The Evolution Of Responsible Investment: A Conversation With Will Martindale

Will Martindale is an expert in responsible investment, with over a decade of experience in the field. In his book, 'Responsible Investment', Martindale offers an insider's account of the growth of the industry, reflecting on its successes and limitations. Martindale argues that while responsible investment is important, it has often stuck to a script and avoided addressing complex issues in public, drawing criticism. He proposes a modern definition of responsible investment that includes real-world impact and outlines five characteristics for investors to consider. Martindale has also worked for Oxfam as a policy advisor and has a background in banking.

The growth of an industry

Responsible investment is going through a period of rapid change, evolving from voluntary to mandatory. The industry is growing up and with that growth comes the need to acknowledge limits and complexities and make difficult decisions.

Will Martindale's book, *Responsible Investment: An Insider's Account of What's Working, What's Not and Where Next*, offers a modern definition of responsible investment, one that includes real-world impact. Martindale, who has worked in responsible investment for over a decade, argues that the industry is profoundly important but has limitations. He reflects that responsible investment is not contributing to real-world sustainability impact at the scale necessary to make a difference.

Martindale's book presents a blueprint for the future of responsible investment that is truly sustainable. It focuses on how the industry will evolve, with new ideas emerging, gaining traction, and evolving to maturity, as well as the challenges and barriers along the way.

The book offers a personal and accessible account of the growth of an industry, detailing what it has got right, what it has got wrong, and where it needs to go in the future. It includes interviews with senior sustainability experts and provides an insider's perspective on the growth of responsible investment, including the role of influencers and the impact of new regulations.

Martindale's work also addresses the issue of stewardship, which has been described as "under-resourced and ineffective". He discusses the problems of stewardship resourcing and incentives, highlighting the need for experienced professionals with clear objectives, escalation strategies, and reporting transparency.

What's working

In his book, Responsible Investment: An Insider's Account of What's Working, What's Not and Where Next, Will Martindale reflects on his over a decade of experience in responsible investment. He notes that while the industry is important, it has limitations and is not yet contributing to real-world sustainability impact at the scale necessary to make a difference.

Martindale suggests that to future-proof investments, investors should focus more on their "influence". He encourages investors to consider a series of thought exercises, such as WTW Thinking Ahead Institute's 4321 pin code and Cardano's model of influence, to maximise their influence and combine different activities to achieve the greatest impact.

Martindale also highlights the importance of understanding the industry's limitations. He acknowledges that there may be issues that require policy change, which investors are not well-positioned to pursue, and in such cases, responsible investment should sit out.

Additionally, Martindale addresses the issue of stewardship, which is considered a key way to foster responsible investments and decarbonise portfolios. He agrees with PRI's assessment that stewardship is "failing, yet remains our best hope". He emphasises the need for clear stewardship objectives, escalation strategies, interim milestones, and reporting to clients and stakeholders.

Overall, Martindale's work provides a personal and accessible account of the growth of the responsible investment industry, highlighting what's working, what's not, and offering insights on how the industry can evolve to have a greater positive impact.

What's not working

In his book, Responsible Investment: An Insider's Account of What's Working, What's Not and Where Next, Will Martindale reflects on the limitations of responsible investment and how it has "got this far by sticking to the script and not talking about the awkward bits in public".

Martindale argues that responsible investment is "profoundly important", but it remains unproven if it is defined as including real-world sustainability impact. He notes that responsible investment is not contributing to real-world sustainability impact at the scale necessary to make a difference. Martindale suggests that investors should consider five characteristics to achieve real-world sustainability impact: goal, intention, process, measurement and reporting, and financial performance.

He also highlights the issue of greenwashing, stating that net-zero approaches are "highly vulnerable" to it. Martindale emphasizes the importance of understanding the limitations of the responsible investment industry and focusing on systems change. He suggests that investors think more about their "influence" and how they can impact others to create change.

Furthermore, Martindale discusses the pitfalls of stewardship, which is considered the most impactful way to foster responsible investments and decarbonize portfolios. He notes that not all engagements are equal, and some investors employ more experienced professionals and have clearer objectives, strategies, and reporting structures. He also addresses issues of stewardship resourcing and incentives, and provides his thinking on collaboration, split-voting, sovereign engagement, escalation, deny debt strategies, systems thinking, and policy engagement.

Overall, Martindale's book offers a critical perspective on the shortcomings of responsible investment and provides insights on how the industry can improve and evolve.

Where next

In his book, Martindale offers a modern definition of responsible investment, one that includes real-world impact. He outlines five characteristics that investors should consider: the goal of the investment strategy, the intention, the process, measurement and reporting, and financial performance.

Martindale encourages investors to think more about "influence". He argues that investors themselves are not directly responsible for impact, but they can influence others to have an impact. He also encourages the industry to better understand its limitations, and to be clear about its capabilities, objectives, and limitations.

Martindale suggests that to future-proof investments, investors should focus on "influence". He proposes a series of thought-exercises, including the WTW Thinking Ahead Institute's 4321 pin code and Cardano's model of influence, which tiers activities by their level of influence. Martindale believes that thinking through the range of activities and how different activities can be combined to maximise influence is worthwhile.

He also addresses issues of stewardship resourcing and incentives, and sets out his thinking on collaboration, split-voting, sovereign engagement, escalation, deny debt strategies, systems thinking, and policy engagement. On voting, he favours pre-vote disclosure, published escalation measures, and post-vote outcome-based disclosures.

Martindale concludes that responsible investment needs to evolve and mature, acknowledging its limits, complexities, and making difficult decisions.

Systems change

In his book, Responsible Investment, Will Martindale argues in favour of systems change. He reflects that responsible investment is important but has its limitations. He says:

> "Many responsible investment professionals see responsible investment's future in impact investments, new metrics, new disclosures and new sustainability themes, as well as understanding responsible investment's limitations, and being clear on responsible investment's objectives. I would subscribe to this too. These are all important developments. But for me, I'd also like to see further focus within the responsible investment industry on how we think about systems change."

Martindale encourages investors to think more about "influence". He says that investors themselves are not directly responsible for impact but rather influence others to have an impact. He also encourages the industry to better understand its limitations. He says:

> "There may be issues that require policy change where investors are not well-placed (or uniquely unable) to pursue that change. If so, this is an issue where responsible investment should sit out, however egregious."

Martindale suggests that investors should focus on how to maximise their influence. He puts forward a series of thought exercises, including WTW Thinking Ahead Institute's 4321 pin code and Cardano's model of influence, which tiers activities by their influence. Martindale also addresses issues of stewardship resourcing and incentives. He says:

> "Not all engagements are equal. Some investors employ experienced, senior stewardship professionals, with clear stewardship objectives, escalation strategies, interim milestones, and reporting to clients and stakeholders, where the stewardship objective is an outcome – a change undertaken by the company. Some do not."

He suggests that investors should focus on maximising their influence and impact through collaboration, split-voting, sovereign engagement, escalation, deny debt strategies, systems thinking and policy engagement. On voting, he favours pre-vote disclosure, published escalation measures, and post-vote outcome-based disclosures.

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