Steve Waygood

Steve Waygood is Chief Responsible Investment Officer at Aviva Investors (Steve's corporate page and LinkedIn). He has been a crucial player in the rise of sustainable finance in the UK over the last 20 years.

Our conversation covers:
-The role of insurance companies in finance, and their particular interest and leverage on sustainability.
-No one anywhere in the world understands the whole of finance.
-Many ESG funds are trying to beat the market ('maximise alpha'), on the assumption that an ESG perspective gives you superior information or insight. (The alternative is to change the market, so that we are all heading in a sustainable direction.)
-It is possible for a market to be efficient (the assets prices reflect the information) and have market failure (there are important negative impacts which are not included in the prices). For Steve, climate change is a market failure; chasing alpha alone will not deliver a sustainable world.
-A potted history of 'ESG' innovations in Aviva (as a proxy for how this has played out across the industry), including:
  >Process innovation: the role of engagement (meeting directors of companies to push them on issues) and voting in formal governance (the Annual General Meeting, or AGM).
  >Organisational innovation: from having specialist analysts in one dedicated team, to now having people with ESG skills embedded in each of the analytical teams.
  >Political economy innovation:  having collaborations like the UN Principles for Responsible Investment (UN PRI) and also using multilateral spaces, like the climate COP, for wider change.
-His current focus on 'macro-stewardship': "taking a more holistic view of our stewardship responsibilities and actively engaging with policymakers, industry bodies and peers, regulators, standard setters and other influential parties to advocate and push for changes that will help create a more sustainable economic system."
-His main challenge: the 'tragedy of the horizon', meaning that by the time you reach the horizon, and experience the risks for real, it is too late to do anything about them.
-Priority: drive innovation through the whole asset management and asset owning institutions, so that they all recognise that without steward  that is systemic then all our business models will be deeply harmed by climate change. Therefore it is in their interests to rise up and challenge those governments that we lend money to, to deliver what they said they were when they signed the Paris Agreement.

This is part of a series of interviews about innovation for sustainability conducted for the UCL Institute for Sustainable Resources, as a contribution to a module in this Masters. You can find out more about these interviews, and the module, here.

Transcript

Unknown: 0:00

Oh

David Bent-Hazelwood: 0:07

hello. This is one of several interviews on innovation, business and sustainability for the students studying for the MSc in sustainable resources at UCL. My name is David bent, and I'm an honorary lecturer at the UCL Institute for Sustainable resources. I co lead the module on eco innovation and sustainable entrepreneurship. Most of the course gives people the latest academic theory and insight, these 30 minute interviews with practitioners to give some of the grit under the fingernails of innovating for sustainability today. I'm delighted to say we're joined by Steve waygood, who is the chief responsibility officer at Aviva, amongst other things, so I'm hoping a little bit let's come back to that. So Steve, what's your role and organisation?

Steve Waygood: 0:52

David, it's a pleasure to be here. Thank you so much for the invitation. Really appreciate it. I'm the chief Responsible Investment Officer at Aviva Investors. And I've been here now 17 years. And that role since 2012, although the nature of the role has shifted a lot. And I also help out as a trustee of WWF. UK, I helped teach as a visiting professor of sustainable finance at the University of Surrey, so nearly three decades working on sustainable finance.

David Bent-Hazelwood: 1:22

And I did do the intro, slightly wrongly responsible chief Responsible Investment Officer, which has a slightly

Steve Waygood: 1:27

It's a mouthful. It's good. But yeah, that is financial time.

David Bent-Hazelwood: 1:31

And so what is what does that mean? So what's the role? What, what is your department do? And what's what do you respond to watching what is expected from me from the rest of Aviva.

