The world awaits you

My LSE graduation speech

This is an edited version of a graduation speech given at the London School of Economics in July 2019.

Good afternoon, Graduates of the London School of Economics and Political Science. It is your day, and your careers, and your new lives, which start today.

 “I was at the LSE. I graduated from the LSE. I’m an LSE Alumnus.” Those words are like saying “Open Sesame.” For the world lies open to you. You will end up working for the Government of China, for NGOs, for PWC or Goldman Sachs or Google. You will be entrepreneurs, social impact investors, data scientists, academics, prime ministers and presidents…we would be here all day if I kept on going. 

I have spent most of my life involved with the City of London. I am proud to say, we are awash with LSE graduates. I can’t quite get away with saying that is the only reason the City is a centre of global excellence! But it is certainly a big one.

Despite its small size, the LSE is the second best university in the world for the social sciences. And Social Scientists are those most crucial to solving deepening inequality, health crises, resurgent racism and global conflicts. All amid the collapse of the international rules-based order.

We have graduates from many departments present today, ranging from Accounting to Anthropology to Behavioural Science. But don’t be distracted by arbitrary distinctions. Cross-silo collaboration, a blending of your different skills and knowledge, is the way forward.

And for those of you going into the City, or into finance anywhere, remember that capital and innovation are crucial in all fields – from Green Finance to deal with climate change, to upgrading asset management so that it delivers value to all.

Shareholder primacy and the Washington Consensus on economic growth had their time in the sun. Today, a couple of years after the election of Donald Trump, we see an avalanche of books with titles like “Democracy and Prosperity – the Reinvention of Capitalism in a Turbulent Century” and articles in the mainstream press headlined “Populists have a point, the system has to change.”

At the end of last month Christine Lagarde, former Managing Director of the IMF, quoted Aristotle on the need for a personal sense of purpose to be linked to a social purpose. Speaking in the heart of the City at the annual World Traders’ Tacitus lecture she called for the financial sector to develop “broader social responsibility.”

She noted that Fintech is producing cheaper and more accessible products to drive an inclusion revolution; that a higher share of women on boards correlates to more financial stability and sustainable growth; that the younger generations prefer to invest in financial instruments with social impact.

[At this moment Boris Johnson was walking into number 10 Downing Street. I could not resist a partisan ad-lib.]  Taking power today is a new Prime Minister who is intent on saving the Conservative Party, rather than working for the good of of the greatest number in the UK. These are not LSE values.

Achieving social cohesion in our societies is key. The widening of the net of financial and societal gains of the last forty years is essential to support democracy and sensible government.

I shall finish with the most memorable sentence in American President John Kennedy’s inauguration speech, adapted for you, my audience, on this special day. Of course he attended the LSE – many global leaders have, and will.

“Ask not what the LSE can do for you, but what you can do for the LSE.”

Huge congratulations, graduates of 2019. The world awaits you.

The City’s New Face

Marrying public and private ethics

Does it matter what the chattering classes are talking about? From the 1970s, column inches and speeches were dominated by Chicago economist Milton Friedman and the principle that companies should focus on shareholder returns and forget about suppliers, customers and community – they would benefit tangentially. This was famously encapsulated by legendary American CEO Al Dunlap´s 1990s outburst: “The most ridiculous term heard in boardrooms today is stakeholders. How much did they pay for their stake?”

Shareholder primacy and the Washington Consensus on economic growth had their time in the sun. Today, a couple of years after the election of Donald Trump and the Brexit referendum, we see an avalanche of books with titles like “Democracy and Prosperity – the Reinvention of Capitalism in a Turbulent Century” and articles in the mainstream press headlined “Populists have a point, the system has to change.”

At the end of last month Christine Lagarde, Managing Director of the IMF, quoted Aristotle on the need for a personal sense of purpose to be linked to a social purpose. Speaking in the heart of the City at the annual World Traders’ Tacitus lecture she called for the financial sector to develop “broader social responsibility.”

She noted that Fintech is producing cheaper and more accessible products to drive an inclusion revolution; that a higher share of women on boards is correlated to more financial stability and sustainable growth; that the younger generations prefer to invest in financial instruments with social impact.

Today, achieving social cohesion in our societies is key. The widening of the net of financial and societal gains of the last forty years is essential to underpin democracy and sensible government.

How should the corporate and financial sector react? Here are four suggestions for companies already on this journey, and for those who are being left behind.

1. Add a dollop of emotion to any policy changes. Making the world a better place is no longer the monopoly of charitable bodies and starry-eyed university students. Company actions need to be marketed emotionally as well as financially, not least because so many experts have been found wanting and ‘facts’ are under attack from the echo
   chamber of news.
   

2. The audience is both internal and external. Millennials and Generation Z – those who are working for your company, those you want to be working for your company. Politicians – who after the financial crisis dare not mention the financial sector as a source of growth or responsible capitalism. Investors – often cited as a barrier to change, because of their short time horizons. They are altering as well, ranging from Black Rock Chief Executive Larry Fink’s 2018 letter to CEOs calling on them to make positive contributions to society, to a family office that handed nearly a billion dollars to a Swiss private bank with the proviso that the bank itself must have a sustainable culture or the money would be withdrawn.

3. Be ahead of the curve by making clear that the costs involved in becoming sustainable are investments in growth opportunities. And that change cannot be immediate. Unilever is a much-cited and much-deserved, case in point. The consumer goods company proudly notes that on average it pays 27% corporate tax worldwide. It is very open about its shortcomings. For example, they overcame the innate contradiction in producing Vaseline, an extract of crude oil, by setting up a health initiative to send the crucial product plus health kits to disaster zones.
   

4. Diversity & Inclusion may sound like politically correct balderdash. Not true. Inclusion means creating an atmosphere where all can thrive and be themselves. This includes Black, Asian and minority ethnic (BAME), older workers and the white middle-aged men who form the backbone of the City and are wondering where they belong in this new world. Don’t leave them out.
   

5. Measure the impact of changes in diverse ways, such as lowering company risk, increasing well-being (an OECD-approved policy), helping achieve the UN’s Sustainable Development Goals and boosting employee loyalty. Stakeholders will all have a specific measure that engages them more than others.

To reach middle age and find yourself and your peers veering leftwards politically is a shock, not least because of that well-known phrase about a young person who isn’t a socialist hasn’t got a heart; an old person who is a socialist hasn’t got a head. But this isn’t socialism. It doesn’t mean voting for Jeremy Corbyn in the UK or Bernie Sanders in the US. It doesn’t mean throwing profits and return on equity out the window.

It does mean marrying private and public ethics. The divide in the moral codes between home and business is over. In the words of Christine Lagarde, the financial industry can be economically rewarding and ethically right.