Sheela Veerappan

Hello, I'm Sheela Veerappan, and you're listening to the abrdn Sustainability Inspires podcast discussing all things relating to sustainability and responsible investing. I’m delighted to have with me as my guest, David Atkin. David is one of Australia's most experienced and senior executives in the Australian pension industry. He is best known for being the CEO of CBUS, the Construction and Building Union Superannuation fund, which is also one of the largest pension funds in Australia. Under David's leadership, CBUS was the first fund to adopt the Integrated Reporting Framework, when CBUS was able to tell its members and other stakeholders how it had created value for them. Growing up in PNG, he is comfortable with the tropics, and he doesn't mind the heat and humidity. He is an avid music lover, he has over 3500 CDs. He's also very interested in the parrot species around the world from an early age. David started his career in the trade union movement, which may seem unusual now that he's the CEO of the principles of responsible investment, the PRI. So, for this podcast, we're going to explore how did he end up in sustainable investing? Was it coincidental or intentional? So, David, hello.

David Atkin

Hello Sheela, I’m glad to be joining today.

Sheela Veerappan

So, I'm going to start off with a really interesting question. When you're not running companies, you used to be a long-distance runner, and sustainable investing is often associated with marathon running. Do you see any similarities between the two? And what are the personal characteristics you think one should have to continue running in the sustainable investing race?

David Atkin

Thanks, Sheela. No, that is interesting question. And yes, I have been a long-distance runner, my knees these days, don't quite let me do the distances that I'd like. But look, if there is an analogy there, it would be, you know, when you're running, your you start out and you just tried to get everything warmed up and get into the rhythm. That's a bit like, you know, when you begin your learning pathway, as a responsible investor, you've got good intentions, you want it, you've got a direction you want to head to, but you're learning in the process. So, it's, it can be a bit of an uncomfortable period first up, as you start to sort of put together your approach to, to responsible investment, then you get into a rhythm. And then you feel like you could run fast forever, as you get your rhythm in place. But you know, that when you get to certain points, particularly in a marathon, that your body is going to start screaming at you. And you've got to find ways in which you can just push through that those difficulties, and then you know, you get to the very end, and it's a sense of satisfaction. And so, I guess the parallels for sustainable investing, responsible investing is that this is a long whole process. And we should also recognise that the responsible investment field is still new. And what we're talking about is reimagining the way we think about value and the balance sheet that's been occurring over the last 15 or 20 years. I mean, effectively, we are building the plane while we are flying it. And so, as a consequence, there's mistakes, we're learning different ways, there's, you know, everything is not working perfectly in sync. And that's the experience of people operating in a sustainable finance field at the moment. But I think personal characteristics would be resilience would be keeping an eye on the long-term goals, and not being put off by obstacles being put in front of you, solve them, and just know that your objectives are worthwhile pursuing. And the final thing that I would say is, think about a marathon is it doesn't really matter what time it takes you to finish. It's about finishing it. And everyone needs to be on this journey, where we effectively we ensure that the world we live in, and the world that we are working in, is one that's sustainable, and is enables our customers, our beneficiaries, to have the lifestyle that they want to live. And so just make sure you keep that in mind when you're, when you're operating in the field. There is a long-term positive value for the work that you do.

Sheela Veerappan

So that's really very helpful. I think the key word for me is resilience, right? Because you can really get bogged down with all the noise that's happening in the industry. At the same time, the industry has grown tremendously, it's become what we would say mainstream, within the whole investing side of things, and that many different areas of sustainable investing. So, you've got ESG integrated, you've got impact investing, and you've also got corporate sustainability. In your opinion, do you think it's helpful for a new joiner in the industry to start focusing on a specific area of should they start off as a generalist and just dipping their toes in bits and pieces.