Steve Waygood: 1:41

So I helped found the global responsible investment team, which now is in various asset classes, the real assets, the liquid markets, the equity team sovereignty, there are groups of people who are at the coalface of the investment decisions, who integrate ESG as the phrase has integrated environmental, social, and governance issues that are material into the investment process, so that they are exploiting any information advantage from this area and helping drive out. That's the jargon. I also recently founded the sustainable Finance Centre for Excellence, which is my current focus, and I expect it to be for now, that coming decades, trying to evolve the approach that finance takes overall, to the way we engage so that it's not just, if you like, micro engaging with individual companies. But its macro, too and has a systems change narrative behind it, and is big and bold and brave and fit for purpose when it comes to the scale of the challenges that we face from things like climate change, but not just that. So macro stewardship is my current focus, David.

David Bent-Hazelwood: 3:02

Okay, well, I think we'll come back to what macro stewardship means, but it's probably worth explaining, not everyone will know what it means to be an insurance company. So what is what is being an insurance company? What do you do as an insurance company? And what does it mean to try to integrate ESG into that?

Steve Waygood: 3:21

Alright, so one way of putting it is that insurance frees people from fear of uncertainty. They post the Great Fire of London, it was recognised that people needed to protect themselves from big risks, and that the business Aviva was created in 1696, it goes back along the way. And that's actually part of the to the sustainability agenda, because it creates a very long term horizon, in the governance of this organisation, but insurance effectively pulls risks, and then sells in return for premium. A product, whether it be life or health, or a general insurance product, like a car or a home. And it means that if anything happens to you, and you've prepared it by paying for insurance premium, then you can free yourself from uncertainty because you know that whatever it is, we'll be looked after. And that's our parent company. And I actively sought working for Aviva or CG or new or Norwich union, general accident, commercial union. As the previous companies, there are about 300 companies that actually have come together over the last few 100 years to form Aviva but I actively sought a job here, but because in the 90s when I was at WWF. There were people who How do you do it Richard Taylor Bentham, who's still actually with us who were doing great work on climate change. And I thought, fascinated as I was was about finance So I've been fascinated to learn for a large asset owner whose business model would be deeply disrupted by climate change. But work in the asset management business, which is where I am, I'm not an insurance guy, I'm a fund manager and see what we could do, right? My fascination was how the markets work, and how can you use them to create more sustainable businesses? And I've discovered in the last 25 years working for three different fund managers that it's actually the markets that are part of the key problem. It's not just how do you use them to change instrumentally corporate practices? But how do you change the markets? Have you changed violence? How do you evolve into a different situation so that actually, the way it works, generates more sustainable outcomes. And I know, you know that there's an enormous amount within that to unpack, but it's been a fast, I think the most important thing I've learned is that no one anywhere in the world that I've met, understands the whole of finance, it's just too big, and yet many people prepare, are prepared to pretend that they do. Stretch very far, and they

David Bent-Hazelwood: 6:09

don't. And I think the the important thing to learn about insurance and why it's such a, an industry and companies when the neck and backstitch have a lot of leverage for change, is because it has it collects money from clients who are wanting to protect themselves from those risks. And it then by pulling that money into assets to be managed, it then also then funds and is investing into the real economy. So it has leverage both ways, what it what is insured, and at what premium. And also the other way in what gets invested in and at what expected return. So that's both ways. And in modern capitalism, if you cannot insure your entity, your business, your factory, if you can't insure it, then you're not able to do very much work there. And vice versa, if you can't get the funding you need for an investor in some way or other, then you're not enough survivor. And so that puts insurance in a very important position in making a difference in the world. Before we go into that, and we'll unpack that is various innovation stories in a second, but you've already used the word sustainability and it has at least as many meanings as there are people who use it within Aviva within a fever what is it what what in particular, does it mean? Do you have a set definition? Is there a sense of what it is okay.

Steve Waygood: 7:38

So we would endorse wholeheartedly and with with all humility, the the Brundtland definition, so meeting the needs of the present that are harming the ability of future generations to meet their own needs. And so sustainable finance should be finance that meets the needs of the present, etc, etc. And yet, it isn't always, in fact, it routinely isn't what is sold as sustainable finance a product that has actually thought through its long term implications on future generations, most of the time. And this is perhaps where we could take the conversation around macro stewardship, but most of the time ESG funds are looking, as I said earlier, to maximise alpha, they're looking to, to secure an information advantage by analysing a corporate from a governance perspective as a social perspective and environmental perspective, and get that information advantage so that they can better assess what the company is worth and exploit what is a market inefficiency. So mostly ESG funds, most sustainable finance funds are literally just there to focus on an information, inefficiency to make more money, they're not there, to create sustainable outcomes that shift the system onto a more sustainable footing. Yet they are implied to be that that's the reset, I think was coming.

