People and Purpose: Putting Positive Impact at The Heart of Economic Growth

- Good evening to everyone, both in the hall and online at home. I'm Wendy Piatt, I'm honored to be the chief executive of Gresham College. and I'm so proud because Gresham truly is a special place. Established in 1597, the college was the first higher education institution in London, the first in England to teach in English as well as Latin, and the first to offer university lectures across a wide range of academic disciplines to ordinary Londoners free of charge. And that time-honored mission still prevails,

we want many more people from a broader range of backgrounds, ages, and nationalities to benefit from the outstanding education that Gresham offers, still free of charge. So we're trying to broaden our appeal, reach out to a wider audience, and cater for the new and diverse ways people learn in the 21st century, whilst of course maintaining academic rigor. And in the first year of our new strategy, we were more successful than we dared hope in expanding our audience. Our lectures were watched more than 8 million times, and that's up from just under 4 million in the previous year. And I'm pleased to report that we've maintained that momentum in this academic year. Our audience is now very global, for example, 30% of our viewers reside in the US. Now, of the many lectures and videos we produce, this event is one of the real highlights of the Gresham calendar, and I'm delighted that our headline act this year is the Right Honorable the Lord Mayor, Alderman Vincent Keaveny, who is a partner in the international law firm DLA Piper, he's also trustee of several music and theater organizations, and a member of the Court of the Woolmen's Company. Previously, he was master of the City of London Solicitors' Company, and president of the City of London Law Society, but most importantly, the lord mayor also happens to be president of Gresham College. And the City has always been important to us, not least because both the Corporation and the Mercers' Company were entrusted by Sir Thomas Gresham, back in 1579, to oversee and support the college. The focus of this year's event is how to build a more sustainable and inclusive economy, and we'll be hearing some reflections and observations on this theme from our really esteemed panel, which comprises Sir Ronald Cohen, Dame Elizabeth Corley, and Tony Burdon. But first, I'm absolutely delighted to hand over to the Lord Mayor, Alderman Vincent Keaveny.(audience applauds)- The world has fundamentally changed in recent times. Exactly two years ago, we were plunged unexpectedly into the first lockdown. This turbulent period in world history has made people reassess what truly matters, what makes life worth living. For the optimists, it's an opportunity to reset and reevaluate what we want our planet, our society, and our future to look like. Even before COVID struck, there was a huge movement calling for urgent action to tackle the challenge that threatens our world. The UN's latest report on climate change makes for a sobering read. Put simply, we have passed the point of no return. Time is running out, and we need to move now to secure our transition to a fairer and more sustainable future, otherwise the impact will be devastating. We've all been horrified by the Russian invasion of Ukraine, and by that growing humanitarian crisis it has provoked. It is not just a shocking assault on the people of Ukraine, but also on the values and liberties which we cherish so much in the United Kingdom. We've read in the papers how Russia's hold on gas pipelines has affected different countries' responses to what has unfolded. Our government, along with many others, are rightly focused on what they can do to help the people of Ukraine and bring this appalling crisis to an end. And I believe this is where the private sector can step up. We need to find alternative sources of energy, new forms of technology, and be less reliant on certain parts of the world. This is just one of the factors driving the cost of living crisis, which is at the forefront of so many people's minds right now. Impact investment is part of the solution to this. For those of you who don't know, what I mean by that is investments which have a measurable positive outcome for social or environmental goals, alongside financial gain. I'm going to touch on some examples of this later in my lecture. We've seen how quickly the political landscape can change, and the need to deliver greater social purpose in business will only increase in importance. The private capital and appetite for change are both there, and we need to mobilize this at pace into opportunities that can help shape and create a better world. Before I delve into how impact investing plays a crucial role in bringing all this to life, let's begin to think why people invest. At its most basic level, it's to reach financial goals, drive financial returns, and grow one's own saving pot. Investing also plays a key role in establishing new businesses, as well as expansion opportunities. This then creates new products, offers, and of course jobs. When a new venture needs financial support, investors step in and provide this. There's an excitement in watching a company grow and knowing that, as an investor, you are part of that journey. All investments have an economic, environmental, and social impact, whether intentional or not. If we look at impact investing specifically, this is an area that seeks to create a positive, measurable social and environmental impact alongside a financial return. This growing market provides capital to address the challenges I spoke about just a moment ago, clean energy and renewables, conservation, sustainable agriculture, access to housing, healthcare, and education. There's been so much discussion about how millennials have played a part in changing the investment landscape. Morgan Stanley reported recently that millennials are twice as likely to invest in companies targeting social or environmental goals. Put simply, they are more likely to invest in organizations that have a positive impact on society. This is leading to increasing demand for responsible investments and purpose-driven businesses, whether it's an ESG-friendly portfolio that, say, excludes tobacco or coal, choosing to buy an item of clothing from a business that has a one purchased, one donated ethos, or boycotting companies that put profit before people. People are increasingly choosing products that align with their values, they are demanding better. Well so far so good, we have a situation with people wanting to invest in companies that create a better society, a better world, a better tomorrow. The impacts of responsible investments can be measured along a spectrum, starting with investments that avoid harm, then investments which benefit stakeholders, and finally, investments which contribute to solutions, and blindness to an investment's impact increases financial and reputational risk. Shifting more investments from those that avoid harm to those that contribute to solutions will unlock the power of finance to accelerate the just transition and leveling-up agendas. This will also finance the sustainable development goals set by the United Nations.