David Atkin

I think either is fine, it just, it's kind of its whatever works for you. I mean, just take my own personal experience, you know, I came into this industry, not with any particular finance training or sustainability, background. I was very lucky to join the superannuation industry of the pension industry in Australia at a time where it was emerging out of being a cottage industry. And I was in an environment where everyone did a little bit of this and a little bit of that. So, when I started STA, which was the precursor fund to Australia, super, which is now the largest in Australia, it had a team of 20 people. And I worked really closely, I was in a marketing role and worked very closely with the investments team, as this sort of interest in sustainability in SRI investing became, you know, was a theme at that point and around the turn of the century. But now we're in an industry where specialisation is being more needed. Subject area expertise is really critical. And so, the thing that I would say is just take the opportunities that are there for you to step in and demonstrate that you are thinking contextually, and that you are thinking organizationally, and that you are thinking strategically. And so, we're, you know, whether you are in a in a technical role, or in a generalist role, they're the sorts of things that I think leaders are looking for from their employees as they come into the industry. Look to join the dots, when I think what's interesting about the sustainability field is that, yes, you still need the mainstream financial building blocks. But you're also needing to add in a whole lot of new domain expertise, as we're trying to solve these sustainability issues where science-based training, engineering, the arts, you know, societal issues all become really important factors in determining risk and opportunity, and also at the solutions. So, joining the dots of different domain expertise, I think is what is something that is a real need within our industry. And if you demonstrate those sorts of inquiring mind attributes, I think you'll have a very meaningful and influential career in in sustainable investing.

Sheela Veerappan

So, you've had an illustrious career in the Australian superannuation industry. When you at CBUS, you were the board member of the PRI, and now you are the CEO. So, you've essentially come full circle with the PRI, I guess, has your involvement with the PRI help you to fully transition to the sustainable investing world.

David Atkin

No doubt. I mean, I was very lucky to come onto the board of the PRI, in the early days wasn't at the very beginning but it was 2009. And a responsible investment was just emerging. I think it was probably 10 years within the investment community as a theme. And so, I mean, I guess my role on the board at that time was to help the organisation emerge and become a functional organisation supporting its signatories. And then I was on the board until 2015. Coming back, I've had to re immerse myself or immerse myself back into the PRI and to understand issues that we've been working on. That is the world's become so much more complex. But I've also seen the fantastic outputs from the PRI is engaged with our signatories that is supporting our signatories to become better responsible investors. And so, whether it's around climate, whether it's around, just transition, whether it's around biodiversity and climate, human rights, et cetera, et cetera. Tax. These are all important thematics. Now, I'm in no way a subject area expert, but to just understand how the PRI can support its signatories around the issues that are important to them. Sort of understanding that over the last 18 months has been fantastic. And I just think there's so much more potential in the way in which we can support our signatories around this thematic going forward, I'm really excited about being here to play that role. I think one of the things that at the PRI is with almost five and a half thousand signatories, we have to be able to scale up the way we support the work of our signatories. And so, as an organisation, we need to mature in the way that we make decisions, determine our priorities, and identify how to support the diversity of approaches by us increase across the globe. And that requires a different way of approaching a task that we say we would have when we started out, you know, 15 years ago.

Sheela Veerappan

So, I'm going to shift gears a bit a bit here. One of the objectives of the PRI is to create and develop a sustainable financial system. So, do you believe investors need to push their governments harder to implement the right policies and regulations to support and enable a sustainable financial system?

David Atkin

So, the short answer is yes. But this, let me expand on that. So, the first thing is that from a PRI perspective, we see our role in three sort of spheres. The first is how do we help our signatories become better responsible investors as single institutions. But if you believe in that ESG, sustainable finance, thematic, you know that these issues, you can't solve on your own, you do need to work together with other signatories on common areas of interest, climate change being the most obvious. So, we provide a whole lot of initiatives and places that secretaries can work on where they are sharing their experience and learning to solve these problems as a group. But then, even with working in a collaborative way, we operate in a system of rules in the finance industry is codified. And they've not been set up to really facilitate responsible investment, although that is changing. And so, the PRI has got a very important role to play, in, as we address these systemic risks, seek to engage with policymakers and regulators around the globe to ensure there is an enabling environment for long term investors. For those who take a responsible investment approach, we've got a very important role to play in bringing a practitioner’s perspective in the formulation of these regulations. From our database, we can see that in 2015, we had 300, responsible investment regulatory rules in our database, that's about 1000 now. So we're seeing this acceleration of regulation around the globe. And the PRI has got a very important role to play to bring practitioners view but also to encourage governments to reward responsible investors who take a long-term view to value creation.

Sheela Veerappan

Given that the regulations becoming more complex, and a lot of it started from the UK, the European Union and Australia. Do you feel that Asia has the opportunity and the possibility to be leading in this space meaning to be able to produce good practitioners who are able to take the lead and become leaders eventually?

