it has, I believe, promoted over very long periods, the common good. Of course, the problem is progress has often been erratic, as we're experiencing at the moment, and for very long periods of time, we get stuck in a particular paradigm and a particular way of doing things. One of the things I think the original Scottish Enlightenment did was change that perception.

Now, one of the things - talking to GEFI - I think that sparked this initial conversation, is something on ESG has clicked over the course of the last 18 months, and suddenly it's become part of the social consciousness.

I've struggled, as somebody who has been banging on about this for 20 or 30 years, to explain why, and explaining why I think is less important than making sure we take advantage the opportunity that's ahead. I think one of the things I want to do in the next 10 minutes or so is show that that opportunity is actually very, very significant and, potentially, I believe, almost as significant as the impact that the original enlightenment had in society.

So, whilst capitalism is a system that has promoted the common good, the way in which it's done, through time, has changed, as have the answers to a fundamental question that was posed by Keynes, how do you find the social system which is efficient both economically and morally?

Of course, when we first started to answer that question - if I could have my second slide up - that actually began in Edinburgh with Adam Smith and the publication of The Wealth of Nations, and the creation of what became known as the school of economic thought on natural liberty. I think one of the surprising things from this slide is that whilst we have seen capitalism ruling the roost and that the rules and thoughts behind the paradigm change through time, effectively, in the deep background, there have only really been three schools of economic thought at the micro level.

Interestingly enough, and a point I'll come back to, the publication of The Wealth of Nations in 1776 was almost 100 years after the first corporate governance conversation about the Dutch East India Company. But, of course, in the modern world, we've got less used to talking about the micro-economic schools of thought - and if we can move to the next slide - and our world has tended to be dominated by what we call macro-economics, which, of course, was created by John Maynard Keynes back in 1936 as a reaction to the Great Depression. That's morphed over time until we've had the latest part of macro theory, something that is rather attractively called dynamic scholastic general equilibrium theory, which is something which dominates the way in which the Fed thinks about the world.

But again, relatively few schools of economic thought. What these paradigms have done though is constrain the way in which we think about things, and more importantly, creating particular policy paradigm for the way in which we address economic and social issues.

Move to the next slide.

One of the interesting things for the economists amongst you is that whilst prosperity and living standards have improved immeasurably over the course of the last couple of hundred odd years, actually the average growth rates haven't changed a great deal. So, one of the things that the schools of economic thought have an impact on is on the way in which wealth is distributed around society. Of course, that is something that finance kind of lies at the heart of.

If we look at a similar set of data and move to the next slide and think about macroeconomics and think about the output gaps, so the way in which economies have diverted from full employment and full utilisation of resources, you can see that's a much more volatile environment and has led to change.

These macro-economic paradigms, they're not just a product of economic theory. They're very much defined by the problems of the day, whether it's addressing slavery or the corn laws, dealing with the Great Depression, dealing with the rampant inflation and rising unemployment in the 1970s. So, every difficult to step away and get public policy to step away from the problems of the day.

What I think is really important today is that I think we stand on the cusp of another paradigm change.

If you move to next slide, please.

We shouldn't just be thinking about the next five or 10 years, but actually, I think there is a real chance to make a difference and generate a very different policy paradigm and finance has to play its role.

One of the signals for that is that when you shift between policy paradigms and the stylised diagrams and you get in between the two tales of the distribution, that's when you see maximum volatility typically in economic activity and in financial markets. So, it's perhaps no surprise to those of you that are involved in financial markets, that 2018 was one of the worst years on record for financial returns since 1909, 2019 was one of the best and 2020 was, I think, probably one of the strangest. So, I think the signals that we're getting from that kind of volatility says time is right for this fundamental paradigm change.

If we can move to the next slide.

I think the real question for those of us that are involved and would like to see some form of paradigm change and policy enlightenment is, what should be the future of that new policy paradigm? I've basically listed five here which we can tackle in discussions.

One is the economists really need a set of economic models that inform policy which fully integrate the real and financial sectors of the economy. I haven’t seen anything yet. I think we're a long way away from that.