David Bent-Hazelwood: 9:05

And so again, we're probably having a lot of people listen who are not on top of all of the jargon here. And one particular piece of jargon is alpha. So what does that mean in the finance world,

Steve Waygood: 9:18

eating the market is as simple as possible, but being able to prove that it is through your skills. However, there's ways that you can do that by assessing for example, your information which but the alpha is effectively your risk adjusted returns. It is supposed to be what active fund managers are paid for. If you're not interested in alpha and you simply want to have a market rate of return you should buy index tracking funds, also known as passive, and there are many different types of investor but perhaps at the highest level, the biggest the most important distinction is active in focusing on alpha and passive where you're happy to do Like a market rate of return, yeah, pizza.

David Bent-Hazelwood: 10:03

And the point you're making about if you are claiming you can have alpha, that is you can beat the market, then you're saying that's because of your superior analytical skills, you have superior access to information, you've done something, which means you are choosing the companies you invest in the types of things you invest in, which is different subtly, from the market average, and therefore you beat it. And that the assumption is that ESG information can give you an advantage if you treat it in the right way, which is why we asked companies to do their ESG disclosures so that investors can then look for the companies they think will outperform their peers, and therefore give those investors alpha.

Steve Waygood: 10:45

So there's the efficient market hypothesis, which again,

David Bent-Hazelwood: 10:50

people listening may not know exactly what it is. So efficient market hypothesis

Steve Waygood: 10:53

is as strong a semi strong and a weak form of the efficient market hypothesis and put those kind of bluntly as I possibly can, for strong form, assumes that information, any material information that's disclosed to the market is instantaneously assimilated into prices and reflected. That's the that's actually, I believe, was intended to be a hypothetical construct, in order for them to understand where market inefficiencies came from, because there are very, very, very, very few markets that are that efficient in the world. Arguably, none. Although high frequency trading, algorithmic trading is, is making market movements faster, but perfect, instantaneous simulation of prices is not correct. So the market inefficiencies are the kind of that's what active managers try to exploit. And I want to make a really big distinction. It's important because it's sounds immediately quite confusing, but market failure stinked from market inefficiency, market failure is that the uncorrected market leads to a sub optimal outcome for society market failure is more of a concept that underpins all government intervention. And we would argue that a lack of sustainability in the global financial system is arguably the world's biggest market failure. Yeah, within which climate change is the most important failure of all, but the way you correct those failures is by looking to see how do you internalise externalities caught Eakins has written prolifically about all of this environmental economics and how you internalise those externalities is absolutely central. And until then, mess those the priceless actually has a value placed upon it in evaluation. Capital will be allocated sub optimally, we can unpack that more, if you wish. But the difference between market failure and market inefficiency is profoundly important. efficiencies are exploited to repeat returns, market failures have to be corrected.

David Bent-Hazelwood: 13:05

Yeah, and I think the one way of understanding that would be to say one, one thing is that if, if you could magic away all of the market inefficiencies, so there would be no more alpha, everyone would get just the same market return, you would still have market failures and climate change would still be a problem. So it's not enough to get rid of market inefficiencies. And and I think the second thing is that the presumption that all markets are rational and write straightaway, that the strong market hypothesis has been used to say, we don't need to do anything different because the market is already right. And actually, if important aspects of what we think are necessary for a sustainable climate and a sustainable society, if those are not included in the prices that people pay and the risks that companies face, then those markets can't even be right there is that market failure. So it's important in setting the context in which finance, which historically has been quite confident in itself. And it's that it can ignore these things which these sustainablity folk are talking about. It's important, we would lay that groundwork, but now I want to move into the some innovation stories and some things that you've done within Aviva. So, hopefully you've got one which is about improving the processes within in Aviva. And then secondly, we can go on to macro prudential and what you're trying to do there but first. So can you tell us a story about a way in which you've changed or tried to change how investment is done within Aviva?

