NSFM opinion: The dogs that didn’t bark

Matthew Kiernan writes: The World Economic Forum has always, quite rightly, prided itself on its laser-like focus on global mega trends, the “big picture”, and, to quote the WEF’s own motto, “improving the state of the world “. So far, so good. Indeed, when it comes to diagnosing the world’s greatest economic, social, and environmental challenges, the WEF has few peers. If, however, one’s tastes run more to catalyzing solutions and real action on the ground, then Davos might not be your cup of tea.

To my mind, there is a relatively straightforward explanation for this glaring deficiency: the WEF’s consistent failure to recognize the single most powerful –but shamefully under-utilized ---instrument for “improving the state of the world “---- using the enormous power of the global capital markets and major investors to catalyze change.

After all, at the end of the day, it’s the folks who provide companies’ financial oxygen --- the investors---- who arguably shape corporate agendas, priorities, and behavior more than any other set of actors. And, in a properly functioning capitalist system (at least so I’m told), at the very top of the investment food chain should be the asset owners.

But as a group, they were nowhere to be seen. Where, for instance, are the CEOs and/or chief investment officers of the 200 largest pension funds in the world?  The largest foundations and endowments? The sovereign wealth funds? Collectively, they own ---and, at least in theory, control --- many tens of trillions of dollars worth of assets. Moreover, they have precisely the sorts of long-term investment horizons, perspectives and global holdings as “universal owners” which should mesh perfectly with Davos’s professed “big picture”, megatrends-oriented focus. Moreover, those few who actually do attend have historically had nothing on the agenda to focus their thinking or prod them into action. And where were the staff from the UN Principles for Responsible Investment --- a $25 trillion collaboration of asset owners and managers? Not only were they not invited, but they were denied admission when they asked!

This to me is a lost opportunity of literally global proportions. The Davos agenda could have and should have been used from the very beginning to catalyze the enormous power of the global capital markets to help re-orient corporate priorities and behavior, reinforcing and accelerating, rather than undermining, the necessary transition towards a more sustainable use of the world’s physical and human resources. If it’s real change and action we’re after, why not include the owners of capital at the world’s highest-profile celebration of capitalism? It’s just a thought …

Dr. Matthew Kiernan is the founder and Chief Executive of Inflection Point Capital Management.