Something that I think is incredibly important and I think we still have to make progress on is that a responsible and sustainable corporate sector has to be right at the heart of creating prosperity. I have a slight concern at the moment that actually the corporate sector gets a bad press. That's a worry when you think about most modern capitalist economies, over 70 per cent of people are employed in the private sector; in the UK, it's over 75 per cent. So, their future and how they view the world is generated by their experience. Somehow, we have to put the private corporate sector back at the heart of responsible and sustainable wealth creation.

I think the other thing where we need to move on as part of this policy paradigm is accept that regulation rather than something difficult and horrible is actually a public good. It helps markets work in the public interest, and only when it works well can they promote the common good.

A couple of pointers towards that. What we call macro credential policies, so the regulation that governs the behaviour of insurance companies, banks and pension funds, actually, that really does drive the deep incentives in the financial system. So actually, if we really do want a set of behaviours that are promoting decarbonisation, promoting sustainability, diversity and inclusion, then actually, that detailed regulatory policy needs to point in that direction.

It's also the case I think that transparency and reporting really influence behaviours. There was a famous remark from a Nobel economist called George Stigler who said, rather controversially, that economists needed arithmetic, not ethics, to correct social mistakes. At a very high level, that's something I fundamentally disagree with, but I do think what gets measured gets done, and he has a point. So, transparency and reporting and the need to report becomes an incredibly important influence on behaviours including those in the corporate sector.

So, full adoption of TCFD, full adoption of metrics like SASB and full reporting, I think, will actually be very, very important so that we understand the risks that are being taken on board.

I think the other important point I would make is that people and policymakers determine social licence, not markets. In prepping for this, I re-read some Adam Smith, and there's a very good biography of Adam Smith by Jesse Norman, and he points out in the whole of Adam Smith's works, he only mentions the invisible hand three times. It's only mentioned once in The Wealth of Nations and it isn’t about unfettered markets. So, actually, we need to determine what it is that we're about.

The final thing is for those people that really do, I think, argue quite strongly about regulation just being a burden and a cost, actually if you get good behaviours, then it's those good behaviours will minimise the cost and burden of regulation. I think that's where everybody needs to take responsibility for the way in which they promote the common good.

I think the final part of the policy paradigm that needs to drop away relates to a whole bunch of stuff created by Meckling and Jensen in the 1970s about the principal agent problem. It absolutely dominates all of our governance conversations.

I actually believe good stewardship behaviours, stewardship that's put at the centre of policy, can mitigate those principal agent problems, and that is the way in which we build trust, that's the way in which we build a responsible and sustainable corporate sector. Given that finance is right at the heart of pointing collectivised savings at the financing of investment and recovery, we have a huge opportunity as an industry to put substance into building back better. But we'll only do that if we all take personal responsibility for the promotion of the public good.

So, this is everyone's problem, not just the policymakers. If we can do that, then I think we will engender another period of prosperity that promotes health and wealth. If you want a short run example of why regulation is a good thing and why capitalism is a good thing, just think about Boris Johnson's remarks last night. I actually disagree that it was greed. I agree that the capitalist system has promoted, but it was effective regulation that allowed, and clear cut regulation that allowed the development innovation of a vaccine and quick route to market.

So, we have, I think a real opportunity, as I say, to put the substance into build back better.

At that point, those high level points, I'll hand over to Kaisie.

Kaisie Rayner: Thanks very much, Keith. What a great tour through your thinking on this topic. Before we get into asking you some difficult questions, I'd just like to remind all the attendees that at the top of your screen there is a button that allows you to ask your own questions. I’ll spend about 10 minutes asking my favourite questions and then we'll start to take questions from the audience. So, get your questions in there.

Keith, thank you for running us through, and I really liked your five principles at the end. So, if I might I'd like to just maybe pick up on the point around Adam Smith. I'm a big fan of Adam Smith and I do worry sometimes that he has been woefully misinterpreted. Everybody focuses on The Wealth of Nations, when, in fact, he has written more than one book, and indeed, it was The Theory of Moral Sentiments, which is the book that goes alongside The Wealth of Nations, and they ought to be read in conjunction with each other. That was written almost 20 years before.

I wonder if in reflecting on the works of Adam Smith that perhaps we need to remember some of that moral sentiments piece and remember the moral purpose of markets. I wondered if there was anything further you wanted to touch on around Adam Smith and the role that his thinking can have in helping us rethink the role of markets as they're meant to serve society.