Steve Waygood: 14:48

One of the things that attracted me to Aviva was the change and it was brand new. I don't believe any other fund manager in the world had done it before but the innovation I believe it was led by Claire Brooke back in 2000. And she changed the voting policy. And just to explain every listed equity, we represent the principles of that business. The agents are the directors who we elect on behalf of our clients that that election is done at the AGM. And the AGM has a series of votes. And they are masters of routine. For example, the movement of the reporting accounts, the re election of directors, the audit committee, and what we added was sort of me I joined in oh six, but Claire innovated by changing the voting policies so that if companies weren't disclosing material sustainability information, in the reporting accounts, we would then vote against the report accounts. Now that use of the proxy as it's called the votes to promote better disclosure, that was one of the very first incarnations of a voting policy that started to take environmental, social and governance issues into account or ens issues until I should say, we then changed it in Oh, seven to be more than just the footsie 100, we will all share. And then in oh eight, we started to look at directory election, for example, if the director in charge of health and safety had a poor fatality rate, or last time injury frequency rate, then we'd vote against their re election and voting and then started to assimilate that into board pay. So there's been an enormous amount of innovation over some decades here in how we behave as micro stewards. How do we engage with the companies that we own through the AGM, and in between ATMs as well? Carry on, David.

David Bent-Hazelwood: 16:56

And I think it's worth pointing out to people that some of the work I've done has been on the other side of that really is mostly when when I've been working in this field, it's been with large companies who they have a huge ramp up to their results day. And when they tell investors, this is what our results after you're just gone. And then they have their AGM, where they've setting forward, things that they want the shareholders to say yes to. And for the most part, those things are nodded through. But to challenge them is something that they pay a huge amount of attention to. And even if a vote goes through anyway, the fact that it was something they're to think about me say something they have to think about, it makes a big difference. So I think, and that's gone, that change of voting pattern presumably has gone hand in hand with more engagement, as it's called, between the different AGMs where somebody from Aviva will go and meet up with a senior director in investor relations or the chief executive and say, We think this is important to your business. What are you doing about it?

Steve Waygood: 17:57

That's exactly how it works. The greater number of companies come here, rather than us going in kicking the tires,

David Bent-Hazelwood: 18:08

of being a large asset manager.

Steve Waygood: 18:11

Yeah. So that's a benefit in Europe. Yeah. But we're a global investor, where some of the more problematic corporate practices exist. That's harder, because the A we're not such a big investor in emerging markets or Mexico, Saudi Arabia, whatever. And so we won't be brand won't be recognised by the IRS. And B, we won't be anywhere near the top 10 of their shareholders. So getting access, there is harder. But definitely the the engagement process has affected all sorts of change, particularly when you're talking about in the kind of academic world, eco efficiency, if the company could be doing things that are better for it better for the bottom line. In other words, as well as better for the planet, over investment timeline horizons over business time horizons, then engagement can really help focus mines. And that for many, many years that fascinated me really captured my attention. And that was my focus from the late 90s Until about 2015. But between, towards I guess, late 2009, I started to realise that people like if you remember James Gifford, who created the UN principles for Responsible Investment it was I remember when he was an intern, and starting to think through the possibilities back in 2002. And watching him then build it over four years, and it's now part of the ecosystem, that kind of innovation, that kind of stewardship, that systems change that takes companies further, faster in a more sustainable way because you're starting to look at correcting the overarching incentives, particularly when you get government behind it. And

