[Marxism] City fund managers call for rethink of capitalism

Louis Proyect lnp3 at panix.com
Sun Nov 17 14:01:12 MST 2019

FT.com, Nov. 14, 2019
City fund managers call for rethink of capitalism
Patrick Jenkins in London NOVEMBER 14 2019Print this page102

Two of the world’s biggest fund management bosses have called for a 
rethink of capitalism and its obsession with constant economic growth, 
in a plaintive appeal for business and governments to deal more 
decisively with the challenges of climate change.

Anne Richards, chief executive of Fidelity International, said the world 
must end “our obsession with ever-increasing GDP” and the “primacy of 
shareholders” to foster the kind of long-term thinking that would help 
protect the environment.

Andreas Utermann, CEO of Allianz Global Investors, said the world’s 
growth mania — “nominal GDP growth, supported by population growth, [and 
profit] growth” — was clearly unsustainable, and suggested that 
capitalism in its current form is “borrowing from the future while 
destroying the environment”.

The pleas for reform, delivered as part of an FT City Network debate on 
whether capitalism could fix climate change, came in response to an 
address by Gail Bradbrook, co-founder of Extinction Rebellion, in which 
she called for wholesale reform of the current economic system to avert 
global disaster.

Mr Utermann, who announced this week that he will retire from AllianzGI 
after a 17-year career with the asset manager, said: “A more holistic 
approach to ‘growth’ needs to evolve, looking to capture societal and 
environmental benefits and costs.

“More sophisticated measures than GDP per capita are required to 
determine whether capitalism is delivering to all stakeholders without 
borrowing from the future while destroying the environment.” It was 
“self-evident that this is not sustainable”, he said.

In her critique of the short-termist outlook of shareholders, Ms 
Richards, who has also worked in senior roles at Aberdeen Asset 
Management and M&G, called for a “pivot [away] from the Milton Friedman 
concept of capitalism and the primacy of shareholders, who may have a 
very short-term involvement with an individual company, towards a wider 
stakeholder approach”.

The surprisingly outspoken interventions from two of the City’s best 
known asset managers reflected a wider view among contributors to the FT 
City Network debate that business and government must urgently improve 
their response to the growing evidence of environmental catastrophe. 
“Solving climate change through inclusive capitalism will define our 
generation,” said Nigel Wilson, chief executive of Legal & General, 
another big asset manager.

Several participants hailed the role that UK-based climate change 
activist group Extinction Rebellion has played — alongside the likes of 
Swedish teenager Greta Thunberg and film-maker David Attenborough — to 
highlight the issue. Recent protests have focused in part on the City of 
London and the role that banks, asset managers and insurers play in 
financing and sustaining some of the world’s most environmentally 
damaging industries, from oil extraction to vehicle manufacture.

Central banks’ mandates allow them to tackle climate change
Several City Network contributors said that, while it was impossible to 
instantly blacklist climate unfriendly firms, it was vital that 
companies set tough environmental targets, measure whether they were met 
and reward managers on their performance, rather than on short-term profit.

“Of course it’s not ‘either profits or sustainability’,” said Robert 
Swannell, the former financier and Marks and Spencer chairman who now 
chairs the government’s investment arm UKGI. “But let us ditch the 
shareholder value maximisation mantra and look for metrics that not only 
measure financial performance but also measure positive or negative 
impact on society.”

The shift towards a broader interest in stakeholders was foreshadowed in 
the US by a summertime announcement from the Business Roundtable, a key 
US corporate lobby group. It insisted that capitalism was the best way 
to protect jobs in a sustainable economy with “a healthy environment”, 
though it made no mention of climate change.

The FT City Network is a panel of more than 50 senior figures from 
across the City of London. Each month the forum debates a subject of 
topical interest.

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