Keith Skeoch: Thank you. I agree. I think the two need to be taken together. I think that that sense of purpose also needs to lie right at the heart of a responsible and sustainable corporate sector. I know a lot of good work is being done on that front.

In terms of Smith specifically, he was a man of his time, but we also need to remember that when you look back at his time, markets were very fragmented. Smith was interested in markets and interested in market failure. He never was applying a one size fits all solution across all markets and suggesting that unfettered self-interest and greed was the appropriate way forward.

So, I think modern scholars look at Smith and say, well, yep, you have to look at individual markets and where they fail and actually you have to think about where you can connect that failure with purpose. The point Smith was making about the invisible hand was actually a point in The Wealth of Nations, where he was suggesting you didn’t need controls over export because the risks associated with being - taking too much risk with foreign trade was apparent to everybody, so you didn’t need to overdo it.

So, it was about risk. It wasn’t actually about the price mechanism.

Kaisie Rayner: That's great. I think there are a couple of key points that you touched on in there, that come up again in your five principles, particularly around this social licence aspect. If I might just touch on that for a moment. I think it's really interesting when we start to look at the rights that we've given corporations to the point where corporations can now sue nation states if nation states put in laws that limit their ability to earn money through the destruction of the planet or different things like that. I wonder if perhaps we've gone too far and is there a need - this comes onto some of the questions that are starting to appear in the chat - is there a need for a circuit breaker? At what point do we call time on a company and how do we determine it's really breached its social licence, and who should control that? How do we form that view?

Keith Skeoch: I guess there's - the undefined is when it is doing things that are not in favour of the common good that is broadly defined, and that common good, I think, has to go across the whole group of stakeholders, suppliers, customers, the communities that people operate in.

It's difficult to define, but I do think we are starting to get a sense of the common good as we come out the pandemic. For sure, bits of that stuff can start to be embedded in regulation, and in deals that are done. I think we're starting to see that with some of the things that are going on with the media and Facebook. It's very early days.

But ultimately, this is the product of political economy. We'll end up getting the regulation we deserve. So, I think it's really, really important that voices are heard.

Kaisie Rayner: Thanks Keith. It sounds like an excellent opportunity for the financial sector to redeem itself from the global financial crash and put itself at the heart of our recovery plans.

Just picking up on that principal agent problem and your new role, I know you're speaking in your own personal capacity, but the FRC has done some great work with the new Stewardship Code 2020. What we've seen with that is a real shift in focus to remind asset owners that they need to get involved in that too.

I wondered if you might touch on what you think some of the benefits are of getting the asset owner really involved in what good looks like and taking more control over this agenda..

Keith Skeoch: I think because it's relatively simple. Everybody is going to have to take more responsibility for their own finances. One of the sad side effects of the pandemic is that we are going to be living in a society that's burdened with public debt for a very, very long period of time. So, I think the fashion was against state support. It'll be economically tougher.

I think actually connecting investment, investment return, with somebody's savings and the fact that they can have a positive impact and they can have an impact on the common good whilst building wealth, saving for a well-funded retirement or a set of wealth, is incredibly important, and I think we have to be transparent about how we do that, and I think we have to offer end savers choice.

It's been difficult because it's been complex in the past, but we now have the technology to help us to do that. I think this is also about building a narrative that there's never been a more important time to invest in your future and the economy's future, and it's your savings that will facilitate those investments. That's a story you actually only usually hear after, or during, wartime. So, enrolling people in investments.

Kaisie Rayner: I see we've got the Treasury on the same page, so looking to issue the equivalent of war bonds to fund the recovery, certainly brings back that ethos of we're all in this together and we need to fund a future that we want to live in instead of some kind of dystopian novel that none of us wants to retire into.

I'm going to come back with a couple of my questions later because we've got so many questions in the chat here and they're really good. So, I'm going to have to go over and see if I can do this thing of read and come back to you at the same time.

So, picking up on that theme of social licence around companies, a question from John Holland. Should the financial aims of financial firms be subordinated to net zero aims?

Keith Skeoch: I don’t think they can be just subordinated to net zero aims, but I do think that that broader issue of sustainability of which the move to a net zero environment is an important part, should be a critical part of the way in which a company, a firm, sets it business model, sets its strategy and delivers a return associated with the way in which it mitigates those risks.

