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Penny Shepherd

The chief executive of the trade body for ethical and environmental investment believes strongly in the virtues of sustainable investment and points out that ethical investors have proved remarkably durable over the years while green concepts are now becoming mainstream Interview by Lee Jones

When she was younger, a friend told Penny Shepherd that she was “the only 27-year-old she knew who was obsessed by her pension”. If you couple this with the fact that she has not owned a car for over 15 years, then you might be hard pressed to find someone who better embodies the values of the UK Sustainable Investment and Financial Association.

As chief executive of UKSIF, Shepherd says her outlook fits perfectly to promoting ethical financial investment. “I am interested in the relationship between business, society and the environment and I have also always been fascinated by the role of money and investments in those systems.”

Shepherd began her career at IT giant IBM. She recalls that in the mid-1970s, a mathematics graduate basically had the choice of becoming an accountant, an actuary or joining the newly created IT industry. She chose IT as it meant she did not have to take any more exams.

She stayed with IBM for 20 years, working with a variety of companies to help develop financial IT solutions, including helping to develop the computerisation of supermarket checkouts as well as overseeing the electronic transition of many high-street bank customer systems.

“The interesting thing about IT is that it is about making systems work better and it changes all of the time. It gives you a sense that the future is different from the past, that things do move forward, that things change, that things improve and do get better and that it is ideas that change things, when you put them into practice.”

But she wanted to find a job that allowed her to follow her passion for ethical business and joined UKSIF in the late 1990s.

“It seemed like one of these areas that had the potential to make the world a better place and to make capitalism work better,” she says.

She worked at UKSIF for four years and earned herself a mention in the Queen’s birthday honours list in June 2000, receiving an MBE for “services to sustainable economic development and socially responsible investment”.

Shepherd left UKSIF 2001 to join the London Sustainable Exchange and help then London Mayor Ken Livingstone create the London Sustainable Development Commission but she was soon drawn back.

“In 2005, I was wondered what to do next, and the person who had replaced me at UKSIF was moving on, and I realised that I had learned an incredible lot about ethical investment which I wanted to bring back.”

She says on returning to UKSIF she has found that ethical and green investment has moved a long way. “In 1997, the main ethical investors were churches and charities but now there is a much broader range of approaches for ethical investment. There are also a lot more asset classes and much more fixed-income investing than were not there 12 years ago. Now it is not just churches and charities investing in ethical funds but global institutional investors.”

Shepherd is well used to dealing with the common criticisms of ethical and green investment. She argues that where once sustainable investment was only for the die-hard liberal, now it is more corporate and works alongside other investment methodologies.

“Going back, the perception was that you could not be just part ethical, now the perception is yes, you can. In the same way that you can drink Fair Trade coffee some of the time, by having some ethical investment, you are proving that doing something is better than doing nothing.”
She also says that the argument that ethical investment is not as profitable as other investment types does not stand up.

Regardless of market conditions, Shepherd points out that ethical and green investors are remarkably durable. “If you look at the Investment Managers’ Association statistics, fund flows into green and ethical funds has been positive for every quarter except one since 1992, so you see consistency in flows. Green and ethical are stickier because people invest for the long term.”

Ethical investment can also be criticised for the lack of a clear definition of what is ethical. Looking at the range of ethical and green funds on the market, it could be argued that any firm can be considered ethical if approached in the right way.

Shepherd does not deny this. For example, she says some people may see nuclear power as ethical and some may not, or some may see future solutions for green energy coming from the fossil fuel companies of today while others would never dream of investing in a polluting oil company.

“Green and ethical investment is any investment that takes account of social, environmental and ethical criteria in addition to financial criteria, for whatever reason.

“It is about the things that are going to make a difference and it is all about what the client wants. Different people want different things from ethical investment.

“That is the exciting thing about the transition to a low-carbon economy, there is going to be all sorts of investment opportunities around it, much more than we are seeing now. That is why we shouldn’t put things in narrow boxes.”

This week is the second year that the National Ethical Investment Week has been held and Shepherd is leading a series of events to bring home the message of ethical investment to consumers and advisers. Her message for advisers who do not currently look too closely at ethical investments is simple. If there is customer demand for it, particularly in a fee-based environment, you’ve got to be able to provide the service your client wants.

“We want to raise awareness amongst advisers that it makes sense to advise on green and ethical investments, particularly with the shift to fee-based advice and the need to get closer to the customer.”

She points out that as environmental issues become more important politically, investment advice will need to take account of political and not just economic factors. With the leaders of the G20 meeting in Copenhagen in December in an attempt to redraft a global carbon reduction pledge and Shepherd says the consequences of political decision on environmental and social issues will have serious implications for investors.

“The time is now,” she says. “Public policy drivers determine what is and what is not profitable, so in the future it will make sense to invest in building a low-carbon world and to make sure that your investments are protected against the impact of that changing world – what is profitable now and what is not will change.”

Born: Southampton
Lives: Central London and Folkestone
Education: University of Liverpool (Mathematics) and Open University (Diploma in Management)
Career: 2005-present: chief executive, UKSIF; 2008-present: organiser of National Ethical Investment Week; 2001-05: chief executive, London Sustainability Exchange; 1997-2001: executive director, UKSIF, 1977-97: IBM – developing IT applications for the finance and retail sectors
Likes: Reading newspapers in coffee shops, The Leas coastal promenade in Folkestone.
Dislikes: People on trains whose personal stereos are not personal
Drives: Happily car-free for over 15 years.
Book: Currently reading Open Source Leadership – great title, not so sure about the content
Film: The Way We Were, with Barbara Streisand and Robert Redford
Album: Anything by jazz legend Billie Holliday
Career ambition: I’m doing it
Life ambition: Making systems work better
If I wasn’t doing this I would be….Finding another way to help capitalism be a force for good


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