Leaders in Funds Management, Désirée Lucchese – Ethics and Impact Manager, U Ethical

During the second term of a Masters in European Environmental Policy & Regulation (Lancaster University, UK), I was offered my first job. That spring, I promptly moved to the Netherlands to finish off my MSc thesis while working for the Instituut voor Milieu een Systeem Analyse (IMSA), a fantastic Dutch strategic consulting firm affiliated to the Club of Rome and Limits to Growth. After a range of exciting and challenging sustainability roles in Australia, I moved to London and, in 2014, I took on the role of Responsible Investment (RI) analyst with Inflection Point Capital Management (now fully owned by La Francaise Group). The team were interested in both my science background and professional experience across the sustainability sector. As it turned out, Inflection Point was led by the founder of Innovest Strategic Value Advisors, a firm sold to MSCI in 2009-10. Since then, I have complemented my past qualifications with an Investment Management Specialisation and courses on financial markets.

At U Ethical I lead the evolution of the ethical investment framework and I drive active engagement with investee companies, in collaboration with U Ethical’s broader investment team, key stakeholders and industry peers. I ensure that our ethical and ESG processes are systematic, documented, and consistently reported both internally and externally. In turn, this praxis informs discussions within the team, with both our Ethical Advisory Panel (EAP) and Investment Committee, and enables us to prioritise engagement activities.

In my view, all investment should be responsible. It is beyond me how we can accept financial success decoupled from respect for basic human rights or environmental stewardship. COVID-19 has revealed how we are only as strong as the weakest link – and that closing borders is not that good for business. Pandemic impacts, modern slavery and climate change are all market failures to what are essentially collective action problems.

This year offers the opportunity for investors to demonstrate both investment skill and leadership in responsible investing. This leadership could be realised through conscious capital allocations, careful proxy voting and, I hope, greater support for environmental and social shareholder resolutions. As shareholders, we have a right to expect investee companies to be diligent, accountable, align with international best practice as well as general market expectations. The need to encourage robust corporate governance, to mitigate a growing raft of downside risks, while planning for decarbonisation will remain key challenges for all investors. The world has moved from complicated to complex, risks are becoming increasingly inter-related and systemic in nature. As a result, we need to invest with that in mind. As Mark Carney said in his Reith Lecture in late 2020, “we must explore what could happen rather than seek the false comfort of being ready for what’s most likely to happen. We need to remember that risks are the greatest when they seem that they are the least”.

In Australia, most large investors are sophisticated responsible investment (RI) players. Numerous pension funds and asset managers are founding signatories to the United Nations Principles for Responsible Investment (UNPRI) and have built or are building dedicated ESG teams. Yet, we are still falling short of transparent implementation: when referring to Refinitiv Lipper database, for example, funds transparency in Australia appears to lag behind global peers. So kudos to the Responsible Investment Association of Australasia (RIAA) for setting up a Responsible Returns certification program. This will enhance transparency, build credibility and a level playing field for competitive ethical and ESG funds.

Authenticity – U Ethical’s ethical conviction in investment and public advocacy dates back to 1985.

Sophistication – systematic screening, ESG integration and actively seeking to “invest with purpose” through the selection of best-in-class companies, UN-Sustainable Development Goals (SDG) alignment, no tolerance for ‘red’ controversy flags or egregious behaviour, and on-going active engagement & advocacy.

Small is …smart & beautiful – we are a small but growing team with the agility enjoyed by more horizontal organisations. Our latest culture survey revealed collaboration is our top value. As I tell my colleagues, we are like a Goliath in a David’s disguise. As a social enterprise, we believe in shared value creation.

Intellectual curiosity, diligence, good communication skills and a forward outlook. The ability to understand both quantitative and qualitative data is very important as the diversity of definitions and methodological assumptions available to ESG professionals requires an inquisitive mind who would not take assessments at face value. Markets tell you something, ESG data add multiple signals to investment decision-making, all this while the world is moving into unchartered territory. This could be viewed as daunting but I find it incredibly empowering. Resilience is another key attribute – and the patience to accept a lot of jargon and an ever growing list of acronyms.

Be curious, be open to constructive challenges and, above all, choose to work with great teams. It takes a team to deliver excellent outcomes.

Kaizen Recruitment specialises financial services recruitment across funds management, wealth management, superannuation, investment consulting and insurance. We are based in Melbourne and Sydney. For assistance or further information please telephone our office at +61 3 9095 7157 or submit an online form.

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