The Responsible Investor Podcast

The world is descending on Antalya, Turkey, to attend the UN COP31 climate conference. Electrification and investible projects top the policy agenda, while the cost of extreme weather after Western Europe's record-breaking heat this summer has made the discussion on resilience and adaptation even more urgent. US investor Allspring Global Investments is attending the talks for the first time. Henrietta Pacquement, chief operating officer for fixed income and head of sustainability, joins senior reporter Dominic Webb on the Responsible Investor podcast. Topics include why the US manager is attending in person for the first time, her expectations for the conference and the "renewed sense of urgency" around the COP process.

Investors increasingly agree that tackling systemic risks such as climate change, nature loss and AI requires policy engagement – but what does effective engagement look like, who should do it and who pays for it? In this episode, editor-in-chief Lucy Fitzgeorge-Parker speaks to Steve Waygood, former chief sustainable finance officer at Aviva Investors and now CEO of the Finance Transition Centre. Waygood shares lessons from nearly 20 years leading one of the industry’s most respected policy engagement programmes, including helping create the World Benchmarking Alliance. He explains why policy engagement must be grounded in the investment process, why asset managers as well as owners have a role and how the industry’s free-rider problem could be fixed. He also discusses the difference between engagement and lobbying, the impact of US politics and where engagement could have most impact now.

Governments and stakeholders meet in Yerevan, Armenia, this week for the UN COP17 summit on biodiversity, where they will review progress on the 2022 Kunming-Montreal Global Biodiversity Framework (GBF). Designed to halt and reverse biodiversity loss by 2030, the GBF has generated unprecedented engagement and action but current efforts fall well short, a UN report has said – especially on finance. Investors appreciate the need to engage the policy and regulatory environment, but where should they get started? In this episode, our nature reporter Gina Gambetta sits down with Ben Allen, senior nature and environment lead at the Principles for Responsible Investment. Allen digs into key policy areas that investors can focus on, as well as examples of work already underway. He also discusses how nature can be integrated into climate resilience and adaptation.

The AI boom is reshaping the global economy, dominating market discussions and taking over the internet. Not to mention the outside chance it could result in the end of humanity. On this episode, we speak to Parnassus Investments about how investors are thinking about responsible AI, and how they are engaging on the topic. Senior reporter Dominic Webb is joined by Marion Macindoe, Parnassus' managing director for sustainable investment strategy, and Krishna Chintalapalli, portfolio manager of the $5.4 billion Parnassus Value Equity Fund and the Parnassus Value Select ETF. Topics range from AI stewardship to data centre construction and the social licence of AI firms. The episode also explores the use of AI in defence and national security, and how the negative externalities of AI are showing up in Parnassus portfolios.

Climate action is facing headwinds in North America but Canada’s big pension funds are staying the course. That’s the message from Bertrand Millot, head of sustainability at La Caisse. The $550 billion manager of Quebec’s public pension funds set its first climate strategy in 2017, and by the end of last year, it had $164 billion allocated to “climate action investments”. In this episode, he explains the evolution of La Caisse’s approach to climate investment over the past decade to RI editor-in-chief Lucy Fitzgeorge-Parker. As well as setting out what La Caisse wants to see from corporates – board-level climate capabilities, credible transition plans and relevant disclosures – Millot makes the case for asset owner involvement in policy engagement, stresses the power of collective action, and looks at the opportunities for investment in climate adaptation.

In the era of president Donald Trump and the ESG backlash, climate diplomats have choppy waters to navigate. Countries are reeling from yet another year of extreme weather as investors look to build resilience into their portfolios. In this episode, deputy editor Jack Graham talks to Rachel Kyte, the UK special representative for climate, about her role under the UK's new prime minister Andy Burnham, how she interacts with investors and what the world must do to respond to climate extremes. Topics include how the government is engaging with Trump's United States on energy issues, China's potential hosting of the UN COP33 summit, and her work on changing the risk perception of emerging markets.

Europe's summer heatwaves have caused widespread destruction, from the Rhine river hitting record lows to wildfires across France, Italy and Spain. It is also having severe impact beneath our feet. Many investors appreciate the importance of soil to our food systems, flood resilience and more. But how do events like extreme heat impact soil health, and how can we adapt? In this episode, our nature reporter Gina Gambetta sits down with Paul Hallett, a professor of soil science at the University of Aberdeen and president of the British Society of Soil Science. Hallett digs into some of the most exciting soil solutions out there, from the power of peas to boost nitrogen levels to acoustic technologies that can rapidly measure soil health. He also explains the implications of the heatwaves and droughts, telling us what's actually happening underground and how investors should be responding – and he looks ahead to next week's UN COP17 conference on desertification, which starts in Ulaanbaatar, Mongolia on Monday.

"Doing well by doing good" was an often-heard refrain at conferences throughout the early 2020s. It was even supported by influential academic studies that claimed sustainability and investment performance were highly correlated. Then came the invasion of Ukraine, giving a boost to dirty and opaque sectors such as energy and defence, and sustainability began to look like a drag on returns. ESG came under fire, with right-wing commentators arguing that it contravened funds' fiduciary duty. Four years on, with new conflicts emerging in the Middle East, the relationship between sustainability and performance is as hotly debated as ever. In this episode, editor Lucy Fitzgeorge-Parker discusses the evolution of thinking on the topic with Jason Mitchell, CIO for responsible investment at Man Group. They discuss the performance implications of exclusionary strategies, the use of quantitative methods to generate trading signals from climate and other non-financial data, innovative ways to leverage AI in sustainable investment, and how ESG might be depoliticised.

The European Union's Sustainable Finance Disclosure Regulation (SFDR) is one of the most important frameworks in the ESG fund space, and one of the biggest headaches. Since the European Commission seized the chance to turn the regulation into a truly usable system as part of its simplification agenda, investors have been nervously awaiting the finalised changes. In this episode, senior reporters Khalid Azizuddin and Dominic Webb discuss the proposed reforms, some of the key concerns raised by investors from sovereign bonds on fossil fuel exclusions, and how the European Parliament and Council of the EU positions are shaping up. They also set out how trilogue negotiations between Council, Parliament and Commission may play out, and what political pitfalls lie in wait as Parliament develops its final position.

Have investors overstated their ability to drive climate action? Have top-down, targets-driven models of decarbonisation taken the industry down a blind alley? And if so, where should sustainability-minded asset owners and managers refocus their efforts? A new report from the LSE argues for a reappraisal of the topic, based on an acceptance that investor action on climate will be dependent on government policy and technology development. In this episode, editor Lucy Fitzgeorge-Parker speaks with Tom Gosling, the report's co-author and professor in practice and director of the Initiative in Sustainable Finance at the London School of Economics, about what this recalibration means in practice – and whether the responsible investment community is ready for it. Key topics include the future of corporate net-zero targets, the challenges of supporting the energy transition in emerging markets, and the practicability – or otherwise – of policy engagement on climate by institutional investors.