Hello, my name is Robert Barrington, and I am an environmentalist who started working in the City about six years ago – I’m now the Director of Governance & Sustainable Investment at F&C Management.

You might think that is an odd combination, but it can easily be explained: the world is changing – governments, voters and consumers have become much more interested in environmental issues, like climate change, and social issues, like sweat-shop labour. That means that companies need to be more aware of those issues than ever before – and so do their investors.

So I don’t come to work every day wearing a baggy jumper and sandals and hugging every tree I pass. I work for one of the City’s largest institutional investors, which invests over £100 billion in companies all over the world. We might typically be one of the top 20 shareholders of a big company in the UK, and like all investors, we are interested in one thing: making money.

What we have realised is that we can make more money if the companies in which we invest have corporate responsibility at the core of their business. Put another way, we know that we can lose a lot of money if companies mess up the environment or get caught out in corruption scandals or human rights abuses.

On one environmental issue in particular, there is a lot in the news these days: climate change and international treaties such as the Kyoto Protocol and the EU’s Emissions Trading Scheme. What that means in reality is that my colleagues who are buying and selling shares day in day out need to know about things they had not heard of ten years ago: the price of carbon, the impact of the EU’s new biofuels targets, and so on.

With that kind of information, they can decide which companies to invest in – and without it, they are operating in the dark.

But what does ‘being responsible’ actually mean? I’m going to refer to corporate responsibility, but it is also known by many other names – corporate social responsibility, corporate citizenship and sustainability, among others.

From the investor’s viewpoint, corporate responsibility means ‘acting in a manner that demonstrates an understanding of the risks inherent in the modern world and an ability to profit from the changes.’ That means that environmental, social and governance ‘risks’ are properly understood and managed – and that the business is able to seize the new opportunities that arise like selling to the rising tide of green consumers.

It is not about ethics or a company’s duty to act responsibly – except insofar as that may help to make money. That may sound a bit cold-hearted, but I believe it is up to governments to legislate if they feel the market is acting in a way that is against the interests of society, and not up to companies or their investors to try and create a perfect world.

In fact, when we are talking about corporate responsibility, I think it is important to remember that one of the most responsible things a company can do, and its investors can ask of it, is to be profitable. Those profits help to fund the savings and pensions of millions of people in this country.

There are some complications to this, and I’ll highlight a couple of them. First of all, things are not the same everywhere in the world. If you are an Indian company and prone to bribery to secure contracts, you are less likely to be caught and the markets will punish you less than, say, an American company – because there are strict anti-bribery laws in the US and companies that are caught can be heavily fined. Every pound or dollar paid in a fine is a pound less for the shareholders – to say nothing of being de-barred from future contracts.

So western companies trying to act responsibly because it is good for their shareholders do have a significant challenge when competing against emerging markets companies playing by different rules. But there are also some excellent examples of companies in places like Brazil that have catapulted into the top league of corporate responsibility, so it does not mean that emerging markets always equals irresponsible companies.

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