Why is it important for Coutts to educate and inspire your clients around living sustainably? What impact do you hope to achieve?
Everyone has a responsibility to do what they can for society, for the communities in which they operate and, ultimately, for the planet. Businesses need to lead by example; if we can make a small difference by reducing our own carbon footprint, or by removing particular assets from our investments, or by helping a colleague or client live more sustainably, then that can only be a good thing. It’s the right thing to do. And though we obviously want to inspire our clients, it’s important to highlight that our clients inspire us too. Regularly, our clients come to us asking how they can make a difference with their wealth, so the impact we can have truly is a joint effort. We can also have a direct impact on the investment community, which is hugely important to us. We are fortunate to have an incredible client base – they have the power and ability to really make a difference. It is vital we work as closely as possible with each and every one of them to achieve our sustainable development goals and embed purpose throughout our business and those we work with. If we can do that, I’m confident we will start to see a real shift.
Why is it so vital that businesses balance profit with purpose? What role do businesses have in moving us towards a more just and sustainable world?
Historically I think people thought it had to be one or the other but being purposeful doesn’t affect your profits negatively. They don’t need to be so separate. Many studies have shown that purposeful businesses have increased profits. Any business of course needs to be commercial – otherwise, it won’t survive and then won’t be able to make any impact – but you can certainly be commercial whilst also having a strong purpose and being a responsible business. It’s about how you do business: the suppliers you work with, how you treat your staff and how your support your clients. We’ve been around for 328 years and we know we need to continue to be purposeful. We’re currently looking at the B-Corp impact assessment and how we can measure our impact. We’re working towards being accredited next year; but we don’t just want to stop there; we want to continue to improve. BCorps are a community of businesses that believe business is a force for good – it’s how all we should all should strive to be.
Business has a huge role in moving to a more just and sustainable world. It has the ability to influence consumers and, specifically to us, financial institutions have a key role as to who and how they finance. At Coutts, for instance, from an asset management perspective, we specifically look for investment opportunities in responsible companies. An example is a US industrial gases company we recently bought shares in that provides technology to enable cleaner energy solutions in the Middle East and China. These activities dramatically improved the company’s profitability, helping drive annual earnings per share growth of 13% over the last five years. So not only can we have a tangible impact on the sustainability of businesses around us but it makes good business sense too.
Peter Flavel with Coutts Executive Chef, Peter Fiori on the Coutts rooftop garden at 440 Strand
What strategies are you putting in place to ensure that ESG and impact investing are standard practice for your clients? What internal and external barriers are you having to overcome to reach this goal?
Ultimately, ESG is standard practice at Coutts. Where most of the industry has specific ‘ESG Funds’, Coutts decided to ensure all investments meet specific criteria so that if a client invests with us they have chosen to fight climate change, promote diversity and establish good working conditions for all. Importantly, we do this without the sustainability-focused strategy costing clients any more and are delighted that recently PRI – the world’s leading proponent of responsible investment – rated our investment strategy as A+.
Our climate strategy across our asset management is working, too. We have already achieved an average 29% reduction in carbon emissions across our funds and portfolios this year and have targeted a 25% reduction in carbon emissions in our funds and portfolios by the end of 2021, and to reduce carbon emissions by 50% across our overall holdings by 2030 – both of which we’re well on track to achieve.
With regard to barriers, there is, I believe, broadly, a real drive from the industry as a whole to be better. That said, there are still ways of working, ways of investing and large amounts of money still tied up in investments or practices that cannot simply be walked away from as livelihoods could be irreversibly damaged. There is also the question of aligning data and ensuring everyone is singing off the same hymn sheet. It can often be quite difficult to measure impact and ensure this is done universally in the same way. Internally, though, we see no barriers – we are all wanting the same thing.
As an institution whose history spans over 300 years, how do you innovate and stay relevant for your clients?
The business couldn’t have survived and excelled for so long without innovating and staying relevant. And although we were the first Wealth Manager to launch an app, and we’re developing cross-channel communications platforms for clients, I think it is the way we go the extra mile for clients that shows the power of innovation. The recent pandemic is a good example of that, as we immediately increased the client communication throughout. Every one of our advisors has been calling their clients regularly to ensure safety and whether there is anything we can help with. On top of that we’ve seen recordbreaking attendances at client zoom conferences that we call ‘Coutts in Conversation’ with speakers such as Sir Paul Nurse and Sarah Woolnough, Terry Waite CBE and Sir Anthony Seldon.
Our chef Peter Fiori has arranged for our roof garden produce to be donated to the Felix Project, who rescue surplus food and deliver it direct to food banks, schools and other charities and much more. On the ESG-front too, we are working with independent consultants Vivid Economics to develop a model of how our investments should look under different global warming scenarios. This will ensure portfolios and funds are well-prepared for the future.
What steps are you taking personally to be more sustainable in your day-to day life?
We needed to replace the roof on my house in Australia and have taken the opportunity to install solar panels with a storage battery for electricity use – normally we are adding back into the grid over each week. And, of course, there’s a lot less travel which I expect to continue as life returns more to normal. We walk and cycle around our home now instead of taking taxis. I think though, like a lot of people, we need to continue to better educate ourselves on the simple things that can be done in our homes and in the way we live.
‘A Sustainable Life’ is out now on the Conduit Conversations feed, available on all major podcast platforms
Learn more about Coutts’ approach to responsible investing on their website.