David Atkin

The answer that the short answer is yes. Again. I think and but just to put a bit more sort of meat to that, I think the sustainable issues, climate change, a way in which we utilise nature to support a healthy world. You know, we've got half the world's population living in the Southeast Asian region. We solve these problems in Asia, if we don't get capital, working with the public sector in a really focused way within the Asian market, we will not solve these issues. And what I can say is that from my own exposure to the APAC region in the last few months, there's a lot of momentum. There's a lot of really strong investor interest in sustainable investing issues. And there's also very strong support from the regulatory environment and the regulators. But it's certainly true that the, I think the opportunity for within the Asian market is to learn the lessons in other markets around regulation, for example, or in terms of investment strategies, and to leapfrog. And I certainly think that there's that opportunity in the Asian market for that leap frogging to occur, and also see really talented, motivated, and thoughtful individuals and institutions in the Asian market that are emerging as leaders, leaders in their own markets, but I think globally. And just to put in a plug, Sheela will be having our PRI in person annual conference in Tokyo first week of October this year. And we're looking forward to showcasing where to ship in the Asian market in that conference to just highlight the points that I've just made.

Sheela Veerappan

So just riding on the plug here for our listeners that abrdn has sponsored, and will be continuing to sponsor future PRI conferences. And if you want to meet one of our persons on the ground, we'll be at the conference this year, which is being held in Tokyo. I guess I wanted to ask you that the PRI and like yourself has come very far. What are the biggest ambitions you hope to see the PRI achieving? And if you had a crystal ball, what would you wish for both in terms of PRI development, and your own career journey.

David Atkin

All my career journey, I'm sort of, you know, that will take care of itself. I guess what I'm interested in is enabling the PRI to play the truly influential role that it can give in its global footprint. I mean, I think what really differentiates the PRI, from you know, other initiatives around the globe is that we are truly global. And we are and we crop, we cover all of the responsible investment thematics. And so, we are a tremendous platform to support our signatories to help them reach their goals to become better responsible investors. But we could also create the opportunities that convening power to bring signatories to problem solve particular issues that report to them, there's so much more we can do in this space. And so, the consultation that we undertook with our signatories late last year, is giving us a very clear read of signatories’ appetite, but also their needs. And one of those needs is to recognise regional difference. To recognise there are different ways of approaching responsible investment, there is no one single way. And so, and that we should be encouraging signatories to progress. And so, we were looking to introduce progression pathways that are voluntary, that are based on your particular investment strategies and approaches. So, this is a way in which I think we can encourage that improvement across the sector. But recognising that there are different ways signatories do that, if we introduce these progression pathways that are voluntary. That's going to take quite a lot of work to co design with our signatories. But we're undertaking that process over the coming months. And then what we'll do is we'll can we'll tailor our programmes of support, convene peer groups that work on those provision pathways together, and then use our reporting and assessment as the feedback loop that enables our signatories to know that they progressed in the way that they had expected. So, I'm very much looking forward to that, I think that's going to be quite impactful for our signatories. If we do that. The other things that we're looking to do in my time here is to create more opportunities for us to promote the good work that's occurring within their sector more broadly. The PRI does not need to generate all of the IP for us to get behind good work. And so, we'd be looking to play a role where we can amplify and support other initiatives that are occurring within responsible investment fields in a way that sort of creates a more cohesive and coherent in a response from the industry. And then the final thing, which we've already talked about is that this opportunity to shape the rules that we operate in, again, is some something that we'll continue to lean into. So, if I could do those three things you are over the next two or three or four years, I'll be very pleased, but I know that it's eminently achievable based on what we've worked through our signatories so far.

Sheela Veerappan

So, for our listeners out there, if they're thinking of where to start their career in ESG, or sustainable investing, would you say the PRI is a good place to get their hands dirty? And to start their career in?