So, it's only by taking that broad approach to sustainability that we'll avoid sometimes the unintended consequences of focusing on a singular metric. But there's no doubt, it's a very, very important part of sustainability.

Kaisie Rayner: Just to push on that one a little further. As we journey down this road to net zero, the actions that we take in this decade are really going to shape the century to come. Stewardship is great when we engage with companies to try and drive change, and many describe it as the carrot. At what point is there a stick?

Coming back to that point of net zero, do you imagine that we'll get to a point where FTSE, for example, will delist companies that haven't demonstrated alignment to Paris by 2024 for example? Or do you think that's a step too far for regulators and listing markets to go?

Keith Skeoch: I think if it gets to the point where, in essence, like in corporate governance, you have a no-vote, or you have to de-list, you've lost the argument and you've lost the game. Actually, what we do need to do is have a combination of carrots and sticks. So, getting corporates to think about how they decarbonise, how they de-risk their business model, and an acceptance that if they do that, they'll get rewarded with good finance to promote and help them deliver a sustainable future for their business. If they don't, the cost of finance will rise and, in essence, they'll end up being potentially starved of finance.

So, there's a means of generating a transition. You can see some of that starting to come through in the pricing of equities and bonds and stuff that's carbon related. It's not perfect, but actually, it's incumbent upon us all to start that process and insist and demand that action is taken, ask for transparent metrics that they're going to report against, and then reward those that deliver against those plans and penalise those who are either not transparent or don't deliver.

Kaisie Rayner: That brings us on nicely to a question from Andrew Ross. I'm just going to add some colour to it as well. His question is who is responsible for greening the economy. We've talked a little bit about the role of corporates, but there are others in this system, and my perception is that we are at a critical juncture in the politics of climate change. We've got COP26 coming up and the key article for the Paris Agreement that hasn't yet been agreed is Article 6, which outlines carbon trading. If we had a price on carbon, we would have the incentives to drive different behaviour. What do you see as the role for politicians in this really important year? And if I can be controversial, do you think we're up to it? The UK has the stage. Are we going to say and do the right things, or are we going to bungle it?

Keith Skeoch: I don’t think it's black and white. I don't think the future of climate change and decarbonisation will depend on a particular conference in a particular year. What I think is important is that we seize the moment, we seize the change in public attitude to create momentum behind these apparent shifts and make sure they're embedded in policy. So, actually, when we look back from 2036 to 2021, actually we can see that we have embedded policies in place that have generated progress. So, I think this is a real case of carpe diem.

I think the other thing we need to accept is we won't be perfect on day one, that actually there will be mistakes, and as we think about the way in which we report, we think about the policies, we will improve through time. So, I think this is - hopefully we're beyond the beginning of the journey, but momentum should be building. That's what I think the opportunity that surrounds the whole COP process is about.

I have to say, so far, so good. The UK seems to be throwing quite a lot of it and is looking to make a sustainable fist of it.

Kaisie Rayner: We've certainly seen the race to zero, setting the pace, a lot of announcements from big organisations setting a 2050 ambition for net zero. I guess the devil is in the detail and the actions that they take over the next 10 years.

I wondered if you maybe just touch on - so, we've talked a little bit about the economic theory, and I wondered if we could just come back to the role of markets and what we've seen over the last, well, probably more than 20 years - I feel like everything is 20 years, but now I'm getting old, so it's probably more - we've seen this huge rise is passive investing, and by passive, I mean market weight investing. I wondered to what extent - it's nearly 50 per cent of the market, is that sustainable as we're trying to rapidly transition away from a high carbon intensive country and economy into a lower carbon economy? What's the role for active investing and how does passive investing potentially distort the market as we go through this journey? Just your thoughts on passive and active and the roles that they might play.

Keith Skeoch: Yeah, I have to say, I think the distinction between active and passive is a little bit too stark. I always think about the risk return spectrum. But when you're looking to generate change and force change, then I think active has a very, very significant role to play, because you can concentrate your investments on who you think the future successes will be. You can reward people for - with your capital being invested, when it's aligned to your particular investment philosophy.

