Tuesday 16 December 2014

Salience and priorities in responsible investment

I've written a couple of bits recently to point up what I think is a bit of a lop-sided approach in the responsible investment world. Specifically, in the UK at least (thought I expect elsewhere too), there is a lot more emphasis on environmental and governance issues than 'social' ones. And given my interests, obviously I'm particularly concerned about the lack of focus on employment issues. I want to be constructive about this, but also be clear that there is a disconnect between much RI activity and where beneficiaries are.

Let's take a detour into Capital P Politics for a minute. Lord Ashcroft (yes, him) has become a source of very useful polling. Not only has he undertaken constituency-level polling in addition to national polls, he has also done some really interesting research on salience. This recent piece is worth a read. He makes the point that issues like 'economic competence' or 'leadership' are actually not necessarily as important as our politico commentators assume. If they were the Tories would be home and dry, as they easily lead on them versus Labour. But because these issues do not have the same salience as 'being on the side of people like me' or 'wanting to help ordinary people' where Labour has a lead, the election is still wide open. (Interesting, too, that Labour's advantages are about values/intentions rather than particular policies. Usually lefties are on the wrong side of this - quoting tractor production stats rather than projecting values.)

And there are issues that have very little salience at all. On these ones you can have a significant lead and it won't really affect the punters' views at all. This is exactly where Labour is with the environment. It has a clear advantage over the Tories on this issue, and has held this advantage over the last two years. But its salience with voters is well below average.

This, to me, shows why it was an obvious move for David Cameron to get rid of the 'green crap' to try and respond to Labour's policy on energy prices. They don't really risk anything given the low salience of the environment, but potentially gain by being able to say "we'll bring bills down" by getting rid of green taxes and thus cutting away at Labour's lead on 'wanting to help ordinary people'.

Actually you see something very similar in the polling that the NAPF undertook of pension scheme members I blogged previously. When asked what they thought asset managers should focus on it was pretty much bread & butter topics - the financial performance of the companies and the pay and conditions of employees were the top two. Environmental issues weren't even close. Again, low salience. (Of course, some will argue that actually a lot of the activity the RI sector undertakes IS focused on the financial performance of companies. But I think, if we're honest, we know this is a limited explanation for a lot of it.) But if we look at the activity undertaken in the RI world these positions are reversed. Environmental issues, climate change in particular, dominate whereas pay and conditions of employees is a long way down the list.

I can't help feeling that this is part of the reason that RI still feels like a bit of an add-on rather than an integral part of what pension funds do. Scheme members probably think it's broadly a good thing that people engage with companies over climate change, but it's not something many see themselves having a personal interest in. And because of its low salience at best it's pretty irrelevant in terms of building beneficiary support for RI activity (making it easy for opponents to scrap the investment industry's "green crap"). At worst there could be a significant gap between what pension scheme members want and what the RI sector undertakes on their behalf. It could look a bit like the legitimacy problem politicians now face.

I think it would be useful for all us in this field if there were a tighter link between what beneficiaries seem to want, and the activity undertaken on their behalf. Reorienting RI a bit so that bread and butter issues are given more prominence could do a lot to bolster credibility, and make it harder for opponents to challange. But then I would say that, wouldn't I?

PS. if I were working at an asset manager I would be looking at some of this polling a little bit nervously. There has already been a bidding war between the parties on pension charges. There is also growing interest in hidden investment costs. It's easy to see how a "lower costs"/"value for money" campaign could quickly gain ground, rooted in some simple values (like sticking up for scheme members), and I've little doubt that is something punters would be interested in.  

Monday 8 December 2014

Ruling the Void

Ruling the Void, a posthumous sort of finished book by Peter Mair, is one of the most interesting things I have read recently. It covers similar issues to Colin Crouch's Post-Democracy but with a) some analysis of electoral behaviour to underpin the argument and b) a focus on the EU as an example. If you don't know about it, the book is basically about the hollowing out of Western democracies, with declining political participation and loyalty leading to more volatility on the one hand but less accountability on the other.

Particularly interesting to me area the comments about the state becoming primarily a regulator rather than an instrument of politics. This is exacerbated by the tendency of governments to seek to demonstrate the ideology-free nature of their offer by appointing third parties to develop and oversee policy. In practice this means that often only corporate interests get a look in since only they have the resources to devote to such work. Therefore, in my opinion, you should shudder when someone suggests that we need to "take the politics out of" a given issue, as this will likely mean hand it over to industry interests to do as they see fit with little accountability.

Anyhow, well worth a read. Below are a few good snippets.

[P]ublic policy is no longer so often decided by the party, or even under its direct control. Instead, with the rise of the regulatory state, decisions are increasingly passed to non-partisan bodies that operate at arms length from party leaders... [T]he officials who work within these delegated bodies are less often recruited directly through the party organisation, and are increasingly held accountable by means of judiciary and regulatory controls. And since this broad network of agencies forms an ever larger part of a dispersed and pluriform executive, operating both nationally and supra nationally, the very notion of of accountability being exercised through parties, or of the executive being held accountable to voters (as distinct from citizens or stakeholders) becomes problematic.
[T]raditional politics in seen less and less as something that belongs to the citizens or to the society, and more and more as something done by politicians. There is a world of citizens - or a host of particular worlds of them - and a world of politicians and parties, and the interaction between them steadily decreases. Citizens change from participants into spectators, while the elites win more and more space in which to pursue their own particular interests.
[I]t is possible to speak of a growing divide in European party systems between parties which claim to represent, but don't deliver, and those which deliver but are no longer seen to represent.   

Tuesday 2 December 2014


This is a few months old, but well worth a read - an interview with Will Davies (parts 1 and 2). Some choice quotes below that I particularly like/ agree with.
Ultimately what neoliberalism is doing is paradoxical.  It is asserting the political legitimacy of certain anti-political forms of technocracy, measurements and economics.  But when those forms of technocracy, measurements, economics and so on reach some massive crisis, as they have done in recent years, then the paradox becomes visible because the only things that can happen is for the state to use all its power to prop everything up and in a sense assert it all back into being.   And so the illusion that we can have a capitalism without power, without politics, and without sovereign bodies, comes crashing down – a project of power comes again to the fore.
[O]nce the state’s job is measuring outcomes and measuring efficiency, the legitimacy of the state looks very different from if its job is seen in a much more normative, legal-constitutional way of imposing a particular market order....
[T]here is an emptying out of the capacity of judges, lawyers and regulators to mobilise arguments on the grounds of principle.  And this is deeply problematic because right now we live in a situation where most people would like to reduce the powers of banks and the main way in which that could be done is through regulation.  But the problem is that the banks are now involved in activities which are so complex and require such expertise, that they can always turn around to the regulator and say: you don’t know or understand what we are doing as well as we do and if you were to intervene that would have a drastic impact on certain economic indicators – growth or whatever.  And the regulator has no counter-argument to that.  What’s interesting about neoliberalism, I think, which has brought us to a state of crisis which we seem unable to get out of, is that it has gutted the very bodies which might traditionally have had the authority to restore certain areas of our economy to a state of legitimacy.  It has made it impossible for anyone to come along and claim that certain practices are simply illegitimate, because the only argument about legitimacy with any force is one based on economic evidence.