impact investing is not philanthropic capital, it's a way to manage risk and capture financial opportunity that delivers returns. Put simply, it's good business sense. There isn't just a business benefit to impact investing. At its heart, social impact focuses on improving the wellbeing of individuals and communities, making sure people get an education, providing them with skills for future progression, at an even more basic level, it's about access to food and healthcare. These are all economic and social rights as set out in the UN's Declaration of Human Rights. Impact investing makes these goals even more attainable. So what's the problem? First, ESG measurements have mostly focused on environmental impacts, yet leveling up and a just transition require an equal focus on social impact. Companies that might score highly on environmental issues can have serious social and human rights issues in their supply chains. For example, among investors who screen using ESG criteria, 88% ranked environment as a current priority, whereas only 52% ranked social as a priority. We need to move more investors from simple ESG onto impact investing. These flows, which have the most transformational potential, are still just a drop in the ocean compared to less impactful responsible investments. According to "Morning Star," global sustainable fund assets were estimated at $3.9 trillion, $3.9 trillion at the end of September, 2021, yet the size of the impact investing market is estimated at only$715 billion globally, that's a difference of$3 trillion, 185 billion, so it's a significant gap, it's huge, in fact. Unless we unlock private capital in both developed and developing markets for impact, we won't have the systemic change that we need. We need better data to convert investor demand into action and to realize full opportunity within impact investing. The International Finance Corporation estimates that impact investing in private markets could be as large as $2.1 trillion in assets under management, but only 505 billion is clearly measured for its social and financial impact. We need global convergence and consolidation of existing data and measurement frameworks to accelerate this at scale. With the enormous opportunities and demand, there are, however, justifiable concerns at the moment about impact-washing. Like its green-washing cousin, this can be defined as any marketing claim about a product triggering a change in the real economy that cannot be supported by evidence, headlines over substance. And the best remedy for this, a framework in place by which companies measure and demonstrate how they are making the world a better place. I want to say this is not a question of lack of trust in business, but that the stakes are so high and the need to get this right is so urgent, especially when you consider that impact investing goes one step up further than ESG investing. It doesn't just aim to avoid a negative impact, it is also trying to create that positive change. Unfortunately, efforts to avoid impact-washing are still largely fragmented. In the Global Impact Investing Network 2018 survey, 69% of respondents said they use proprietary frameworks not aligned to external methodologies to measure impact and impact-washing. This doesn't necessarily mean they're engaged in impact-washing, but it does make comparisons more difficult. What can we do about these complications, complications that hinder our progress towards rebuilding a more sustainable and inclusive economy? As a wise man once said, do or do not, there is no try. First, let's answer the easy question, why is this all so urgent? The obvious answer is climate change. As I highlighted at the beginning of my talk, we need to move fast. Secondly, do we still need to convince people that we need to save the planet? I hope not, and I'm sure in this audience that's not the case. We are at the stage where people know we need to do better and build back better, from bankers, to politicians, to activists, everyone pretty much is in agreement, but we need that same sense of urgency for social factors as well. When it comes to social mobility, the financial and professional services sector can sometimes have a reputational problem. We took a big hit after the financial crash, and have spent years rebuilding that trust. Financial institutions are leading the charge, promoting social cohesion and building generational equity. We can be on the right side of history here and narrow the gap between the rich and the poor. In fact, that's what the other element of my mayoral theme this year has focused on, giving people a chance not just to get on the ladder, but to climb it, regardless of their background. In my view, the more diversity of backgrounds, thoughts, and opinions in senior roles within private financial institutions, the more likely we are to see impact investing becoming more mainstream. If we're in agreement that we need to move quickly, and everyone thinks that impact investing is the right thing to do, then it begs the question, why can't the markets be left to do this? Why can't we be a little bit more laissez faire and let it happen naturally? Well, there are certain inefficiencies, and we need to give it a nudge. We must shape the landscape and the strategies just a little, we must ensure that those savers and investors who wish to prioritize ESG factors in their savings and investment strategy can do so safely, and trusting in the authenticity of the products offered to them. This is a win-win situation, it will lead more investors engaging with the investment market and deliver better impact returns as their capital is deployed. Why are we in the City and the UK perfectly placed to do this, in my view? Because the City is a social impact, because the UK, indeed, is a social impact investing pioneer, with over two decades of practice and valuable knowledge. Here are four highlights, just four highlights on this particular magical mystery tour. One of the world's first social bonds was developed in the UK, and provided a model which was replicated across the