Mark Wilson, Group Chief Executive, Aviva. Speeches at the World Investment Forum, Geneva, 14 th October 2014.

Transcription

1 Mark Wilson, Group Chief Executive, Aviva. Speeches at the World Investment Forum, Geneva, 14 th October Good morning and thank you. It s great to be here. As I waited for my flight last night I prepared for today but also snatched a few moments to catch up on the newspapers. And the announcements about the Nobel Prizes caught my eye. Now, I m sure we all applaud the award of the Peace Prize to Malala, the young Pakistani child education activist. 2. But another award also grabbed my attention: the Nobel Prize for Medicine. It was awarded to a team of researchers, who solved a puzzle that has perplexed scientists and philosophers for centuries. 3. This is nothing less than decoding the brain s global positioning system our personal satnav. How we use our 86 billion neurons to work out where we ve come from, where we are, where we re going and how to get there. 4. One of the winning scientists described the last few years as one long drawn out eureka moment. 5. We ve got to kickstart our own continuous eureka moment here on sustainability. We know where we ve come from. Now we ve got to work out where we re going and how to get there. 6. We ve all seen the images of what an unsustainable future looks like: polar bears on melting ice, expanding deserts, extreme rain and violent storm. The stuff of Hollywood movies. 7. And as the CEO of a global insurer and investor like Aviva, this is not an image I relish. 8. You see, I have an entirely different vision of the future. 9. It s a vision of patient capital rather than hot money. 1

2 10. I don t trust hot money, yet many governments add fuel to hot money with inconsistent policies and regulation. 11. And yet regulators, exchanges and IFRS accounting principles drive us to look short term. That s to everyone s detriment. 12. This short term regulatory environment is like kryptonite to sustainability. 13. That s why one of Aviva s core values is to create legacy I call it being a good ancestor. So what we do now still resonates and creates value in the future. 14. And that s why we wrote this roadmap. It s called How Can the UN Sustainable Development Goals Harness Global Capital Markets. 15. We are proposing 3 things: 16. One. Systemic transparency and consistency. A simple reporting framework for everyone involved in investment decisions. 17. Two. Understanding. 18. That means increasing financial literacy so ordinary people understand the impact of investments. 19. Three. Aligning incentives. So that everyone in the investment process thinks long term. 20. Businesses like ours, and government and agencies like many of you, have to step up to the mark. We need to make these three things happen. 2

3 21. Not being sustainable could, in my view, be the biggest market failure of all time. 22. And, in this case, there won t be any central bankers to bail us out. 3

4 Second speech on the role of the private sector in financing infrastructure. 1. Thank you. I d like to keep my intervention brief. Because my message here is pretty simple. 2. Does the private sector have a role in providing sustainable infrastructure? Absolutely it does. 3. I know that everyone is looking to me as investor and insurer to provide long term capital. 4. There is no shortage of suitors, but there is a shortage of good investment propositions. 5. Investments also have to bring us an acceptable long term return above the bond rates. 6. Many governments around the world ask me to invest in infrastructure. 7. They ask me what conditions we want. But what we don't want is equally important. 8. What we don t want is governments only looking as far as the short term and the next election. 9. What we do want is a stable policy environment with respect to infrastructure. 10. And the easiest way to achieve that is to have underlying government guarantees on infrastructure projects so that governments take on some of the risk and cap the downside. 4

5 11. Infrastructure in emerging markets carries risk, but this is ok as long as governments share the risk. An uncertain downside is the quickest way to kill an investment. 12. And emerging markets have financed their infrastructure in this way for decades. It s a perfect alignment of public good with the insatiable capitalist desire for profit. 13. The new Sustainable Development Goals the SDGs - present us with the opportunity to embed a long term approach. 14. We must have something simple, effective and focused. 15. The draft text just doesn t cut it. 16. Today I m calling for a new global stakeholder group, mandated by member states and facilitated by the United Nations - that is charged with getting sustainable finance onto the agenda and into the Sustainable Development Goals. 17. The need for this group was also a recommendation in UNCTAD s 2014 World Investment Report. 18. The different bodies and institutions have to get their heads together and speak with a unified voice. 19. Currently it is like an orchestra, an opera and a rock band playing on the same stage at the same time. Individually they might make sense, but together they don't work and the audience won't hear the harmonies. 20. And investors have got to be on the stage. 21. There s $200 trillion in capital out there to be harnessed. 5

6 22. And to carry on with my musical metaphor, getting the harmonies right could mean some truly beautiful music! 6

7 Sustainable Stock Exchange Event. NB. This is a prepared text but Mark Wilson spoke more informally. His comments will be drawn from it. 1. I ve always believed that the responsibility of business is to create legacy or, as I put it, be a good ancestor. This is about how the decisions we make today stack up in 5, 10 or 20 years time and still produce value. 2. This is common sense. It makes sense for the planet. And it s good business sense. 3. The current unsustainable structure of the global economy might mean an economic feast today but lead to famine tomorrow. 4. Speaking for a company like Aviva, a global asset owner and insurer, I need the right information to price risk and invest. 5. If I don t, I m flying blind. And at the moment the only information available is about the short term. It s hardly surprising that investors make decisions based on short term returns. 6. That s why I welcome the publication of this new report from Corporate Knights, which we sponsored. 7. It ranks the world s stock exchanges, based on how well they encourage listed companies to provide data on very basic measures of sustainability. This includes employee turnover, energy usage, greenhouse gas emissions, and waste and water. Very basic, but a good start. 8. It makes for compelling, but somewhat sobering, reading and there s a huge divergence in the rankings. 7

8 9. The Helsinki Exchange heads the table all the companies listed disclose these measures, with Amsterdam coming second. The London Stock Exchange, where we re listed, comes in at number nine. 10. We ve made some progress. But not enough. And it s in stark contrast to investors growing interest in sustainable investment strategies. So we ve got to ask ourselves what we ve got to do. And I assume that many learned people in the room can help me answer that. Second Intervention 1. I spoke earlier about the Corporate Knights Report and the problem. Here s a solution. There s three things in the report I think are critical. 2. First. Listing rules must make it compulsory to publish annual integrated accounts on a comply or explain basis. 3. Second. Global consistency and simplicity in those rules. We don t want one hundred exchanges applying one hundred different sets of rules and reporting criteria. 4. If we get regulation wrong, regulation becomes like bureaucratic molasses. It might smell sweet, but it gives you terrible indigestion. 5. Third, if I may be candid, bodies interested in this initiative need to get their heads together and make it happen, with UNCTAD taking a special role as convenor. 6. Ladies and gentlemen, that s three simple ingredients. Transparency. Consistency. Collaboration. 8

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