David Bent-Hazelwood: 19:59

I want to come Come back to macro stewardship in a second. And within the module we one of the things we teach is these different levels of innovation and what you started described there as what we call political economy innovation. And the very first thing is you spoke about was a sort of process innovation, changing the process by which the investment is made. And there's one thing you mentioned quite early on, which I think is probably an organisational innovation. And I just want to unpack it a little bit. Because you said how the ESG experts are not in one team centralised. But they're now embedded in each of the different teams, which look after the investing in the different types of assets. And that strikes me is as a change over the last, say, 10 or 15 years 10 to 15 years ago, there have been a small number of specialists in a room covered slightly and tried to get the different analysts and investment managers of the different types of investment to pay any attention to them. But now they're invest. They're embedded in the team. And I just want to acknowledge that as a form of organisation innovation. Do you happen? Was there a particular moment when that happened in Aviva? And how did you get that to happen?

Steve Waygood: 21:15

So there was the festival brilliant spot. Thank you for identifying that. Yes, it wasn't innovation. We've also innovated around the incentive structures. So if you work on in the front office's is called, if you're an analyst or fund manager, running whatever kind of fund managers, if you like screened sustainability funds, but whatever kind of fund, we believe that ESG issues are fundamentally irrelevant to the valuation of all securities depends on what the timeframe is as to how relevant and so the incentive structure, we've also had innovations around and people if they can demonstrate that they're savvy to the ESG performance, and they are aware of the underperformance and they're engaging in companies that they can expect that bonus to be reflected that. And if they can't, then again, the bonus will reflect that too. So there's innovation there, but on this on the kind of where do you deploy the people. In 2012, I was invited to create a network of responsible investment officers and build that they were embedded. They were already people working in the coalface if you'd like conventional farm managers and analysts, and I was also given a team of about eight people, which we call the global responsible investment team. Now over the, probably eight, nine years after them till about 220 21. With that team, the clever responsive investment team grew and grew to be about 37 people. And it was actually becoming larger than some of the investment teams on some of the asset classes. And whilst it created great connectivity between between all the environmental, social and corporate governance specialists, they weren't though, in the coalface of the decisions where they were analysing where peers were analysing the country, for the building for the real assets, or the offshore wind farm, or the pyrolysis installation or the corporate, which people would expect, you know, the BPS or the shells, they will do, they're in a central function, and that made it less efficient and integrating the issues into the actual the valuation and the price target and the portfolio behaviour. So what we did in 2021, was to correct we, we've sort of inverted that. So there is I still have a team of eight people that laterally looks across everything, but we do it from a macro search perspective. And then there's a gentleman called Mazur Baig has been with us now for well over a decade, Moser is the head of SGX. And he oversees the analysts who are embedded in across all of the asset classes. So there's a connectivity that remains from an ESG perspective. But those analysts primary function is exploiting market inefficiencies. Whereas the people that are reporting to me, our primary purpose is correcting market failure. And we believe that in correcting market failure, we're supporting global growth that will also come through to help support the returns of our clients, which will otherwise suffer from some of the issues around example, biodiversity loss, antimicrobial resistance, climate change. But those time horizons, the work that we're doing on if you like, building the future, our customers which to retire into from that kind of policy perspective, those they're not material over conventional analytical time horizons of one to three years, that catastrophically material over a century. but not immediately material to valuation now, often. So striking that difference and making sure where we've got a sense of the system and where it's heading, and making sure that we try and do what we can to course correct. That's what, that's what the team has now done. So I guess the final innovation would be the creation of the futures team if you have a sustainable Finance Centre for Excellence, doing seeking to engage on market fine.

David Bent-Hazelwood: 25:31

And I want to hear one story of something that centre is up for up to at the moment. But we've always do that just to land for everybody. When I was working for for teachers, as their director of sustainable business, it was a perennial problem that the analysts who sat in the fund managers didn't know the questions to ask, that would be important. And therefore the companies didn't think the investors thought it was important, and therefore they didn't want to do anything to embed specialists into each of those different asset classes. So that then the investor investment managers ask good questions of the investment relations people is part of creating the feedback loops from which capitalism, which is what it needs in order to be able to actually respond and do anything. So without those is a tragedy. And with that, it's at least stands a chance, or and then move into so we have this there are several Finance Centre for Excellence. And you enjoy a macro prudential and the difference between exploiting market inefficiencies versus getting rid of market failures. Is there a particular initiative intervention that sits under the centre, which you're working on right now, as you can tell us about that will just land for us what that means?