world. Our offer on impact investing sets us apart, we have both the infrastructure and the specialist funds, products, and services to support growing market activity. The Impact Investing Institute's Green+Gilt proposal emphasizes the potential for a green sovereign bond as part of the UK's drive to net zero, with defined social and economic benefits as well. And since 2002, the UK's Private Infrastructure Development Group has mobilized $35 billion from private sector and development finance institutions. This has provided new or improved infrastructure to 200 million people and created 250,000 jobs around the world. For anyone interested in delving deeper into this topic, in early March, the Impact Investing Institute released a new report, in collaboration with EY, demonstrating the scale and scope of the UK market and the breadth of opportunities, and how much impact investing makes good business sense. There is so much exciting activity happening in this space already, and we here at the City of London Corporation have several initiatives in place investing in this future. We are championing place-based impact investing, which focus focuses on social impact as a strategy for leveling up, we supported the joint report"Scaling Up Institutional Investment"for Place-Based Impact." This report shows there are real opportunities for investors to secure financial returns while addressing place-based inequalities and supporting more inclusive and sustainable development across the UK. I'd encourage you all to have a read, but don't, please, reach for your mobile phones just yet. To minimize the risks of impact-washing and to unleash the potential of private capital, we are improving impact data and driving at coherence in reporting standards. We supported the UK's Impact Alliance to develop the Impact Classification System, which brings sustainability-related disclosures of investments into a consistent digital reporting format. During my term in office, I've been promoting the City of London's new Finance for Impact initiative, showcasing the UK as a global leader in ESG and sustainable finance, advancing enabling frameworks and regulation and mobilizing capital for investments that contribute towards achieving the UN sustainable development goals. This work will culminate in an impact investing summit here at the Mansion House in July, where we will announce what we have achieved, and what we intend to do next, turning these intentions into firm commitments. In conclusion, we need to invest in things that make sense and that aren't dead-ends. It's good business, not just to save the world and be nice, great though that is, it's the soundest business choice we can make. Without the social impact, what we invest in will decay, our business models will collapse, we need to invest into future society, and that makes pure business sense. Are we destined towards this economical entropy? I believe we are not. The City and the UK have shown, through our work in sustainability, that we can lead the world in the future of green finance. Impact investing is the next horizon that we're heading towards, and I'm making it my duty to bring others with us on this journey. Thank you all very much.(audience applauds) Now, to discuss this, I'm delighted to be joined here on the stage by Sir Ronald Cohen, Chairman of the Global Steering Group for Impact Investment, who's joining us online, Dame Elizabeth Corley, Chair of the Impact Investing Institute, and Tony Burdon, Chief Executive of Make My Money Matter, and the discussion will be moderated by the Provost of Gresham College, Dr. Simon Thurley. Thank you.(audience applauds)- Well thank you very much, lord mayor, for that stimulating introduction to our evening, an incredibly important subject. Our three panelists are going to make some remarks for about five minutes each, and then we will open the discussion up, and hopefully take some questions from you in the room and from people online. So we're going to start off with Sir Ronnie, who I think is going to appear on the screen. Good evening, Sir Ronnie.- It's a great pleasure to be here with all of you, albeit remotely, to share the platform with my close colleagues, Elizabeth Corley and Tony Burdon, and to follow such an inspiring speech by Vincent Keaveny, Lord Mayor. I speak as somebody who has spent his life in the investment business, and I suppose most of you have probably done the same. And we know that, from time to time, we see major changes coming to the investment world. The last huge change we saw came from the arrival of technology. Technology changed every investment portfolio. The measurement of risk, which opened the door to the inclusion of venture capital and private equity in investment portfolios, funded the tech revolution. Similarly, the concept of diversification and risk-adjusted returns allowed investment in emerging markets, and funded globalization. And we find ourselves on the threshold of such a momentous change once again, as the lord mayor has said. There are three major forces, as I see it, today, which are driving forward this impact thinking and impact investment. The first is a massive change in values, Which started with young people who refused to purchase the products of companies that did harm, whether it be environmental or social harm, as he has very importantly emphasized the social dimension too, and then it became noticed by investors that these changed values had serious implications for the profitability of investment portfolios, and so we see, as he has explained, a huge shift in financial markets now, with $40 trillion of environmental, social, and governance investment today seeking to achieve impact as well as profit. The field of impact investment proper, which, as he has emphasized, involves the measurement of risk, is seeing innovation in financial markets, in mainstream financial markets, that we couldn't previously have contemplated. The idea of the social impact bond, which started in the UK in 2010, around Peterborough Prison, has inspired a trillion dollars of investment