Mark Campanale, Founder and Executive Director, Carbon Tracker Initiative
Mark Campanale has been thinking about a study published on August 25 by researchers with the Stranded Assets Programme at the University of Oxford’s Smith School of Enterprise and the Environment. The authors argue that because the investment consultant “gatekeepers” who advise pension funds and other large investors are rewarded for short-term gains, they don’t give full consideration to long-term risks (climate change) and opportunities (green investment).
Campanale conceded that investors are hindered by short-termism and performance benchmarks. He noted that in equity markets fund management contracts are for three years and performance is measured against a benchmark over that period. “That tends to fix the mind. It leads to herd behavior.” But, he added, for investment advisors, “It really comes down to what the clients ask them to look at.” So fund managers must themselves confront a question: “Is keeping the world a safe place one of the things that pension fund managers have to address?”
As he prepared to speak during the Climate Investing Conference, he considered the key message he hoped the attendees would take away. “We can’t rely only on solutions provided by governments. Civil society and other stakeholders have to participate,” he said. “What we have seen happen in the last two years is that the financial community, which tends to get lumped in together with the business community, has separated. Investors are coming behind a climate agreement. This is a very important, subtle change.”
Campanale was ready to place the onus for action on investors. If governments don’t come up with something strong in Paris, he asked, what do investors do then? “There has to be an orderly transition to the low-carbon future, and that requires investors to divert capital from fossil fuels and into renewables. It also means beginning to wind down fossil fuel companies, and that may mean replacing board members, putting in place what I would call ‘2 degree-compliant business plans.’”
“Investors don’t have to wait for governments to tell them do this,” he added. “They can just do it.”