Over the course of the last year I have been privileged to have had the chance to contribute to the Lord Mayor of the City of London Corporation’s initiative ‘The Business of Trust’. As part of this initiative the City Corporation pulled together representatives from leading financial institutions, with the support of the executive teams within those companies, to create a group named the Leaders of Tomorrow. At its core this group of volunteers was given the task to address two things:
- Drive positive change in our own companies and in the markets in general, from which we are representatives, to adopt better governance models and values which support a stronger tie between business/financial value and social value.
- Reflect back to society at large the improvements that are being made to the world of finance and big business that give reason to be less cynical and demonstrates this positive change.
Clearly, this is a rather gargantuan task, but it is an important one and you have to start somewhere. As part of this process The Lord Mayor of the City of London interviewed a number of public figures on their perceptions on the importance of trust and the civic principles laid out by the City of London. The City Corporation also drove engagement and debate around reviewing and influencing the new UK Corporate Governance rules and guidance. Various events were held to promote those entrepreneurs bringing transparency, access and fairness to the retail banking and investing markets, such as Anne Boden (CEO of Starling Bank), Martin Stead (CEO of Nutmeg) and Miles Cheetham (Head of Propositions at Open Banking). Engagements have started with school children, particularly in disadvantaged areas, to establish mentoring relationships with City executives and to provide education about how the financial eco-system works to reduce the mystique and complexity are also being put into place.
As a representative of Refinitiv, formerly the Financial & Risk business of Thomson Reuters, I would also highlight reasons to be optimistic about the future of trust in business and finance. Over the last few years we have seen a dramatic rise in demand for Environmental, Social & Governance (ESG) data. Institutional investors, such as pension funds, now have a core expectation that the companies they invest in track and report on certain metrics such as their carbon footprint, the diversity of their staff, executives and Board, etc. This is in turn driven by rising demand by the millennial generation (and others) who work in these companies and have more recently started pension schemes and have a stronger desire to ensure a moral purpose in the companies they work for and invest in.
Whilst there is work to be done to standardize ESG reporting across companies and regions to allow for benchmarking of progress, as well as preventing the process of ESG reporting from being a check box exercise, we need not be cynical about the rise in requirements for this data and the need for companies to report progress in this area if they want to be attractive to investors. The growth of social impact investing, such as venture capital firms like Mustard Seed, or the ongoing growth of private equity and hedge funds dedicated towards renewable energy, is evidence of and indicative of the possibility of progress.
There is also a growing interest by executives in financial services to deploy their skills and knowledge to socially beneficial ends. Working with the likes of UnLtd as a mentor for social entrepreneurs, or Pilotlight, as a pro-bono consultant for executive teams and Trustees of charitable organizations, helps to bridge the gap between corporate value and social value.
The rise of AI, technology transformation and digitalization being applied to the financial services space potentially allows for the democratization of information in finance and banking which has so often been looked upon by those outside the industry as a black box in which there is no knowledge of its inner workings. There is a perception amongst some in the general population that most financial services professionals in the City behave like the famous media portrayals of millionaire crooks depicted in Wall Street and The Wolf of Wall Street, as evidenced by the 2018 Edelman Trust Barometer, which showed that trust in UK business has fallen by 2% to 43%, the lowest level since 2012. But encouragingly it is the application of cutting edge technology tools to this world which offers the best chance of a meaningful reduction in financial crime, and this is being welcomed and adopted by the banking community as the extensive expenditure on this area demonstrates.
During the last year, whilst working with the City Corporation on the Business of Trust, the company I work for, the Financial & Risk business of Thomson Reuters, has now become Refinitiv, following the closing of the strategic partnership transaction between Thomson Reuters and private equity funds managed by Blackstone. As a standalone company we recognized that we had an opportunity to re-establish our purpose and values as well as be conscious about what was important to retain from our 160-year Reuters heritage and our reputation for providing unbiased, accurate, time critical insights and information. In this process of articulating our purpose we arrived at two foundational issues:
- A healthy functioning financial eco-system is critical to human wellbeing and can address a number of key critical issues – from supporting pensions and savings in wealthier developed markets to allowing governments and companies to raise capital for investment into research and development, from ensuring infrastructure continues to be developed in emerging economies to helping global resources to be allocated more wisely and in a more sustainable way.
- As a key provider of data, technology and insights to the global financial community we have an opportunity and obligation to support the health and prosperity of this system – this includes amongst many other things the provision of data that enables companies to identify fraudulent or ethically problematic behavior to enabling free trade to flow seamlessly over our systems in a low latency technology environment.
The Business of Trust has enabled me to be more explicit and conscious about how we add social value as a central and critical component to the work we do in the world of business and finance. There are numerous ways to do this and I suspect it will take a diverse and multi-faceted approach to rebuild the bonds of trust that the institutional financial sector has with society as a whole which were so damaged by the financial crisis ten years ago. This makes the case for starting the process sooner rather than later, to live by the commitments we make, and to reduce the chasm between wider society and big business which both sides tend to over emphasize. As the philosopher, Karl Popper stated, we must not be cynical but optimistic about the future. It is our duty “not to prophesy evil but, rather, to fight for a better world. The future is open. We all contribute to determining it by what we do. We are all equally responsible for its success.”