Sunday Brunch - bridging the chasm

Or are we over simplifying the sustainability finance debate

Anyone who works in the finance industry knows the mantra. Simple is best, as it helps people understand what it is you are trying to get across. Which leads on to the frequent requirement that the pitch has to 'fit on one page', the 'three bullet point' rule, and the 'can you explain the investment case in under 1 minute?' axiom in finance.

We get that. We need to grab clients attention. In the fast paced world we live in, if you lose them at the start, you never get them back.

But - what happens next. Your simplified pitch has done its work. For some clients, that is it. They love the narrative so much that they act - they invest or buy or sell. That is great if you are a trader, who needs to stay a head of the market, looking to take advantage of information arbitrage. Gaps in the market’s knowledge or understanding that close quickly.

But for most clients, that is just the start of the process. They want to dig down some more. They want to understand the risks in the opportunity, and the consequences of the tradeoffs. because every investment decision has tradeoffs and consequences.

And if you are an asset owner - a pension fund, a family office, an endowment or charity you need to know more. You want to understand how the investment helps or hinders your values.

Put simply, you need to park the simple narrative and start to build a proper investment case. Which means warts and all. No simple win win scenarios. Back to the real world where very choice has consequences.

Which is where we hit a number of problems. The first is that there is often more information, more content, than any single person can absorb. The second is that attention spans have got shorter.

And thirdly, and perhaps most importantly, the world has gone binary. We are increasingly heading into absolute certainty echo chambers.

We seem to be losing our ability to work with uncertainty. To see the world as not black and white, but multiple shades of grey. Sometimes this is for the best of reasons. We have passion for our cause and we want action, preferably now. And so we have limited tolerance for those who seem to be standing in our way.

But, in many investing related areas, this false certainty is a barrier to real progress. We need to talk and listen, and we need to find workable solutions.

For those of you who live in Europe - stay safe this summer (ironically it’s raining here just out of London). We will continue to publish over the summer break, so look out for us. Some poolside reading to make you think.

You can read the full blog on The Sustainable Investor website