Film director Richard Curtis: ‘the time for tinkering is coming to an end’
If UK pension savers knew how their money was invested, funds would be more inclined to invest exclusively in environmental, social and governance (ESG) assets. So argues Richard Curtis, the screenwriter, director and co-founder of Comic Relief. He has launched a public campaign, Make My Money Matter, to pressure UK pension funds to invest more sustainably.
The UK is in the middle of a consumer revolution, Curtis tells GlobalCapital. People are beginning to further their beliefs with their wallets and Make My Money Matter believes an important way of doing that is looking at pension funds.
The campaign group, which launched this week, claims that moving to a sustainable pension fund can be as much as 27 times more effective than giving up flying and becoming a vegan.
How much pension funds should consider ESG issues when making investment decisions has long been debated. For years, funds have been under pressure from the government, regulators and some trade bodies to make faster progress.
A Pension Schemes Bill, which is being debated in Parliament, will bring new disclosure requirements, forcing funds to say how climate change will impact their assets.
Compared with other investors, pension funds are often said to face less scrutiny from their end investors: individual pension savers. Many rely on asset managers to do their ESG thinking for them, but this can lead to a polite stand-off in which the asset manager will only move as far as the pension fund has explicitly told it to.
What is not in doubt is that UK pension funds have serious firepower. A report by Willis Towers Watson puts the UK pension pot at roughly £2.7tr.
According to a report from advisory firm The Good Economy last September, more than half of savers would prefer a scheme which has all its assets in sustainable investments, or at least a portion. Just 14% would choose a fund which does not seek to have a positive impact.
Curtis is mostly known for writing Blackadder with Ben Elton and films like Four Weddings and a Funeral and Notting Hill, but he has also played a serious hand in charity campaigns Comic Relief, Live 8 and Make Poverty History. GlobalCapital spoke with him and Make My Money Matter's chief executive, Tony Burdon.
Burdon spent nearly 20 years in the civil service, first as a policy adviser at the Treasury and finally as deputy director at the Department for International Development.
GlobalCapital: What led you to start this campaign? Why a petition, and what is your ultimate aim here? In short, when will you feel the campaign can end?
Richard Curtis: When I started Comic Relief I was hoping the campaign would end in 1988, so I’m always disappointed. I can’t actually live long enough if this one went on as long — I’d be as old as Olivia de Havilland.
One of the messages we keep getting is that public pressure isn’t there when it comes to pension investments. The door has been slightly ajar for some time. People were thinking about these issues, both on the government and institutional pension level. But there wasn’t enough to make it a public discussion.
Investment is a fundamental driver of sustainability, clean supply chains and diversity. All these things we'd like to make a difference on and we've actually got money in that pot. The UK aid budget is £14bn or £15bn but the pension pot in the UK is £3.1tr.
This realisation comes along with a real feeling that we’re in the middle of a consumer revolution, in how people understand the effects of what they buy. You saw it dramatically with plastic, where people suddenly don't want to buy plastic bottles. Then every company which makes containers had to react to that. You see it in clothes in the way people stop buying things from a company if they hear it uses sweatshops. You see it in food sourcing.
Now that everyone has to have a pension it seems like a moment of great consumer choice, where people can actually exercise their ethics and their values. It's very timely in terms of people opening their hearts to these issues, and the consumer being inclined to actually have, you know, ethics-based consumption, rather than just whatever's cheapest.
The big question for me as an outsider was are you going to lose money by doing this? A lot of the discussions seem to reveal that that is not the case and actually ethical and sustainable products are in many cases performing better.
GlobalCapital: OK, but in principle if ethical investment didn’t outperform other investments, should investors have an obligation to buy sustainably?
Richard Curtis: Well, they definitely should because implicit in the job of pensions is to be sustainable. You're tempted to trust firms that have a long term look and they're looking at the SDGs (United Nations' Sustainable Development Goals) that are sustainable.
There's no point having an extra £10,000 in a world on fire. But I think we've come in at quite a good moment where the statistics seem to support our point of view.
Tony Burdon: Companies that don't respond to climate change, and the environmental emergency, will lose money in the future.
Richard Curtis: Mark Carney was very interesting on this. In our first conversation, he said risk used to be interpreted by dropping share prices and value of companies but he said for him the three fundamental risks are these. One, are your employees and your consumers going to want to work for you and buy from you if you're not sustainable? Two, if you don't have a long term view, are you going to get caught out by the changing market and the changing world. And three, is your company going to get knocked by a scandal, where you suddenly lose all your value, because it's turned out that you fixed a deceiver in a car or whatever.
GlobalCapital: What are the pressure points for pension funds? Is it largely to do with public perception? As in, if the public became more aware of what their pension fund was going towards, non-sustainable funds may lose customers?
Richard Curtis: Yes, but I prefer to look at it the other way around, in terms of enthusiasm and opportunity. There's a great new fund that's doing incredibly well in Australia called Future Super, and they've sold this ethical element.
We have evidence that people would actually put more money into their pension pot, if they found out that it was doing good. We’re not really a sort of ‘change your pension provider’ campaign group. In the long term we want all pension providers to provide a brilliant default pension that's also sustainable.
Tony Burdon: We want pension savers to know what a good pension looks like and what a bad one looks like too. Then both employers who provide schemes for their staff and individuals who choose their own pensions can make informed choices and do what they think is right.
This is initially a UK campaign, but have you seen any kind of equivalent, or comparable organisations popping up across Europe, and are there conversations between countries on this yet?