in sustainability-linked bonds and loans last year alone. And so we see this change in values expressing itself, as he has so eloquently described, in mainstream financial markets. But this change in values and investment flows meets two other very powerful forces with which it converges, the force of technology, which has taken new leaps in the direction of artificial intelligence, machine learning, augmented reality, the convergence of hugely increased computing power with the human genome, and these changes are enabling us to deliver impact globally, to improve lives and the environment globally, in ways in which humanity could never previously have contemplated. And the third force, which he emphasized so greatly in his comments, is the force of impact transparency, because big data and computing power enable us today to measure the impacts that companies create through their operations, on the environment, through their employment practices, on people, through their products and their supply chains, on people and the environment. And we are seeing these impacts measured, and valued, and brought into financial analysis and the valuation of companies, and we can see already in financial markets a correlation between greater pollution, in several sectors, and lower stock market values for the companies that pollute the most. And so we really are on the threshold of an impact revolution now, and the UK has led it. The UK brought not just the total impact bond, but the first social investment bank, Big Society Capital. For the first time, it released unclaimed assets from banks in order to fund Big Society Capital, it brought the G8 taskforce, and now the G7 taskforce, which reported in this great hall during the month of December, and the UK has the opportunity now not just to develop the financial products that satisfy the demands of investors, but also the opportunity to lead, with the EU, which has done so much work on impact transparency through its taxonomy, the US, where the SEC just last week put on the table the mandatory disclosure by companies of their environmental impact, and to take place between them to show how impact transparency, and how impact accounting, and how impact analysis contribute to the improvement of lives and the environment. Adam Smith brought the idea of the invisible hand of markets. Once again, with impact, Britain has brought the idea, this time, of the invisible heart of markets. Thank you.(audience applauds)- Thank you very much, Sir Ronald. We're now going to ask Dame Elizabeth, please.- Thank you. Good afternoon and good evening, and for those of you who might be east of us, thank you for staying with us for this long. It's a real pleasure to be with you today, and it's always a pleasure to follow Sir Ronnie and the lord mayor in these events. I want to bring the topics closer to home, but I don't want to step onto Tony's space, where he's going to talk about individuals, so I'm going to sit in the middle ground between the trillions that we've talked about, the individual, that Tony'll talk about, and say how do we connect those two things. If everything is so good, and it is potentially so good, what is stopping it from being better? What is stopping the flow of finance to where it's needed? And there are a number of things that we at the Impact Investing Institute are focused on, really to take us forward very fast and with real intention. The first is the point that, as we transition to net zero, we have to make it fair, and we have to make it just. There's a way in which we can do this which makes poor people poorer, poor countries further left behind, and abandoned communities ever further abandoned. There's another way of doing it which is around leveling up and building back in a significantly better way, and about ensuring that we combine environmental and social benefits in how we use finance, and how we use capital, and that must be our focus. I've seen examples, fortunately now reducing, where we do a brilliant thing to make the world greener, as defined by green, but we actually destroy community involvement because we use water in the wrong way for sustainable community practices. We have to find ways of making this a just transition, and to do that, we think you have to have a strong environmental goal that is clear and intention to do good with it, and that might be around circular economy, biodiversity, new carbon opportunities, we can do that. The second thing is we have to think about the way in which it empowers people and it creates jobs, skills, and livelihoods that are sustainable, and doing it in places that are not always easy to reach, whether that's here at home or whether it's actually internationally. Climate change is happening fastest outside the UK in terms of real drought, real agricultural effects. We also have extractive industries, fossil fuel, that is the heart of many communities and their livelihoods. If we take that away by excluding it from how we spend money, those individuals can't find a new job down the road, it is the only job in that area, so we have to think very deeply about how we bring a social, as well as an environmental financing with this, and we have to think about the communities that are involved. Often, the people that know best, and this was very strong in COP26 last year, are the indigenous communities in places that really understand how things get done. So at the institute, we have a mission to make this transition of trillions real, and in a way that brings people and communities along with it, and that we measure the deployment of finance, as well as measuring the outcomes that it delivers. I don't want to get too much into how, because I'm sure that's going to be a subject of questions, but I would say to you, the power of doing it is every single person in this room, and every single person online. I spent 40 years in financial markets, and only now do I believe that I can actually engage with them for change. Millions, and millions, and millions of people feel it's impossible to change the way in which things work, and one of the other revolutions that Sir Ronnie talked about is that revolution of values, accountability and determination at an individual level that we will have a better world, and it will be fit for children and grandchildren. And now I'm going to pass you to the person who can tell you exactly what they're doing to make that happen. Thank you very much.