Environmental Finance: How to build back better, Rory Sullivan discusses the system we need to build after the coronavirus pandemic

How to build back better

Environmental Finance, 23 April 2020

Chronos CEO, Rory Sullivan, who was named Personality of the Year in last year's Sustainable Investment Awards discusses the system we need to build after the coronavirus pandemic.

With our thanks to Environmental Finance for the opportunity. You can also read the article on Environmental Finance’s website here

Rory Sullivan, who was named Personality of the Year in last year's Sustainable Investment Awards, on the system we need to build after the coronavirus pandemic.

Let me start with a statement: I believe actions and outcomes, rather than practices and processes, are the basis on which responsible investment should be judged. That is, the test for the investment industry as a whole, and for the individuals that work in this industry, is whether their activities have made a positive contribution to our society and to the environment.

Fast forward a year from the 2019 Sustainable Investment Awards, and I believe that argument has an even greater and an even wider relevance.

While it is far too early to say what the final impacts of Covid-19 will be, our experience since the beginning of 2020 provides some insights into what the world of the future could look like.

It seems certain that we will have increased remote working and virtual connectivity, reduced long-haul travel and less waste. We are learning how we can build a modern, low-carbon economy.

A sense of community and of looking out for others – for family, for friends, for the old and the vulnerable – has re-emerged. The virtues of kindness and of service, in particular in the health service, are now seen as strengths not weaknesses.

However, the picture is not unambiguously positive, and we are also seeing some of the strains and consequences that this world of the future might bring.
We have seen the health consequences of a pandemic.

We have seen supermarkets stripped bare as people panicked about the availability of basic foodstuffs, toilet paper and cleaning products.

We have seen sectors such as tourism, restaurants and aviation face a fight for their very survival, with negative consequences for their staff, their customers and their suppliers.

We have, perhaps unsurprisingly, seen some in the finance sector look to profit from the misfortune of others.

We have seen an ugly rush in segments of the media to blame others for Covid-19.

Of course, the future is unknown and unknowable. We really cannot say what our society, our economy, our environment will look like in one-, two- or five-years' time.
What we can say is that we face a defining time in our history. So, what are the decisions that we face? I will focus on two.

First, we need to decide not just when but how we will restart and then rebuild our economies.

It is likely that many governments will look to infrastructure spending as a key element of that strategy. The question is whether they will choose to accelerate the low carbon transition – through increased spending on, for example, renewables or building the infrastructure for electric vehicles – or whether they will double down on investments in areas such as airports and fossil fuel power generation.

Second, we need to rebuild and reinvent our food system, so it is resilient and respects and protects the natural environment. Protecting animal welfare, reducing antibiotic usage and ensuring animals are not kept in close confinement (a key vector for the transmission of disease) were core themes of the most recent Business Benchmark on Farm Animal Welfare report launched at the beginning of April.

While companies face pressing short-term challenges, there was consensus that the industry, and its investors, must rethink the way in which food is produced and the relationship between our food system and the natural environment on which it depends.

This requires us to think about how we build a financial system that properly supports the needs of society, of our economy and of the individuals who rely on it to meet their financial needs now and in the future.

These changes will not happen by accident. They require us to think carefully about what we want to achieve, and how we will achieve it. Critically, they will require us to invest in a way that may look very different from the way we invest today.

This requires us to think about how we build a financial system that properly supports the needs of society, of our economy and of the individuals who rely on it to meet their financial needs now and in the future.

There will, of course, be many opinions on how we do that. But it ultimately starts with us, and with the organisations we work in and for, be they in the public or the private sector.

We do have choice and we do have responsibility, and we must exert that choice and accept that responsibility.

Last year, I commented that many of the Environmental Finance Sustainable Investment Awards were tributes to those individuals and those organisations who had committed to making a difference, and to making the world a better place. I hope that the 2020 awards will inspire many others to join us.

Rory Sullivan is CEO of Chronos Sustainability and was named Personality of the Year in the Environmental Finance Sustainable Investment Awards 2019. He is also Visiting Professor in Practice at the Grantham Research Institute at the London School of Economics and Chief Technical Advisor to the Transition Pathway Initiative.

The deadline to enter the awards is the close of play 24 April. To enter, follow this link: https://www.environmental-finance.com/content/awards/sustainable-investment-awards-2020/