Tony Burdon: We want to get going in the UK but we're going to reach out across Europe and the G7 countries, because we want pensions to play their part in a global recovery. The UK is hosting the G7 next year, and hosting COP26 (the United Nations Climate Change Conference in 2021).
We’ve got to look for alignment across Europe with other G7 and G20 countries, reach out to partners in each country, and get a campaign going that’s looking at pensions as part of the global recovery. We’re looking at what they're doing in France, in Germany, in the Netherlands, Norway and elsewhere.
GlobalCapital: It is often said that institutional investors, be they insurance companies or pension funds, have been the slowest actors in finance to take sustainability seriously. Which is in some senses, given the nature of their business, is surprising. That may be to do with their end investors, or their customers in other words, not demanding it.
Richard Curtis: Gosh, this discussion is changing fast though. I was talking to the Lord Mayor of London recently, and he said that it was literally in the last eight months that sustainability suddenly came up in every single meeting he was having about London finance travelling around the world. He said even 12 months ago that wasn't the case.
Tragically after Covid-19 this question of how we protect ourselves against huge shocks becomes a priority. I remember someone saying to me, the insurance business ceases to exist when the temperature goes up by 3.5 degrees because nothing will be insurable.
There's a new reality to the possibility of big changes so I'm hoping we’ll move fast and actually change fast, and we'd like to be one of the levers of that change.
GlobalCapital: How will you seek to differentiate between pension funds, though. I don’t know how much public information there is about how pension funds invest their money, and it may be hard to consistently get that information if it's not public. How do you as a campaign group scrutinise what is perhaps quite an opaque area of investment?
Richard Curtis: I think that's changing. I know that Mark Carney is trying to do that for the world, where you have to announce the carbon effect on your portfolio. This would be enormously helpful for transparency. In some of the tougher areas, around diversity and gender, it may be quite hard.
Tony Burdon: One of the things we're calling for is pension funds to commit to making sure their portfolio is consistent with the Paris agreement: net zero emissions by 2050 and halving by 2030. So one very ready way of judging is to track progress against this.
We've also asked that there be requirements in the new UK pension bill for them to project emissions to 2030 and 2050.
GlobalCapital: I see on your website that you have a list of funds, who are kind of pioneering, or first in class, for sustainability. I was wondering whether or not that will be extended to funds that are performing poorly on an ESG basis.
Tony Burdon: Engaging positively is a really good thing. Naming and shaming, maybe we'll get there but I think what we want to do is encourage people and get that positivity.
What you've got with pensions, as you know, are not sophisticated investors, but busy working people who are often already making tough choices. People don't understand what's going on with their money, and how it's being invested.
The brochure you get once a year, telling you how your pension’s doing is as opaque as you could ever imagine. People probably just chuck it in the bin.
Pension funds have got to communicate better with savers, and listen to what they're saying. The majority of people are very worried about climate change and they want to see their savings invested in things that don't do harm.
And as Richard said, somewhere around 52% of people surveyed in Britain would save more if they knew their pensions did good.
GlobalCapital: I was wondering how much of an impact you’re hoping to have not just on pension funds but also on the UK government, which has a certain degree of power, particularly in regards to transparency.
Tony Burdon: The UK government's hosting COP26 next year, and this suddenly brings together all the different bits of government, you know, wanting to have that ambition around net zero. So, whether it's Treasury; or the Department for International Development; Work and Pensions; Business, they’re together in this.
Richard Curtis: I'm also very excited by all the examples that in fact aren't climate related, you know, developing vaccines, affordable housing, affordable health care buildings, special schools, all these kinds of things. That's what you want to try to excite people over, who are taking out their pensions. I love the idea of local pensions helping local businesses, which is something that has started to happen. I think it could completely alter people's attitude to their pensions, as an opportunity to improve the world they're going to inherit their pensions into.
GlobalCapital: Final question that I wanted to ask, because it’s bugged me for years now. Sustainability has clearly become one of the most important aspects on finance, with a lot of talk and some action from banks, investors and companies. But I get this overwhelming feeling sometimes that all we’re doing is rearranging the deck chairs on the Titanic, and actually if we’re really interested in pushing back against climate change we need to do much, much more. My question is not, ‘is this campaign radical’, and more ‘is this campaign radical enough?’
Richard Curtis: You're quite right to ask that question. We’re really hoping that financial advantage, consumer tastes and legislation will all accelerate that concern of yours into a generation where you actually say: ‘well, sustainability has turned out’.
I attended a conference at the Guildhall where people said the move towards sustainability was the biggest potential goldmine since the industrial revolution. My instinct is that it is. There will be a gear shift, and the time for tinkering is coming to an end.
There are new models appearing every day. If you look at Unilever which made an absolutely big decision to look at every single product, and see whether or not they were doing the right thing, and then see whether they could mark the fact that they were doing the right thing.
When you talk to the Secretary General of the UN, Antonio Guteres, he said businesses are being much more energetic and proactive on these issues.
The shift towards renewable energy is a massive source of market shift, a really substantial one.
Paul Polman said to me that the time of Corporate Social Responsibility is being replaced by the time of Responsible Social Corporations.
My daughter's expecting an app that when she walks down the high street she says she’ll be able to say how well Zara does compared to H&M and Primark, and then choose where to shop from that.
You can do the same with supermarkets, with energy provider, or your pension providers.
Tony Burdon: The pension industry is one of the laggards on this, lots of companies are responding, they're engaging with their customers, but the pensions industry is truly 100 years behind on this.