(audience applauds)- Well thanks for cueing me in so elegantly, Elizabeth, but thanks, lord mayor, for the invitation to speak, and it's fantastic to follow Ronnie and Elizabeth, who are both heroes of mine. If there were Oscars for impact, you'd both have those on a shelf at home. As the lord mayor said, people want to invest in ways that create a better society, a better world, and we've seen that people are trying to make a difference in their everyday lives, the decisions you make about the clothes you wear, the food you eat, how you travel, people are always trying to think, well what can I do better to make a difference. And what we're seeing is that people are starting now, more and more, to think about their money, and how that can have an impact. So I just want to show a short video that introduces you to the views of people on the street about how they might think about their pension, and it was put together by our friends at Quietroom, a communications agency. So if we could see the video, please.(calm acoustic music)- It's actually never occurred to me before that my pension could be something that would create change.- That's the dream, yeah, tell me about it.- I would wonder why I hadn't been told about it already.- It doesn't sound like it can or should work.- I think most people don't know what their pension's investing in.- It would be good to know more about the companies that my pension is being invested in, whether they're doing good in the world.- Who are they, who are they run by, what are they doing, where are they?- What? Invest in these?- You're reading like a list horror.- Making weapons and ammunition? That's a no-go.- Cigarette companies, coal mines, oil companies, gambling? No way.- I feel like something better could be done with my money.- Well there you go, that is a stunning list of good things. If my pension went to these things, that would be a wonderful thing.- Social housing, infrastructure like schools and hospital.- I would definitely want my money to be invested in building wind farms, tackling climate change.- And companies that treat their workers well, this is my kind of list.- And I, as a customer, can feel first of all better about where my money is going, but also, you would assume that those pensions would do actually quite well, probably make more money, ultimately.- It would make me feel better in some small way that the things that I believe in, the things that I think are important, and are important to me are being reflected in how my money's being used.- I would probably go so far as to say I would increase my pension contributions.- Yeah, I think I'm going to make some calls when I leave here.- Now I'm going to run back home and check.- Understanding that the money could be working, and obviously working to contribute to a better world, that's pretty amazing.(calm acoustic music)- Great, thank you. So people find themselves accidental investors in things they don't necessarily want. So you could be a cancer doctor investing in tobacco, you could be a vegan investing in meat farming, or a climate activist in oil and gas. And as they said on the screen, most people have no idea what their money's doing, even whether it's invested, but this is changing. Since we've been campaigning, we've been running public opinion polls across the country, and what we see is is that public awareness that their pension or their bank might be causing climate change has gone from 28% to 38% of the population, and nearly 50% for under 35s, so people are becoming more aware of what the impact of their money might be doing. The public desire to move to a green pension if offered one is now at 70%. It's at 80% for people who are under 35. So that desire for their money to be doing the right thing has grown enormously over the past year and a half. And the awareness of our campaign has gone from 5% to 40% of the population, and 66% for the under-35s, so the awareness of the campaigning message that you can make your money matter is really connecting to the people of Britain, which is really fantastic news. And a result of that is that we've seen thousands of people write to their pension scheme asking for a pension that's not causing climate change, but helps tackle it. There are 80 companies and other employers who've committed to their staff to try and get their pension scheme to align to net zero emissions, and again, not cause climate change, but to try and tackle it, so that's companies like IKEA, Tesco, the Co-op, EY, Innocent Drinks, Ella's Kitchen, the Worldwide Fund for Nature, fantastic. And the end result of that, that's the demand from the public and from businesses and employers providing pension schemes to their staff, the end result of that is that during this last year and a half, we've seen 1.1 trillion pounds in the UK committed to align to net zero emissions over the coming years, and leading pension schemes showing the way, from Nest, to Scottish Widows, Aviva, Phoenix, Cushon, and others, so you have leading schemes knowing this is the right thing to do, not just for their pension savers, but also to manage financial risk and to start investing in the new commercial opportunities which are being created. Last week, Marks & Spencer's pension scheme committed to align to net zero by 2040, halving emissions by 2030, and that's what staff and retired employees of Marks & Spencer want which is fantastic. I've talked a little bit about climate change, but I think this is just the start of people becoming more aware of the impact of their money, but also that they have voice, and can demand better from their pension schemes, as can employers who provide pensions to their staff. I think there's a couple of