David Atkin

Oh, absolutely. I mean, I think I mean, it's the PRI has been a very important place that people come to work and develop their careers. Our alumni is now you know, reaching, you know, a breadth across the sector. I mean, Sheela, you're one of those. You know, it worked with us, in Australia, and now you're promoting the thematics around being an ESG, investor and responsible investment in your role at abrdn. So, I think the PRI without challenges that, you know, we were a very good training ground for the industry. And we know that good sustainable, sustainable investing personnel is hard to find. And so, you know, us being able to keep our people working within the bureau is always a challenge. But I mean, it's, it's certainly one of the pleasures is to see how our alumni move on to roles and do fantastic things across the sector, that gives us a lot of pride.

Sheela Veerappan

So, we're now at the stage of the podcast, where I'm going to ask you for something to inspire our listeners on sustainability. It could be an interesting book that you read, or film that you watched, a mentor, or even a personal experience. So, David, what are you comfortable sharing with the listeners on something interesting?

David Atkin

Well, I don't know this has inspiring. But it was certainly inspiring to me. And it was a personal experience. So, as I came into the industry, as a marketing role at STA, as I mentioned, we were doing some research with our members about whether we would introduce an SRI Sustainable, Responsible Investment option onto our investment menu. And the STA membership, we're manufacturing workers. And so, we did a whole lot of focus groups with our members around, you know, their interest in SRI options. And, you know, the pitch was, you know, you could, you could invest in these options in a way that was aligned with your personal values that was around ensuring that you're looking after, you know, the, you know, the socially responsible aspect, but that there wasn't a tradeoff for returns, that this was, you know, additive. That was, that was the one that's what we were testing. And what we got back was people liked the idea. And then they said, if you the trustee believes that this actually is wind, which is integrating ESG into your investment processes, improves investment performance on protects investment performance, but also enables better societal outcomes. Why aren't you including that in the default option? Why are you making me choose? Because you're the experts, in super, I'm a manufacturing worker, you know, you can't expect me to really know about all these issues, but I trust you, as my institute, my pension fund to be to be making those judgments. And so why are you making me choose to go into an investment option, when it should be if you really believe it integrated into your overall investment strategy and approach, and that has stayed with me ever since? That was around 2001. And I guess that was my first epiphany, or I guess, light bulb moment around the importance of this thematic needs to be mainstreamed into your overall investment strategy, and your investment beliefs and your investment practices. And that stayed with me to this day.

Sheela Veerappan

Well, that's interesting. So, we're now crawling to the end of our podcasts. Perhaps can we touch on one final question? What do you believe will be the next big sustainability team or issue and which the financial industry can play a role in? In other words, what should we be watching out for?

David Atkin

this, no doubt that the new frontier of or the new the new frontier of issues that our investors are wanting to step into is this connection between climate, biodiversity, and nature. And so, the whole nature thematic is newish for the industry. There's a great appetite to learn more. There's a great desire to understand how you can incorporate an analysis of nature into thinking about risk thinking about opportunities. It's hard. I mean, it's harder. It's not as neat as climate as and we know what the number is that you can work back from. It's much more multi-dimensional. But what but it's clear that again, you do not solve the climate issue unless we ensure that we are protecting the nature assets of which have an economic value. And so, signatories, our investors wanting to spend much more time on this issue. And so, I think the fact that we've got now TNFD being worked on and being released in the first sort of iterations of being released in the coming months is very exciting. But also, there's a lot of work to do for investors around me how to incorporate an understanding of the risks associated with the nature aspects of it into our investment process. So that's something that we'll be working on significantly in the coming years. So that's probably the main one I'll point out, Sheela, is the sort of the big next issue of, of ESG.

Sheela Veerappan

So, I come to the end, David, thank you again, for being with us today. It has been a real delight to have you with us.

David Atkin

I enjoyed the conversation a lot and hopefully, your listeners will take something out of this and can be inspired with and continue, you know, the fine work that you're all doing. So, thanks, Sheela.

Sheela Veerappan

You have been listening to the abrdn podcast Sustainability Inspires aiming to help you to get inspired and get involved to all those who have taken the time to tune in many things for listening. You can find all our podcasts on our website, tune into our next podcast where Eva Cairns speaks to Sonja Gibbs from the Institute of International Finance to discuss action in finance and policy. Until then, goodbye for now.

Disclaimer

This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer investment, recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication and do not necessarily reflect those of Abrdn. The companies discussed in this podcast have been selected for illustrative purposes only, or to demonstrate our investment management style and not as an investment recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up and investors may get back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates and provide no guarantee of future results.