Amanda Young: You are listening to the Aberdeen Standard Investments Responsible Investing podcast. Here we discuss all things Responsible Investment related

I’m Amanda Young and today my guest is Vanessa Whitehead. Now Vanessa is currently a technical manager within the risk and compliance function at Aberdeen Standard Investments. She's been with the company since 2012 - originally joining as Global Head of Compliance Monitoring.

Now prior to joining us, Vanessa held roles in client reporting, operations and compliance with a number of other financial institutions. Vanessa is currently heavily involved in the ESG regulatory work stream as part of Aberdeen Standard Investments wider ESG transformation program.

Now Vanessa describes herself as a humanist with a passion for social justice and equality and this is demonstrated in her involvement in the Standard Life Aberdeen Global Inclusion committee, and her role as co-chair of the Unity Network focused on ethnicity and multiculturalism. Last year Vanessa was recognized brilliantly alongside her co-chair as the top 100 ethnic minority future leader by EMpower so congratulations on that.

Now Vanessa is a mother to three daughters who she says contribute to her laughter but also her grey hair. She loves music and dancing and was in fact in a girl band in her earlier life where she got to perform at the London Palladium. She loves to travel particularly to the Caribbean and she has a special affinity with the Island of Grenada where her mum comes from.

Now in Vanessa's house the love of music doesn't stop with her. Her husband was an internationally renowned DJ working with some of the biggest acts over the last 20 years such as Eminem, Snoop Dogg and Alicia Keys.

Vanessa's social conscience runs deep. She is currently exploring an opportunity to be involved in a children's charity so she can utilize her socially disadvantaged background as a way to help others.

Vanessa a very warm welcome to our Responsible Investing podcast.

Vanessa Whitehead: Wow thank you very much Amanda, it's a pleasure to be here. Is that quite possibly one of the longest intros you've ever done? I don't know, it definitely makes me sound much more interesting than I feel.

Amanda Young: No, it certainly isn't that. We've had some interesting guests but it's just great to have you and your passion for social justice and bringing a different perspective to some of our other guests in the past. So Vanessa, perhaps we can actually begin with your current role. You work in compliance and yet here you are on a Responsible Investing podcast. Now some people might find that a bit of a surprise so I’m keen to hear a little bit about how you see Responsible Investing fitting into a compliance team and perhaps you can also touch on how you personally are looking at environmental, social, governance issues in your current role?

Vanessa Whitehead: Well as you noted in the intro I am currently heavily involved in ASI’s regulatory work stream which has been focused primarily on EU regulation related to sustainability. Our primary focus has been level one of the sustainability related disclosure regulation - SFDR - which has been absolutely fascinating but also you know quite a tough gig. Requirements are predominantly around products but also apply to entities and essentially are aiming to do three key things.

One which is recognize the role of financial services firms in encouraging the redirection of capital to longer-term more sustainable investments, seeking to improve sustainability disclosures and periodic reporting to enable greater transparency and comparability for investors and also to mitigate or at least minimize the risk of greenwashing. So quite simply regulators recognize that these ESG characteristics sustainability, you know, have become a real marketing tool that hasn't always stood up to much scrutiny and so from a compliance perspective we have a role to play in order to achieve or to ensure that our disclosures are fair and that our investment processes and outcomes stand up to those that are described.

Amanda Young: So we've seen this massive increased focus on sustainability funds along with the wider regulation on ESG investment. Perhaps you can outline what regulation is coming down the line and how that regulation may differ across geographies.

Vanessa Whitehead: So we're seeing a whole host of regulation at the moment and some far more progressed than others. So some regulations, some consultations not only from the EU who are clearly at the front of the pack if you like, but globally and so we've had interactions with our Singapore colleagues, Hong Kong, Thailand, Malaysia and in terms of the EU - and I've already touched on the SFDR and the fact that we're looking at these level one rules but then we have level two to work with as well, there's been rules in France from the Autorité des marchés financiers (AMF) - their so-called AMF doctrine -and we're expecting a whole raft of amendments coming later on this year around UCITS and AIFMD and MiFID II.

Added to that of course with Brexit, the UK intend to do their own consultation related to sustainability so there is an absolute raft of it coming from all over the world. So although at different stages of evolution between the jurisdictions, it's apparent that the key principles and the spirit behind the regulation is about the encouragement of responsible investing but also about the transparency of investment objectives and outcomes, and the need to consider business models and - you know -management frameworks in light of that.

Amana Young: Now in Europe where over the past few years the EU has been developing something called a taxonomy on sustainable activities and this is obviously linking into the regulation. Are you able to tell us a little bit about this taxonomy and what that actually means for investors?

Vanessa Whitehead: Yeah, so the taxonomy - even that word alone sort of scares me somewhat but - every time I hear it - taxonomy - it just makes me want to shiver. Essentially the taxonomy is a kind of common classification system that the EU has or intends to put in place. And the aim of it is of course to just use this common language and have a clear definition of what ‘sustainable’ really is.

And it begins with - I think they've got about six environmental objectives that they aim to start with - and the first two relate to climate change mitigation and adaptation. So for products falling out of SFDR that find themselves categorized a certain way - namely under articles eight and nine - they will become subject to this taxonomy and will have to provide periodic reporting to investors so that they can see exactly how taxonomy aligned the products are or the underlying investments are.

Amanda Young: So let's move away from regulation now and perhaps touch on some of your personal passions. You know one of the topics that we often look at as responsible investors is that issue of diversity. Now as we said earlier, you've spent some time co-chairing our unity group and this is obviously an issue close to your heart. So it would be really good to hear what you think the biggest diversity topic is of the moment as well, as how you feel investors have a role to play in addressing the issue.