ingredients that will help drive that a little bit more quickly. We need to see better information to pension savers from their pension funds, what's the impact of my money, what's it doing on climate, the environment, on workers in companies that my pension scheme invests in. When you're a young person just starting work, you would expect your employer to choose a decent pension scheme for you to save in, one that doesn't cause climate change, so it should just be a default that your pension scheme is aligned to net zero, but also a default that your pension scheme invests more money in having a positive impact on the environment, but also in our society around us. Another survey we've done recently shows that 80% of people don't want deforestation in their pension scheme, and we'll be running a campaign on that, which I think will engage people. So again, people want better. And what they ultimately will want will be investment in climate solutions, in nature, positive investments, but also in companies that treat workers fairly, in social housing, in all the things that people described in that video. And again, as the lord mayor said, and Elizabeth, to invest in this just transition as we adapt from a society that's relied on fossil fuels to one that will rely on renewable energy, and to achieve the sustainable development goals. So I think people want their money to matter, and impact, I think, provides a huge opportunity to do so. Thank you.(audience applauds)- Thank you, Tony, and thank you all of you, and thank you for keeping to time. We'll just have a little bit of a chat amongst ourselves before we open this up. Lord mayor, I just wonder what you think the priority interventions are that we should make to accelerate the mobilization of capital in this area?- Thank you, Simon. I think there's a number, in fact. Sir Ronnie, in his remarks, mentioned the G7 Impact Taskforce report, which was launched here in Mansion House in December, it highlighted a number of the key drivers that we need to engage, and engage quickly. I think data has been mentioned around this, the need for consistency, coherence of the data is absolutely essential. It's so powerful, for the reasons Tony has just mentioned, investors wanting to understand where their money is going is going to be a key element of making this really, really effective. But I would say international standards as well, actually having high-level standards that can be applied. How we get there is a big question. One of the organizations that came out of COP26 was the new International Sustainability Standards Board, and I think a lot of us have great hopes that the ISSB will, over time, provide the building blocks we need. The G7 taskforce talked about setting a global baseline, a baseline from which then countries, governments can start to build, I think we need to work, and work quickly, towards establishing that baseline of a standard that can be applied reasonably easily across the financial world, across the various jurisdictions, across the various capital markets, and then begin to build towards a higher level of standards, a higher level of disclosure reasonably quickly, but we need the baseline to start with, that would be my initial thoughts on that, but it's a huge question, there's a great deal to it.- Do you want to have a go, Elizabeth?- I think, just building on that, the G7 taskforce, the UK was president of the G7 last year, and they sponsored an impact taskforce. The first one was done years ago, that Sir Ronnie initiated, and then there was one last year. It looked at two things, one was measurement, and transparency, and accountability, which absolutely will underpin a good market, but the other one was around mobilization, we actually need money to move to where it's needed, and so that mobilization challenge looks at the barriers to that currently, not just here domestically, but also internationally. And some of those barriers are around things like the way in which private capital works alongside public sources of finance, such as development finance institutions and philanthropy, we need to get much smarter at working together towards a common goal. And increasingly, you realize that there's a huge amount of capital in the world, but it isn't being deployed in a way that is joined up, necessarily, and even when it thinks it's working to a common goal, can sometimes, inadvertently, not. So there's some work that needs to be done at government level, at financial institution level, but again, I come back to the fact that we don't have to wait for the global standard to emerge, we can start to live and deliver by best practice. Industry and private capital can move quickly, but we have to do it in a way that's responsible, and isn't actually lacking both intention and a commitment to outcomes, those two things are absolutely key. And by commitment to outcome, it's very easy to say what you want to do, but then checking whether you've done it, and whether it really has happened takes another level of effort and work, and that's the true difference between an impact investment and, say, ESG screening, where you are screening out things you don't like. And I think a number of people are still, I hate this phrase, but it's the only one I can think of, on a journey to recognizing that it's a real step up from moving, as the lord mayor described, from avoidance to genuine benefit of all stakeholders, that's a huge step up, and then it's another step up, it's almost geometric, towards contributing to solutions, and that's the journey we have to push capital onto as quickly as we can.- And Simon, if I could just come back in on Elizabeth's point about mobilizing, you're absolutely right, Elizabeth, the need to come up with new financial structures, to find new ways of working with some of the existing players, such as the development finance institutions and the multilateral development banks, these are key players, but of course I would say, and as lord mayor, you would expect me to say it, the ability of the professionals sitting in offices around us here in the City to do that is world-leading, we have the expertise here, we have the people, we have the track record, we understand how to create new financial structures, new financial products, new financial vehicles, that's what people have spent their lives doing in the law firms, in the banks, in the asset management companies around the City and around the UK. We can harness all of that expertise to meet this new challenge, and I think it's a hugely exciting moment for the UK financial and professional services sector.- I'm going to widen it out with some questions that have come in online here, and there's a little bit of a theme going on online, which is, generally speaking, about whether impact investment is less financially beneficial than other types of more traditional investment. There's one here, Tony,

