Thursday, May 23, 2013

Pension Plan Break-Out of the "Asset Owners" Box

Yesterday I was invited to review and comment on a campaign being developed to get young people to rally their parents to pressure their pension plans to reform their investing policies, specifically to address climate risk and economic inclusiveness.  In the prepared materials, is this quote from Paul Polman, CEO at Unilever:

"If you look out five or ten years (which is my job), the power is in the hands of consumers."
This is as perfect an expression of values-driven business leadership in optimizing commercial competitiveness for sustainable wealth creation as I can imagine.

Pension plans and other stewards of large, purposeful, perpetual pools of capital entrusted to their care for the benefit of others under governing charters of trust need to rally to Mr. Polman's call.

Here are the 3 steps they must take.

  1. Embrace stewardship - stop being passive “asset owners”, start being responsible stewards of change and adaptation to change
  2. Invest evergreen - stop being passive “asset owners” extracting wealth from other investors by buying and selling pre-packaged "investment products", and start being proactive capital sponsors sharing directly in wealth creation with values-driven business leaders (see Paul Polman, above)
  3. Sponsor organic growth - stop inauthentically “maximizing shareholder value” along an prematurely truncated exponential growth trend line and start authentically optimizing commercial competitiveness over the entire length the organic growth cycle (see below)

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