Steve Waygood: 26:54

Sure. So there are four pillars. One is about reforming finance overall, so that everyone's a better macro steward. Another pillar is about our work on human rights and societal transition around embedding human rights due diligence that's necessary. A third is around antimicrobial resistance and ensuring that the pharmaceutical sector evolves to provide antibiotics as well as the downstream users of their pharmaceutical products are using certain antibiotics that are critical for human use to ensure our lives continue with trying to look at how they can be stewarded better. But the most important pillar, to my mind, both macro play, as well as society and environmentally is the work that we do on climate. And that takes the majority of that not all of our results. And within that, what we are trying to achieve is enhance the system of finance, so that climate risks, particularly physical risks associated with climate change, are more considered by our peers. They wake up to the fact that if we don't deal with these physical risks, that our business models will start to collapse and evaluations of pretty much everything we own will start to collapse. And we therefore take action at speed and scale, ideally over the next five to 10 years. Although when you look at the actual action that's implied that needs to take place over that duration in recent history of being able to deliver it, even though we've known over the last two decades, we need to do something you have to pause to think whether it's plausible, but we are looking at we've been I've been going to the UN Framework Convention on Climate Change Conference party sets called Five. And in 99, I haven't gotten to all of them. But what we've been trying to do is advocate for change in finance. And specifically for four years now, we've been promoting an evolution of the international financial architecture, which is defined as the system by which banking insurance and investment is governed. And we've been suggesting that that system, which was designed post the Second World War, somewhat at Bretton Woods, itself needs to evolve. None of it was designed to help transition the global economy to be zero, but it needs to now be rethought. And we need every institution, the Financial Stability Board, I Osco, the World Bank, the IMF, the Bank of International Settlements, the International Association of Insurance supervisors, pension supervisors, and so on and so on. They all now need to think about how do they transition their own institutions, and all of the institutions they regulate so they can all be on a Paris aligned footing. That is how you start to harness the sentiment within the market that's approaching now. 500 trillion in assets under management, no one can tell you exactly how much it is for reasons I won't bore you with, but there is enough capital in the system to finance the transition. But the market sentiment is not yet flooding the capital in the direction that it needs to be sent to stop the world itself from cataclysmic fire and flood. And what we are also looking to see is the finance ministries themselves taking a much more robust approach to internalising externalities, through tax through reducing subsidies for the fossil fuel sector, through creating emissions trading schemes, promoting regulation of various other sectors by other regulators so that the market signals fully price, the long term consequences of climate change. And in doing that, it means that the discount cash flow analysis of more analysts consensus forecasts, as they become called, The forecast will reflect the full cost for environmental cost. And therefore, capital allocation and flows of capital will head towards the solutions to these problems in a way that just not to wait four to 6 trillion a year, for the next few decades. That's an enormous amount of money, unprecedented amount of money, and yet it's there. So what we'd like in the UN is a vision for how you mobilise finance, a governance structure for how we govern the transition within all of the international financial architecture, and a institution that can help guide them or not govern them or guide them. And that's what we're looking to try and achieve out of cop 28. We'll see in the outcome, document how far we get. But we need every institution within the international financial architecture, to be invited to do its own transition plan. That's our key has been for a few years now.

David Bent-Hazelwood: 32:06

Great, and we're speaking on the 20th of September, and cop 28 is at the end of November. So depending on when you're listening to this, either it is about to happen, or may have already happened or maybe a year or more in the past, and who knows what will have happened. But nevertheless, it's what you're working on at the moment. Just in our last few minutes. Thinking taking a step away from the specifics. When it comes to methods and practices. You talked about lots of different kinds of innovation that you have been involved with is that the process of of investment, there's the organisational form and changing that to suit with what's needed. There's trying to shift the very rules and architecture and plumbing of how our world is governed and how finance flows in that world. Do you have any methods that you use regularly?