"Why are ethical pensions so expensive"compared to other pensions,"and what can be done about this?" And there's someone else here saying,"Does the impetus for impact investing"need to come from shareholders,"and if so,"what will be the role of institutional shareholders?" Do you want to comment on that? And I'll bing Sir Ronnie in after that.- I think you should ask some of the investment experts, really, about the costs, do you want to?- I think it depends what you want to do, I think there are ways of making this very affordable, and it is about making sure you've got the resources at scale. I think if you've got a very small scheme, and you can't do things at scale, it gets more expensive, but what's happening in the pensions world is people collaborating, coming together to make it bigger pools of capital, and once you start to get scale, once you start to get those bigger pools of capital, you can share resources that would otherwise be quite expensive, and I think that's part of this. Because if you only have a tiny scheme, and you want to do all the things we've talked about, you need experts, you need data, it becomes expensive, there's no doubt, but with high quality scale, but still linked to accountability, I think we absolutely can do that. And actually, there's a lot of work in this country, in the UK, looking at that, how to encourage longer term investing in infrastructure, not just impact infrastructure, and do it in a way which is affordable and still within a reasonable price for pensions. And I think it's a great question, it's absolutely doable, but we have to think slightly outside the box to get there, so I think that's spot-on. And in terms of the trade-off, you should definitely ask Ronnie about that, because this is a theme Ronnie and I have been debating about for years, isn't it, Ronnie, about the theoretical trade-off.- Please, Ronnie.- Thank you, thank you. My view is that, putting it in investment terms, optimizing risk, return, and impact today delivers better financial returns than ignoring impact and simply optimizing risk and return. And the fundamental reason is this change in values we've been talking about. If consumers, and talent, and the investors who are conscious of the influence they have on the profitability of companies are all going in the direction of companies that deliver more positive impacts and better still, that deliver solutions to the great challenges we face, then it's obviously easier to deliver high returns by going in that direction, and you reduce the risk of increased regulation, increased taxation, and talent, in particular, migrating to firms that bring more meaning to their lives, as executives and as employees. At the same time, when you look at investment opportunities through an impact lens, it uncovers huge latent demand for new products in new markets. You can look at the Tesla, for example, which tried to optimize risk, return, and impact. You can argue about whether its batteries are polluting more than the combustion engine elimination reduces emissions, but Tesla built a trillion dollar company in 20 years, shifted the whole of the automobile industry to electric vehicles by bringing new technologies to a latent demand on the part of consumers who didn't want to continue to pollute the atmosphere and create climate change. And for this reason, I see a massive wave of disruption taking place now. Wherever companies have business models that create huge pollution, you're going to see entrepreneurs coming with new technologies to create building materials that create fewer emissions than concrete does, you're beginning to see changes in the food industry, we're beginning to see alternative proteins coming in instead of meat, and part of the motivation is the result of cattle creating emissions. So I am a firm believer, and I have applied this in my own investment portfolio, that if you want to deliver superior returns today, if you want to be at the best point in the efficient investment frontier, then you optimize risk, return, and impact.- [Sam] Hi, thank you very much for taking the time to speak to us today. My name's Sam, I'm from the Investment Association. You talked a lot about data, so I was thinking, is there any way that you would deploy data, or you can think about deploying data to improve investors' financial literacy?- Deployment of data?- To improve financial literacy?- [Sam] Yes.- Again, this is a great problem, and in fact we, of course, have a significant financial literacy issue here in the UK, far greater, I think, than many of us in this room probably realize, and even more fundamentally, you actually have a major issue around numeracy as well, which we've, in some ways, got to tackle numeracy before we can begin to deal with financial literacy. There is hope in a lot of this, and the hope comes back to what most of us have got sitting in our pockets, which is the mobile phone, and the access that gives people to basic tools, that we're already seeing in the pensions industry, how that's changing the dynamic so quickly, and I think working with those who promote financial literacy, working with those who promote numeracy, and I'd put in a plug just here for the Lord Mayor's Appeal, we have just taken on our new charity partner in the appeal, it's actually National Numeracy, a new, great program called Every Londoner Counts. And there are lots of initiatives like that that we can work with and support, and that do then play into this deeper sense of control over one's own financial destiny, and alongside that, then we go in the direction that Tony is talking about with Make My Money Matter, where you actually get decisions being taken by people about their pensions and longterm savings products. So it's all part of a continuum here, but I think we do need to start, and we need to start, actually, quite early in schools, and make sure that we're getting some of the basic education around numeracy right.