Vanessa Whitehead: I think the biggest diversity topic is really gender and we're quite rightly seeing a lot in the press around gender equality. And as a woman myself of course, this is, you know something that's quite close to my heart. But actually, my additional tax if you like goes beyond my gender so, you know, race and socio-economic background also can create additional barriers for me and others like me - particularly in financial services - so that you know race, socioeconomics, gender they're very close to my heart. And these kind of barriers are typically unconscious and will be the result of, you know, years of stereotyping or just the comfort that comes from recruiting in one's you know own image.

Whatever the reason, we need to do more to encourage actions to help you know readdress the balance and provide and produce fairer and more representative workplace - that's what I'd love to see.

Amanda Young: You know what so would I, and I do think we're getting there, I do think where we were 20 years ago and times have changed considerably.

Vanessa Whitehead: Absolutely, I mean just to go on to say because you asked about investors right and as investors, I think we have a really powerful opportunity to be a positive force for change by encouraging companies to improve their own representation at all levels and advocate for inclusive environments you know.

We have a role to play in communities through charitable activity or the sponsorship of talent in a myriad of ways or on the private investment side, you know, maybe we can support young businesses that are, you know, female founders or ethnic minority founders - that's an area that's known to have very little support relatively speaking. And then obviously things around encouraging conversations and data collation and the like.

Amanda Young: Now that diversity is obviously just one social issue, are there any other social issues that really resonate with you?

Vanessa Whitehead: I have a passion for fairness Amanda. Probably too much I have to say, stand on my soapbox type, I have to watch that at times. But I do really believe in fairness and justice and you know and I’m fascinated with this concept of being a human first right and so that's why this inequality and the wealth gap really you know, pains me. So socioeconomic disadvantages and perceptions do drive me nuts, you know, and my own - with my own background in mind - you know, I’m from a single parent home, my mum was a teenager basically when she had me and she struggled in lots of ways and particularly financially, you know, but does that make me worth any less? And you know, does it make me any less capable really? Any less inspiring to others?

So some of those old school views and the barriers that are caused off the back of them, you know the fact that it's harder for people like me to find their way and you know it does drive me nuts as I said and it took me a while to kind of shake off my own feeling of not belonging in a space like within financial services and you know trying to fit in. But I’ve learned at this fair age - I won't quote my age -but I’ve learned you know to appreciate my difference and you know, run with it basically. So yeah, socioeconomic that's something that's also quite close to my heart.

Amanda Young: Well, you spoke about inspiration and at this stage in the podcast I always ask my guests for a book or film or other things that have inspired them on sustainability issues that they'd like to share with our listeners. And now you've clearly shared with me a range of things that have inspired you including your childhood, The Big Short, The Pursuit of Happiness and the colour purple. But I believe there is a particular film that tops your list? Would you like to share that with us?

Vanessa Whitehead: Yeah, I was thinking about the film Dark Waters actually. So my husband and I went to see that when it first came out in 2019 and it really struck a chord with me because it talks about a company who essentially knowingly produced products that were basically poisoning the local community and their staff and it talks about - it's all about this case - this lawyer who is persuaded to take on this case, you know it's like David and Goliath type story. And he pursued the case for 20 years, having received evidence galore of all of this toxic chemicals that was finding its way into the water stream and you know and causing deformities in birth and you know deaths and things like that.

Amanda Young: It reminds me of Erin Brockovich.

Vanessa Whitehead: Absolutely.

Amanda Young: It's a similar inspiring film.

Vanessa Whitehead: Absolutely yeah. And for me it shows that you know capitalism really at it’s worse, you know, this ruthless pursuit of profits over people and the importance of good governance and culture and really that there should be no room for companies that you know wilfully or recklessly risk the lives, you know, of others for the sake of money. So I think, you know, it kind of stood out for me.

On the positive side I also liked it because in the end the right, you know, justice was served but actually it was a really high price to pay and again it brings me back to our role doesn't it, you know in terms of asset managers, investment managers how we can seek to, you know, remove capital from these kind of companies or influence business models for the for the better, so yeah that was the film that stood out to me.

Amanda Young: Thank you for that, and finally one last question. What next for compliance and responsible investment - what should we be watching out for the future?

Vanessa Whitehead: Gosh, I think it really will be more of the same Amanda as you know if we continue to see this proliferation of, you know, sustainable products and it will be around what is it we're selling, how do we stand up to that scrutiny, can we evidence that we are doing the things that we are committed to, our investors seeing the outcomes that they would expect.

And to be honest that principle has always been there anyway from a compliance perspective, it's just now the lens has shifted somewhat into this sustainable space but I think the spirit is the same. So yeah more of the same, certainly for the next few years as we get through the raft of regulation that we know about in this space and there are so many other markets - like say the Americas - that I’m sure won't be far behind. So, I think there's plenty, plenty work in compliance for the foreseeable future just trying to decipher how we interpret and implement the regulation in the spirit you know of the regulators globally.

Amanda Young: Well, it's going to certainly keep you busy for the next few years and I’m sure our listeners will agree that we need to make sure we can evidence any responsible investment approach and this, as you say, is just going to increase to avoid green washing which I think is a really important thing.

Vanessa it's been absolutely delightful to have you and your passions on our podcast today, thank you for giving us your time

Vanessa Whitehead: Thank you for having me Amanda, I really appreciate that and really enjoyed it!

Amanda Young: Thanks great, now you've been listening to the Aberdeen Standard Investments Responsible Investing podcast which aims to bring you insights into all things sustainably investment related.

Now to all those who have taken time to tune in again, many thanks and you can find all our previous podcasts on our website. Until our next podcast, goodbye for now.