Steve Waygood: 33:00

Okay, it's so sort of visioning. If you think about what are the events that are coming up over the coming 612 months? They're coming three 510 years, which are the geopolitical moments that you could make matter. So part of it's about horizon planning, horizon scanning. Working back from that, what are the biggest ideas that we have, at this point, to correct market failures that are most relevant to those meetings that we can then? And particularly how can we access the people who are in charge of the meeting, for example, cop 26, which was Glasgow, we were very pleased to be able to engage with them as much as we did, because it was quite an alien back garden. We enjoyed considerable access to the people in charge in the presidency and gave them all sorts of ideas and helped shape things like GE fans. But we were there at the beginning of the idea, well, before it was actually public. So that kind of shaping there is useful, but when it's further flung when it's further afield, that's hard. So I was very pleased to be invited to the G 20, in Kerala earlier this year. And it was incredible experience. But it left me incredibly disappointed to find that they just weren't really that interested in the sustainable finance imperatives, they were much more interested in maximising short term economic growth, which in a way that will actually harm long term economic growth and price stability, market integrity, market, financial stability, and so on. So, methods, methods that we use, it's partly about Planning and foresight, and then it's about packaging our ideas in a way that lands with the individuals who are in charge of that event and ensures that they can understand what's in it for them institutionally, what's positive for us economically in terms of growth? And how will it help them raise capital from the capital markets globally, and we need to unpack various arguments to help them deliver that. And overarching argument, I should add, is the moral case. So when the series of different arguments so that they resonate with the different motivations, psychologically, within the individuals that we're talking to try to understand the art of rhetoric is part of that too? Maybe that's kind of tack for you a little bit, but I

David Bent-Hazelwood: 35:53

think it's good because it shows that the creating narratives that people can find their own hooks in and that land with people is, is that I think the thing I take from that, in our last few questions, I want to kind of push you for sort of pithy, short answers, because we're running out of time, unfortunately. And what's the biggest challenge you face and how do you overcome them?

Steve Waygood: 36:18

Short term is the tragedy of horizon in politics and economics in investment. short termism. People don't really, they're not able to comprehend and hold mentally, properly picture of what the cataclysm could look like, if we allow climate change to run away from us. That means the political system is operating an incredibly short term way. Yeah. Sounds

David Bent-Hazelwood: 36:43

great. And then, if there was one thing policymakers could do, which would make your work significantly easier,

Steve Waygood: 36:52

make the finance ministries and ministers vividly clear but their job is to look after not just inflation this quarter this year, but inflation and global and national growth, and therefore global growth on a sustainable basis. Future generations to and therefore not exploit future generations and the way they grow economies today would be critical.

David Bent-Hazelwood: 37:20

And a one word for that might be macro stewardship, perhaps that would be the new way of framing. And then just finally, what are your priorities on innovation going forward? What do you hope, the next, in the next two years you'll be able to achieve?

Steve Waygood: 37:38

I would like to drive innovation through the whole of asset management, asset owning institutions, so that they all recognise that without steward, that's systemic, but uses systems thinking that engages with the entire, if you like, global economic ecosystem, the international financial architecture, I'd like them all to realise that unless we will raise their game out all our business models are at some point going to be deeply harmed by climate change, and therefore I want them to rise up and challenge those governments that we lend money to, to deliver what they said they were when they signed the Paris Agreement, because it's in everyone's interest. And we can innovate in that way, not just engaging with companies but engaging with countries.

David Bent-Hazelwood: 38:28

Wonderful. Well, that's a wonderful thing. Wonderful. Call to Arms and call to action with the for us to end. It's been fantastic. Thank you very much, Steve describing the kinds of innovation you've been involved with starting at that micro stewardship, how the investment is made, how the investment processes organised within Aviva. And now up into the macro stewardship, how finance itself is organised in order to celebrate and delivering material well, because one of the parents, thanks very much.

Steve Waygood: 38:59

Thank you, David. It's been a great pleasure.