Building a fully-fledged responsible organisation

Hello again, and very best wishes to you all, especially given what we are all going through. There have been, and always will be ‘black swan’ events, as our CIO, Fahad Kamal covers in his latest Blog, ‘Tails of the Unexpected’. Yet, while 2021 may not have brought the fresh start that we were hoping for, a new year always provides an opportunity for us all to press reset, to reflect and to look forward, writes Jeremy Hill from Kleinwort Hambros’ Newbury Office.

At Kleinwort Hambros, we are focused on simplifying life’s financial challenges and realising our vision to be the leading responsible bank for client service and expertise. We have set the bar high in terms of saying we want to be recognised for leadership across all aspects of responsibility, including how we manage our clients, our investments, our business and our staff. We have also created a dedicated responsible bank committee to focus on all areas of responsible banking.

What does it mean now to be a responsible bank?  The extraordinary nature of 2020, the ongoing pandemic, as well as climate change, global monetary policy, economic inequality, and many other global dynamics force fundamental responses.  We cannot underestimate the impact the coronavirus has had on our global society. We see already that the pandemic has been a wake-up call for banks and investors, as far as responsibility is concerned.

Building a fully-fledged responsible organisation is a fundamental part of our long-term vision. We strive to make a positive difference to our communities and for our people. Beyond simply managing their finances, we want to help our clients build responsible legacies.

We are a signatory to the Principles for Responsible Investment (PRI), and a member of UKSIF. New regulations will soon be enforced across the industry which will require that we ask every client for their environmental, social and governance (ESG) investment criteria.

Over the past six months, governments have had to pump out capital in an effort to save economies. It is becoming increasingly clear that this funding alone will not be enough to combat this crisis. The crisis has raised bigger questions on how our financial system is structured to respond to such threats.

Defining and refining responsible investing is a continuing journey and the financial services industry is in transition. ESG considerations are becoming increasingly mainstream. Many studies have demonstrated that incorporating ESG factors into the investment process have a positive impact and evidence is becoming increasingly compelling. A key development for instance – in terms of public response - is the recognition that if firms do bad things their share price will fall.

Responsible investing can mean different things to different people. For us, it means incorporating ethical, sustainable and impact investing. We blend these approaches, spanning a spectrum of responsibility, from negative screening, ie the exclusion of specific sectors such as tobacco and thermal coal, to investing in impact funds which generate a measurable, social and/or environmental impact.

We have created a range of responsible strategies constructed from best-in-class companies, steering clear of those that do not measure up to our standards by using an ESG ratings system. Challenges remain in accessing suitable implementation in certain asset classes, such as certain hedge fund strategies, but the launch of new products continues to evolve.

In the wake of the coronavirus pandemic, it has become apparent that the social and environmental themes which underpin responsible investing have a direct influence on the future of our society. Our values are deeply rooted in the belief that investors can and should be able to engage with such themes, and that we must harness the power of capital to effect positive change. Our ethos is defined by this intent.

We have an exciting opportunity to build a brighter future for us all, as we continue our transformation journey to fulfil our vision to be the leading responsible bank for client service and expertise. Thank you for reading and here’s to collaborating to realise positive outcomes.

Jeremy Hill

jeremy.hill@kleinworthambros.com

020 7597 3445

kleinworthambros.com