Why collaborating is key to climate change

Collective action is essential for addressing global challenges like climate change, food security, and pandemic risks. MURRAY ACKMAN and PAULA VALDES explain

• Collective action addresses global challenges
• Challenges and regulatory landscape
• Find out about Regnan Credit Impact Trust

WHAT does it take to tackle climate change, food security, or pandemic risk? At the recent PRI Stewardship and Collaboration Forum, the answer was clear: collective action.

The United Nations Principles for Responsible Investment (UNPRI) brought together global leaders in sustainable finance.

This Sydney forum, hosted by Regnan, convened 45 asset owners, managers, and responsible investment professionals to share insights on collaborative stewardship. Regnan’s Grace Zhang presented at a similar event in Melbourne.

The power of collective action

Investors face challenges that are global and demand collective action. Issues such as climate change are beyond the control of one individual company or investor.

Investors who view their activities within the context of interconnected, dynamic systems recognise their role in building resilience across the financial ecosystem.

This systems-thinking approach has long been central to Regnan’s research, engagement, and advocacy.

It is why Regnan is actively involved in industry associations and initiatives within the responsible investment industry.

Why impact investing?

Aligning investments with personal values to have a positive impact on the world while also generating a financial return.

Why collaboration matters

Collaboration gives investors access to diverse perspectives, shared intelligence and optimises resources. It also offers greater scale.

Regnan has long recognised the importance of bringing voices together to address big challenges. Since Regnan became part of the Perpetual Group, stewardship opportunities have been amplified.

This represents greater funds under management (FUM), which has increased influence. Collaboration also enables different engagements across geographies, asset classes and fund types.

We have found within the Perpetual Group that collaboration allows for diversity of thought through challenging assumptions and improving decision quality.

Regnan research highlights that to achieve true diversity is not just by having varied backgrounds, but by also cultivating a culture where differences can be valued and expressed.

Regnan also seeks to bring voices together across our industry. This has included hosting like with the PRI event earlier this month, as well as facilitating and bringing communities together.

A few years ago, Regnan brought together different links along the food production supply chain to discuss sustainable agriculture.

Last month, we walked around the Regnan eucalyptus trees we get our name from with key leaders in the biodiversity space for an exploration of the work Regnan is doing in advocating the Great Forest National Park.

Regnan is also a supporter of the other initiatives by the UNPRI, working with the SPRING initiative which relates to nature, co-leads the Collaborative Sovereign Engagement on Climate, and has a longstanding membership with the Climate Action 100+ initiative.

Challenges and realities

Positive intentions alone do not guarantee smooth collaboration. As anyone who participated in group projects at university knows, not all contributions are equal.

Internal alignment with specific funds, mandates, and client expectations are essential.

Collaboration must connect with other stewardship and engagement efforts to avoid “collaborative fatigue” – multiple meetings with nebulous outcomes that fail to advance the purpose of the funds.

Why now?

Continued ramp up in focus on climate change and ways to achieve global net zero goals through the transition to clean energy is generating greater opportunities and diversification in impact investing.

Navigating regulation

Regulatory challenges are increasingly shaping the landscape of responsible investment. In the US, political resistance has led to changes in shareholder rights, antitrust claims, and investigations into proxy advisors.

Closer to home, the ACCC has opened consultations to introduce a class exemption for certain types of beneficial collaboration.

It is vital that joint stewardship activities, such as engagement on climate, human rights, and governance, remain permissible under competition law.

Restricting such collaboration could undermine efforts to address systemic ESG risks that require collective action.

Looking forward

Collaboration does not negate competitive tension. Our clients expect us to undertake stewardship activities that provide meaningful investment insights and strengthen portfolio holdings.

Nevertheless, collaborative stewardship is essential for managing systemic risk.

Regnan has been a pioneer in using a systems-thinking approach to sustainable investing, and involvement in these collective initiatives is vital to support the health and resilience of the entire system (which, incidentally, includes our investable universe).

The stewardship work Regnan does for Regnan funds, and the support provided across the Perpetual boutiques, treats stewardship as a beneficial component to active management.

Leadership in collaboration activities allows us to leverage our research and experience, ultimately making us better stewards of the portfolios we influence.

Why Regnan Credit Impact Trust?

Provides easy access to an institutional-grade impact investment fund that is highly liquid, diversified and scalable.