In the intricate landscape of the investment industry, the concept of “joined-up” thinking takes centre stage, driven by the three Cs—coordination, collaboration, and coherence. Originating from governmental discourse, this term serves as a guiding beacon, highlighting the challenge of achieving synchronised efforts and cohesive thinking. Despite its widespread aspirations, joined-up governance in the investment sector often proves elusive, presenting a complex paradox.
Applied to asset owners, joined-up thinking entails extracting maximum benefits from coordination, combinations, and coherence across diverse elements—people, teams, organisations, and ideas. The investment ecosystem’s complexity is evident as boards, executive teams, asset managers, support teams, regulators, and others contribute to the intricate fabric of an asset owner. The core mission revolves around adding value to capital by amalgamating efforts from these diverse groups in the pursuit of returns.
To optimise and enhance value creation for asset owners, the article advocates a strategic approach grounded in soft organisational alpha. This alpha, generated from governance, culture, talent, and technology, hinges on aligning the organisation with specific goals. Departing from traditional methods, the total portfolio approach (#TPA) is introduced, where all investments and groups compete for capital based on their contributions to the overall portfolio. Despite challenges, achieving joined-up thinking and action within the investment industry emerges as crucial for success.
The exploration extends to sustainability, emphasising the nuanced interplay between sustainability goals and financial objectives. Aligning sustainability ambitions with the primary goal of maximising returns per unit of risk becomes paramount. The concept of “3D investing” integrates risk, return, and real-world impact within the Sustainable Development Goals (SDGs) framework. While acknowledging the complexity of addressing societal challenges in the SDGs, the narrative argues that being joined-up is particularly effective in tackling climate change—a formidable challenge described as the “mother of all super-wicked problems.” The strategy involves a net-zero investing approach, allocating primary capital to climate solutions, and pro-active discussions with higher emissions companies, all aimed at mitigating risks to the financial system from a changing climate system. This sustainability impact strategy, with its fiduciary integrity, proves instrumental to better financial outcomes. The conclusion underscores the importance of joined-up thinking in navigating the investment industry’s complexities and contributing to a sustainable future.
https://www.top1000funds.com/2023/11/being-joined-up-why-its-so-important/