This morning I had a coffee with possibly the most passionate woman I have ever met. Her name is Dr Bronwyn King, and she is on a mission to divest the entire financial world from tobacco. That’s right, a humble Australian cancer doctor has world leaders, sovereign wealth and pension funds in her sights, commands meetings, and is on track to have cleaned up around $1 trillion dollars in Australia alone, come October of this year.
Her pitch is one most of us can resonate with – because most of us can’t fathom how our money could possibly still, in 2018, be invested in tobacco. But a solid amount of it still is, and the incongruous reality of how financial custodians act relative to society’s shifting values is a hard lesson to digest in 2018.
Tobacco Free Portfolios is the not-for-profit organisation that is shining a pretty brutal spotlight on these custodians. But the good news is, many are coming to the table, eager to engage. Since 2012 insurers like AXA have divested out of € 1.8B of tobacco assets, as have PME in Holland, the Irish Sovereign Investment Fund and banks like BNP Paribas, who in 2017 ceased lending to, and investing and insuring tobacco businesses.
Of course, it’s worth noting as early as 2007 forward thinking pension funds like the New Zealand Superannuation Fund implemented a tobacco free policy, one of the first to do so. Just like they were the first country in the world to give women the right to vote.
The work Dr King does is the tip of a very big iceberg for the financial services sector – we all know tobacco isn’t the only dirty investment. The reality is business models that externalise their costs to society and the environment are less and less worthy of our investment dollars, and are increasingly riskier bets, with significant long-term downsides. The fact that Tobacco Free Portfolios even exists is society’s rude awakening to the fact that to a large extent, the finance sector has still not stepped into line with their values.
As has been documented on Daily Fintech before, this is a huge area of opportunity for fintechs, if they can successfully front run the incumbents on value led messaging and action. Because the grande dames of the finance industry will change, of that there is no doubt. They are full of well-meaning people who will push these sorts of initiatives through the various departments and board approvals they need to be pushed though. The political and peer group pressure, thanks to the likes of the work of Dr King, will help oil the wheels of progress (or perhaps ‘process’, in this case).
But there is an absolute window of opportunity for those that don’t need to do any pushing – businesses that can choose to set values at the core of what they do from day one. That is what all fintechs can and should do, across their entire financial value chain.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy.