Sustainable finance, says Martina Macpherson, President of the Network of Sustainable Financial Markets, is an ‘enabler’ which meets the needs of current and future generations while helping practitioners and investors identify – and mitigate – micro and macro-economic risks.
“Sustainable finance also helps us recognise the opportunities and projects and companies we need to work, invest and engage with in order to identify best practice and long-term value creation,” says Martina.
“So the role of finance is to take accountability for the future, the future of investing, the future of society and the way in which businesses operate within society.”
Martina, who has worked in socially responsible investment, research and analysis for over twenty years, has carved out a unique pathway for herself, having worked across the board in industry, academia, the NGO community and think tanks.
She is well placed to understand, analyse and influence ESG strategy from a leadership level. She describes herself as a pioneer, an innovator, an incubator and an influencer.
From an academic perspective, Martina teaches across several educational institutions including Henley Business School and the University of Zurich and has contributed to many research papers and books. In fact, her collaborative work on ESG and AI was awarded the title of one of ‘the most influential/most read’ papers on the Social Sciences Research Network (SSRN).
She also co-chairs the International Capital Markets Association’s RI regulatory working group and the World Benchmarking Alliance’s Just Transition coalition.
Working in sustainability
So, it would be fair to say that Martina knows her stuff.
“When you work in this field you have the ability to influence the decisions for tomorrow,” says Martina. “Our field holds valuable insights into prevailing risks and challenges, from things like zoonotic diseases and pandemics, ever-increasing demographic shifts, degradation and erosion of natural habitats and biodiversity as well as the ever-increasing issues and impact of climate change.
“This all matters.”
“But, we need to work collectively, across science, academia and industry to develop solutions, tools and strategies to measure and integrate financial, economic, environmental and social outcomes and impacts.”
One key area of focus for Martina in particular is finding sustainable solutions which meet the demands of market and regulation by identifying new investment opportunities and standardising ESG benchmarking standards.
“There is a ‘real alphabet soup’ issue around ESG, so part of my role is to harmonise ESG standards and help set the right level of expectations which can enable us as an industry to meet different requirements around regulation and normative frameworks.”
Being the connector
It’s also about building bridges between industry and academia, particularly around policy work, governance frameworks and collaborative engagement efforts.
“Investors, particularly those in the retail spheres are increasingly looking for guidance and frameworks as well as transparency around the metrics and research methodologies around ESG,” Martina points out.
“However, a pluralism of ESG labels cannot be the only answer for active risk and opportunities management.”
“We need rather to work directly with clients and auditors, and through collaborative investor efforts, to enhance transparency and disclosure around ESG data, and to provide science-based insights to establish better resilience against systemic risks, fundamental issues, and corporate and sovereign controversies.”
The three Ls
To this end, Martina believes it’s also important to look at the world in terms of ‘laggards’, ‘learners’ and ‘leaders’.
Laggards she says, are the ones who fall under the radar, the ones who are excluded from sustainable investment portfolios before they even become a divestment issue – usually because they are unethical or non-compliant with ESG in some way (coal, nuclear waste, tobacco, controversial weapons for example). The investment industry therefore, needs to focus more on the learners and leaders.
“Investors should follow closely the ambitions set out in the Brundtland report (1987) and identify investment opportunities which meet the sustainable development needs of the present without compromising or constraining the future.”
“Hence, focussing on positive change trajectories, transition actions versus ambitions and ultimately on measurable, transformative corporate concepts is key to identify best in class or best in universe entities.”
Yet, Martina insists, when it comes to excluding certain entities, it’s not about excluding for the sake of exclusions. Investors need to define a top-down responsible investment strategy and approach, defining and incorporating sector-led and normative thresholds, regulatory compliance and client mandates.
Looking forward in finance
Ultimately, Martina encourages investors to focus on ‘future fitness’. A well-run, well-managed strategy starts with the organisation and good governance, which showcases relevant, sustainable and ESG compliant policies and practices while engaging with employees and meeting stakeholder requirements is classified as a ‘social ecosystem for resilience’.
Martina is passionate about sustainable investment and for her, it’s a lifelong ambition to support different initiatives and transitions which will lead to better corporate, investor and societal outcomes and ecosystem transformation.
“I’m not just engaging in so-called sustainability or ESG-focused investments in my day-to-day work,” she explains.
“I’m supporting multiple causes, focusing on forward-looking perspectives and working with the younger generation in my teaching work.”
“For me, it’s about inspiring and motivating the next generation of sustainable finance practitioners. This is positive change and impact in action.”
Martina’s Power Profile
What music empowers her?
“I like a mix of classical and modern music, although I do not have a specific favourite. I like to let music inspire the mood. I think it’s about living in the moment.”
Who are her heroes?
“Mother Teresa: looking at the current geopolitical crisis and the situation in Eastern Europe, dedicating your life to others is a great ambition. Kofi Annan: without him, we would not have had the level of commitment we have seen towards sustainable development. David Attenborough: he’s been a huge leadership figure and driven so much interest and engagement on all sides – consumers, finance, corporations. He’s helped us better understand the nature of the risks that we’re facing around ecosystem collapse.”
Want to hear more from Martina and other finance change-makers?
Elevate your strategies at the virtual GENCFO live Summit, in partnership with ACCA, on the 8th and 9th of June 2022.
Learn more about Martina’s session, as well as the many others from over 50 innovative industry leaders…