There is a lot of emphasis on investing with a long-horizon, an idea that seems to unite pension funds and socially/environmentally focussed people in the five main topics the workshop covered - stranded assets (what happens when climate change or price of oil destroys business models), integrated reporting (going beyond financial-only reporting to include social etc), evils of quarterly earnings guidance (stop being so obsessively short-term!), executive compensation (wrongly structured and excessive) and constructive investor behaviour (i.e. acting more like a long-term investor)
Some notable comments:
- executive compensation "...the current executive compensation situation constitutes a ‘market failure’ situation in the sense that there is no obvious relationship today between executive performance and the levels and structures of executive compensation. ... the sense in the room that a strong, coherent collective action initiative is needed " If the big pension funds develop an activist stance on compensation and do it the right way, maybe they can break through the incestuous self-reinforcing cycle of upwardly ratcheting executive compensation, a problem I have written about before.
- constructive investor behaviour "The key concept here is the broad adoption of ‘concentrated long term investment mandates ’ that require investor engagement. This would be a radical departure from the traditional Keynesian ‘beauty contest’ style of active management, and also from the broadly-diversified ‘formula’ style of passive management. A high number of workshop participants judged this to be a potentially high-impact initiative at the individual fund level." In other words, the pension fund people attending think this is worth doing and they see themselves doing it. Unlike joe average investor who can only influence by voting with his/her feet, when a giant pension fund calls, or several do, big-shot CEO and aloof Board are likely to listen. The swipe at passive index-ETF style investing is interesting - most individual investors in such ETFs are probably there because they believe the mantra of investing for the long term yet because of the passivity they can only take what they get, including those companies who operate only with a short-term horizon.