So, in the context of the current issues we're talking about, the really important thing here is ESG factors, including climate change, should be embedded in the investment processes of active managers. If all you're doing is following a trend following or a momentum strategy, that isn’t going to do you much good as well.

Passive investing has the advantage, but if we're talking about index investing, it is relatively cheap and efficient for the end investor. Whilst those investments are passive in that sense, that doesn’t mean that largescale passive investors can't play their role in generating change in policy, lobbying for, as you were suggesting, what's in or out of the index? Putting pressure on the index providers, looking to shape government policy about who can, should and shouldn’t be listed in the UK or the premium segments of the market. So, you can have an investment philosophy, I think, that does have impact.

Kaisie Rayner: I hope those asset managers who have big passive portfolios were taking note at that point.

We're going to come onto a different area of questioning. This is more on the social aspect. I think there's been a lot of focus in previous years on the G in ESG. Climate has having its moment, so the E is in focus, but this tricky S aspect. I think alongside this S aspect, we've also seen an uptick in engagement across society, from both the Scottish climate assembly, engaging with citizens through to the Just Transmission Commission engaging with citizens as well on their views.

There's a provocative question from John Miller, which says thinking about the S in ESG, would you agree that the investment industry has contributed to and benefited from the long-term growth in income inequality? Then I will tack on a, so what should we do about that, at the end.

Keith Skeoch: I think yes, the answer is yes. We have benefited as an industry, benefited it and been part of it. I think that's probably in three senses. One, this has been an industry which has risen through time. So, it hasn’t had products and pricing policies that have been commoditised, so it has been very profitable. Therefore, those working in the industry have benefited from that.

I think the other issue is we have obviously benefited from globalisation, which was quite a strong rising trend, and the deregulation that took place from '79 onwards.

But I think the other thing that's really, really important here is to recognise and accept, and I guess it was part of Thomas Piketty's thesis that financial return is typically at a premium to the return on wages. Because the financial industry has benefited from that and more sophisticated exposure, then there's undoubtedly a benefit from the income inequality, and of course, you have to add into that all this liquidity post financial crisis, that's been pumped into financial markets via QE, has lifted the price of financial assets relative to assets in the rest of society. That's been for the benefit.

The question then, you're absolutely right, is what do we do about? What do we do about it? I believe with a vengeance this is not about taxing, it's about financial inclusion, it's about making sure that finance plays its role in making those attractive returns available to everybody in society. So, that is partly about pricing, it's partly about the way in which, as you were suggesting we enrol people in.

It's also getting back to something like we seem to forget about in the 2000s and the late 1990s, that right at the essence of capitalism is this collectivisation of savings which pools risk, and pools risk for the common good. We have spent so much time hypothecating risk and identifying and measuring it that, actually, some of those polling mechanisms, which have been to the benefit of society, have gone by the wayside. So, I think as an industry, the asset management industry needs to have right at its forefront a purpose which is about diversity and inclusion. It's about [inaudible] work better.

Kaisie Rayner: Great, great, great response there. I don’t know if you can see the questions because it's like you're leading straight into the next question from Sheila - and apologies if I've said your name incorrectly, [Sheila O'Reilly]. I've got two more questions for you because we are getting close to time, so apologies to all of those I'm not going to get to.

Keith Skeoch: I'll try for three.

Kaisie Rayner: Sheila has asked about - she references your use of the collectivisation of savings, which is great, but she wonders how we might go about identifying what public good is given that it's highly contested? Then the second question - and I'll give them both to you now because they're linked together - is from Nigel Kershaw around, yes, it's great that we're making ESG mainstream in the finance sector, but how on earth do we make that understandable to people so that we win their hearts and minds? How do we take them on that journey? How do we know what good is, and how do we take people on the journey?

Keith Skeoch: I wish I knew the answer to what good is. Good, in finance, is I think is stuff that doesn’t do harm, that promotes prosperity, and by which, I would mean long-term health and wellbeing.

Technically, I think one of the things you're looking to avoid is volatility. So, if you get sustainability of return right, you don't get the dislocation and blow-ups in corporates that result in the likes of Carillion, for instance, which causes economic dislocation, loses jobs et cetera. So actually, sustainability is absolutely key.