- I'd really support that, I think we need a serious investment in financial capability starting at that young age. If I had my way, what I'd do is I'd get government to open a pension for every child born in the UK, and then allow parents, grandparents to put money into that, so as the child gets older, they're also taught in schools about how to manage their money, the value of investing for the longterm, and they could see the real benefits of that. We also have a savings crisis in the UK, where lots of young people won't save enough for their retirement. The older generation are quite lucky, but young people are in quite a fragile position. What we see in our surveys of the public is they all say they would save a bit more if they knew their money had a positive impact, so I think there's a real win-win to build financial capability in young people, start saving young for them, and then make sure they understand the impact of their money, and then they can make more informed choices about how they want their money saved and invested, and hopefully to promote that positive impact investment that I think we would all want to see.- [Alison] Thank you, my lord mayor and panel, you've really opened up some very important points about impact investing. One of the holy grails, if you like, is how do we measure the impact, and social impact is much more difficult to measure, really, even than green impact and carbon emissions. So do you have any hope that there's a real framework that's being agreed that will be more internationally acceptable, and I wondered if you could just share some thoughts on that? Thank you.- That's a great question, and we're going to go round to each of you, and if you could just do it in 30 seconds, I'd be very grateful. Sir Ronnie, you're first on.- Thank you. You can already go to Harvard Business School's IWAI site, Impact-Weighted Accounts, and see the employment impact, and the cost of diversity, for example, you can compare Amazon's diversity debit of $6 billion a year to Apple's $3 billion. There are now frameworks in place to do that, and big data is very helpful in achieving this, because you can compare the demographics inside and outside facilities and measure exclusion.- [Simon] Elizabeth?- Alison, I think there's no doubt at all that we're seeing developments very fast, and a lot of this is through investor or shareholder activism, but some of it is also companies wishing to step up to the mark, whether it's in the wake of the Black Lives Matter movement and social justice, or whether it's a recognition of employee rights and interests. So I think things that, if you like, are the equivalent of a scope one, which is things directly related to the company in terms of employment and supply chain, I think we'll see that evolve very quickly, and I think we will start to see international standards around that emerging for public and private markets. Where we will probably take a bit longer is where you get beyond that, into communities, into the things you can't measure easily, that a company can't measure, but I do believe we'll see a focus on that coming within the next couple of years.- Tony?- Yeah, I'd agree, and I think what will happen, and there'll be demand for this, is that that complex data will go on a phone and be translated for just a normal person to look at their pension, look at their bank, and say, okay, what's my money doing, what's the rate of return, what am I earning from it, and then what's its impact. And then you'll be enabled, and even now, you can do this, you'll look at the key companies it's investing in, and then you can say what your preference would be for the vote at an annual general meeting on those directors of that company and their plan, say, to transition to net zero, and if it's not good enough, you could say, actually, you want those directors moved off the board, and this is happening. So I think we're going to get a lot more engagement with people through their phone with their money, but they really do need that data on impact, and I think it will get there, we just need it to get there quickly.- The last word, lord mayor?- And I think we'll get there at some speed. I think, in some ways, a lot of this is going to be supercharged by many of the current political and economic issues we're facing. The headwinds that the world is facing at the moment will cause people, I believe, it will actually cause people to become more concerned about these issues, about environmental and social issues, rather than less concerned, and I actually think, in many respects, the cost of living crisis, which I referred to at the beginning of my lecture, will, if it's not in the environmental world, mixing the wrong metaphors, it will actually put rocket burners under this agenda, so I think we'll see more change coming more quickly than any of us in this room expect.- Well ladies and gentlemen, I'm afraid that's all we've got time for this evening, we could be going on here all night, but we can't do that, Gresham lectures finish very punctually at seven o'clock. So on behalf of the college, I'd like to thank our panel, Sir Ronald Cohen online, Dame Elizabeth Corley to my left, and Tony Burdon, and of course lord mayor, for your excellent and stimulating introduction to what's been a great evening. So thank you all very much.- Thank you, Simon.(audience applauds)