Investing and Responsibility

Part of the reason I’m passionate about this job is that I believe through my role I have some influence in making (good) companies even better and hence moving capital to good ideas and good companies and away from bad ideas and companies (self-delusional maybe).

(It’s part of why I write about stories that are not often told, when I write plays)

So, it’s both a privilege and a responsibility (yes, Spiderman with great power comes…) to have a two-way conversations with Chairs of companies, billionaires, CEOs and the like… about the long-term, business, sustainability… diversity, employees, operations… the list is long.

(Thoughtful) investors are uniquely placed to have influence at board and senior management level at the most influential companies in the world. (Unthoughtful investors too).

In many ways our influence is overstated. Why should a governance/[insert specialty here] analyst a few years out of university with some understanding about governance frameworks, but limited understanding of the business, have such a say at setting incentives over a committee or board of combined 100s year of relevant experience?  So, it is up to those like us, who are interested in the long term, and understand business to make the case both to companies and to pension fund and asset owners alike that we are thoughtful and (socially, financially, strategically) useful.

There are few, if any, easy answers to complex questions. In some ways, staying out of contentious issues (eg don’t invest in Rio Tinto, don’t in Shell) is an easy way of signalling virtuous intentions. As I mentioned on my post on Rio, the fact that selling coal mines doesn’t make them go away is awkward. (Although you can also make the point on new capacity….)

In any case, I’d like to make the case that investors and pension fund managers (some of them at least) are heavily involved in these debates.  You can see it across a range of matters – the heavy (live) debates over Shell (as seen through Share Action, Environmental Agency and others, vs Shell management position here), to where we have come to on incentive plans at Weir (FT article here) or Unilever.

I don’t claim to have answers to many of these problems (although in the case of carbon, a carbon tax might help) but we are trying to think about them….

One person to be thinking on these matters a long while (we met back in the early 2000s), is Raj Thamotheram. Raj has cancer and this is a piece in IPE where he reflects on sustainability learnings from the lens of his illness. 

Raj is also looking for a Chair for his sustainability think tank - see the role here (1 June deadline)


 One of the best Munger speeches on how to think about a mental model of inversion can be found here.

If you'd like to feel inspired by commencement addresses and life lessons try:  Neil Gaiman on making wonderful, fabulous, brilliant mistakes; or Nassim Taleb's commencement address; or JK Rowling on the benefits of failure.   Sheryl Sandberg on grief, resilience and gratitude or investor Ray Dalio  on Principles.

Cross fertilise. Read about the autistic mind here.

More thoughts:  My Financial Times opinion article on the importance of long-term questions to management teams and Environment, Social and Governance capital. 

How to live a life, well lived. Thoughts from a dying man.

Know thyself is not enough without change

Self awareness is helpful. Self awareness without charge is unhelpful. Socrates wrote "Know Thyself" (noted from a temple)* and 2000+ years later a leadership-management-self-help industry has spawned.

Allison Vaillancourt writes in the Chronicle of Higher Education: "It is rare to have a conversation lately about workplace dynamics in academia that does not include discussions about the notion of emotional intelligence and the critical need for self-awareness among those who want to effectively lead or interact with others. Understanding our strengths, weaknesses, and blind spots is increasingly considered essential to good management."

She cites 3 lines of evidence: 

(1)  Insight, a new book by Tasha Eurich, an organizational psychologist. According to Eurich, 85 percent of us have a faulty understanding of how we appear to others or how we affect them.

(2) The Daniel Goleman work on Emotional Intelligence - you can see a short discussion here on his site.

(3) Erich C. Dierdorff and Robert S. Rubin ( DePaul University) , wrote about self-awareness in an essay for the Harvard Business Review. High levels of self-awareness, they argued, increase team performance, decision making, and conflict management. They noted, however, that most of us are remarkably clueless about how others perceive us

But, she writes

"I am noticing a surprising trend: I see more and more leaders who seem to be embracing negative feedback and almost bragging about their perceived deficits, while continuing to engage in the very behaviors that colleagues have asked them to stop or tone down."

She notes:

  • "I know people think I have too much to say" shared one person who tends to go on and on — while, of course, going on and on and on.
  • Another leader recently stated, "Apparently, people consider me dismissive; that’s their opinion," as she proceeded to reject the perspectives of everyone around the table who disagreed with her.
  • One leader who is known for overcommitting and underdelivering commented, "I know I tend to overcommit, but that’s just who I am. I think most people understand that when I say ‘yes,’ my intentions are good."


It is good to be self-aware. But demonstrating self-awareness, while at the same time showing a lack of discipline to fix issues of concern, is worse than being clueless about our shortcomings.

The most effective people I know sometimes whimper for a bit after receiving constructive criticism, but they quickly put a plan in place to modify the annoying or offending behaviors. By doing so, they demonstrate respect and appreciation for those brave enough to share difficult truths that are offered with the very best intentions. "


We need our colleagues to help us be better, but they can’t help if we’re not listening.

*The Ancient Greek aphorism "know thyself is one of the Delphic maxims and was inscribed in the pronaos (forecourt) of the Temple of Apollo at Delphi.


If you'd like to feel inspired by commencement addresses and life lessons try: Ursula K Le Guin on literature as an operating manual for life;  Neil Gaiman on making wonderful, fabulous, brilliant mistakes; or Nassim Taleb's commencement address; or JK Rowling on the benefits of failure.  Or Charlie Munger on always inverting.

 

Cross fertilise.  On investing try a thought on stock valuations.  Or Ray Dalio on populism and risk.  You can also click on the Carbon tag below. 

A lesson from autism here.  And a post on the seductive story of Bitcoin