Fantastic question from Nigel. I think it's very simple that we've - we talk about impact in our industry. One of the things we should be doing as fund managers is in very, very, simple language, not just reporting back on the way in which we deliver returns, but how we deliver returns and what's the impact that it has. So, these investments, how many jobs has it created? How many of the SDG goals have these investments met? We have to be able to demonstrate in simple language where we've had impact and why somebody's savings, be it £10, £1000, £100, has actually contributed to that broader benefit.

Kaisie Rayner: Thanks Keith. If I may, I'll share an insight from one of my children talking to them about the impact of investments and the rise of so many different brands of ESG, ethical, sustainable, responsible. We've got ourselves into a bit of a muddle at the top end of the spectrum where we're trying to differentiate between the different shades of green. The analogy was when you go into a supermarket, you don't see health warnings or gold stars on carrots. You see them on the cigarettes and on the alcohol. Maybe what we really need is to start calling things that are not sustainable what they actually are, which is unsustainable, and help customers understand. Any thoughts on that provocation.

Keith Skeoch: As somebody who grew up in Yorkshire, I'm all in favour of actually telling things how they are. I think at the heart of that, what we do - we're an industry full of technical experts and we love complexity. What we have to do is to think about how we create a simple, effective, inclusive narrative. So, language, I think becomes incredibly important. And I think the other thing where I think the industry is a terrible example, is it's over-promised and under-delivered.

So, one of the things I always try to do in my corporate life was use the Rentokil slogan, make sure it does exactly what it says on the tin.

Kaisie Rayner: We're almost at time, so I'll maybe just remind our viewers if you haven't had the opportunity to fill in your responses to the questionnaire, we'll be going back to that soon.

At the top of my mind after talking to you, Keith, is that we have this wonderful opportunity for finance to play its role in building a future that we all want to live in. I'm reassured that our great thinkers from the initial Scottish Enlightenment still have wonderful things to say to us if only we listen to all of what they're saying and remember to apply it to the time that we're in.

But perhaps if I can hand over to you for a couple of closing comments and then we'll go back to Alan.

Keith Skeoch: Yeah, I think finance does have a huge opportunity. There's a real chance to put substance into building back better, to making a difference. It's the only way in which we're going to build trust. I think the only way in which we're going to see that delivered is not through industry bodies, but by everybody taking personal responsibility. So, sustainability is everybody's business.

Kaisie Rayner: Thanks Keith, and back to you, Alan.

Keith Skeoch: Thank you Keith and Kaisie. That was a magnificent tour over the last few hundred years of economic thought. I was really struck by a phrase you used there Keith, simple, effective, inclusive narrative. I think we've got a lot to do to explain as a sector to the general public what we're doing, and I think some really interesting debate. Clearly, during the Scottish Enlightenment, it was fuelled by the growth in newspapers and the public really starting to understand and engage with the ideas of the great philosophers. I think we could probably learn a lot from what happened then.

So, first of all, I just want to thank both you for the debate today. I think it was a really worthwhile and useful part of our path to COP. I'd also like to thank the GEFI team, particularly Matt and Sam for bringing this whole event together.

We did a little poll at the start, and I think we can share the results now. Hopefully on your screen you can see the results.

We had two questions. One was how seriously - when did your organisation start taking ESG issues seriously into its decision-making. So, we can see 17 per cent of the respondents think their organisation needs to do that, and most people, it's a journey of the last two to five years. So, interesting to see that.

I think slightly more alarming is that the poll result is saying that three-quarters of you listening today don't think that the finance sector is on track to support that massive transformation that's needed. I think part of that is that simple, effective, inclusive narrative and Keith's plea to make it everyone's business to deliver on the ESG enlightenment.

Alan Watt: Just to finish up, a couple of events that GEFI have coming up. Next will be our - our next roundtable will be on leadership and we want to examine how organisations can make the kind of major transition that we've just been discussing. This is going to be a date early in May, still to be confirmed. Also we've been sending people reminders about our ethical finance summit which will take place on 8 to 10 June, virtually. There's already an impressive roster of confirmed speakers and you can see that on ethicalfinancesummit.com.

So, with that, thank you again to Keith and Kaisie for today's session of the Radical Old Idea. That leaves me to say thank you to you for joining today. You can always tell the quality of an audience by its questions, and they too were magnificent. We look forward to welcoming you back to GEFI very soon. Thank you very much.

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