UKSIF in the Spotlight | Q&A with James Alexander, CEO

Q&A with James Alexander, Chief Executive of UKSIF; Treasurer of Eurosif

| UKSIF shortly published a report warning that UK energy companies are considering moving green investments abroad. Could you tell us more about the key findings and measures required to support an efficient transition in the energy sector?

Our report featured extensive research into the state of private investment in the UK’s green energy sector, including polling of 100 senior decision-makers at large energy companies. Private investment is the real prize here, especially when public funds are tighter than ever. The central findings of our report showed that the UK must do more to attract private investment or risk falling behind other countries that are doing a better job of appealing to investors. 81% of large energy companies believe that the UK is already falling behind here, so it’s clear we need to act quickly to change the direction of travel.

What our report showed is that there are relatively simple and cost-effective ways the UK can attract that much-needed private capital. Providing policy certainty that sends a strong message to investors that the UK is a stable and supportive environment for sustainable investment is one of them. Speeding up the planning system to help wind farms and other green energy projects get permission to build is also fundamental to making green investment on UK soil an attractive proposition. Another crucial piece of the puzzle is ensuring the availability of grid connections, which 44% of energy companies surveyed said had been a barrier they faced when investing in the UK. It’s clear from our report that the UK is falling short in some fairly basic areas, and the urgent need now is to get back on track to where we should be, which is in a leading position for green energy.

| Financial Markets Law Committee recently released a paper highlighting the importance of reducing legal uncertainties for pension fund trustees concerning sustainability and climate change. Supporting it, you provided relevant evidence to the UK Parliament’s Work and Pensions Select Committee. Could you elaborate on that, including on what measures can be taken

For some time now, our view has been that fiduciary duties need to be clarified in relation to sustainability. This paper certainly does that.

The guidance states that it is simply good financial sense to consider sustainability, breadth of impact, and the long-term outlook of investments. We think that this guidance delivers the clarification necessary to make fiduciary duty legislation much more effective in its purpose, and that therefore a law change is not currently needed. What we want to see now is ministers and regulators supporting the findings of the FMLC. We should all continue to monitor the impact of these clarifications amongst fiduciaries and their advisers.

| In your view, what does fiduciary duty include in terms of climate risks and sustainability, and what does it not entail?

There has been confusion for some time over how far environmental, social, and governance (ESG) risks and opportunities should be considered on behalf of beneficiaries. This guidance sends a clear message that ESG risks, and particularly climate change, present serious financial risks that should be considered by fiduciaries as part of standard investment practice, taking long and short-term investment horizons into account.

The guidance is ambitious, which we applaud, in the standard it proposes for qualitative assessments of climate change where quantitative modelling has proved complex and imperfect. In the past, the sheer difficulty of quantitative climate change modelling has meant many firms simply leave it out. This paper rightly indicates that that is no longer sufficient.

| Amid member exits from various net-zero initiatives, how do you assess the role of investor collaborations heading towards a low-carbon transition?

As a practice, sustainable investing is getting more mature, refined and effective. Our membership tells us week-in-week-out that they have seen an increasing demand from customers for investment portfolios that align with their responsibility and sustainability values. The ways in which we measure sustainability have improved hugely over the last five years alone. Gone are the days where funds could label themselves ‘sustainable’ without taking any concrete action to actually decarbonise their portfolios, examine governance practices, or verify social responsibility. With the release of SDR last year, our industry took a big step forward, and UKSIF played an important role feeding into that by collating our members’ perspectives, their challenges and their ambitions, to make SDR what it is today. The power of a membership association that unites investors and fosters opportunities for them to share knowledge, is that it makes the industry stronger than the sum of its parts.

| brief bio

James Alexander joined UKSIF as Chief Executive in October 2020, with a strong vision and mandate to further enhance the organisation’s key role in promoting and expanding sustainable investment and finance in the UK.

James has a background in international climate finance and infrastructure finance as well as many years’ experience in leadership roles in membership organisations. Most recently, James supported global megacities to overcome the substantial barriers to financing climate action as Director of the City Finance Programme at the C40 Cities Climate Leadership Group and Head of the C40 Cities Finance Facility – a project preparation facility he developed, now supporting cities across the world to structure nearly a billion dollars of sustainable infrastructure transactions. James has worked on international climate finance issues at the UN level and supported cities across the world to invest their pensions and reserves more sustainably.

James is Treasurer of Eurosif, the European Sustainable Investment Forum, a member of the Green Technical Advisory Group (GTAG) providing advice to the UK Government on implementing a UK green taxonomy and a member of the Disclosures and Labels Advisory Group (DLAG) providing advice to the FCA on the UK’s SDR and fund labelling regime.

| about

UKSIF exists to bring together the UK’s sustainable finance and investment community and support our members to expand, enhance and promote this key sector. Our work drives growth and new opportunities for our members as global leaders in the sustainable finance industry.

UKSIF represents a diverse range of financial services firms committed to these aims, and our 300+ members, managing over £19trn in assets under management (AUM), include investment managers, pension funds, banks, financial advisers, research providers, NGOs, among others.

UKSIF and our members have been hugely active in, and supportive of, efforts to promote the sustainable finance agenda and worked closely with policymakers and others to find new ways to overcome the barriers to the growth of sustainability and deliver progress towards decarbonisation of the economy.