Schroders’ Peter Harrison discusses COVID-19 and beyond: webinar
Schroders’ Group Chief Executive, Peter Harrison, talks about steering a FTSE100 investment business through the crisis to date, and considers the potential social, economic and financial consequences that lie ahead
"This is definitely a marathon and not a sprint," says Peter Harrison as he reflects on steering the FTSE 100 company though the coronavirus crisis – thus far. In his view, the full effects of the crisis have a long way to yet unfold.
“As Bill Gates said, we’re at the end of the beginning. When the history of this is written, at this point we’re not even a third of the way through the book.”
The “economic downdraft” is still to come
One of Peter’s key observations is that “the divergence between the economic and financial outlook has never been greater.”
This is because he sees global economic performance as “very weak”. “We think talk of a ‘V-shaped’ recovery looks increasingly outdated,” he says.
“The next big shift we’re going to see is the economic downdraft being reflected in social costs. In the UK we’ve got six million people who are probably unemployed – but they just don’t know it yet.”
He also talks of Schroders’ – and other financial businesses’ – extraordinary ability to operate through the crisis so far. “We planned for many things,” he says, “but not for a social crisis, a financial crisis and an economic crisis all happening at the same time.”
"This is a truly extraordinary time to be running a business. What I have been really pleased with is our resilience... but what I worry about is how we sustain this for a long period."
Doing the right thing as long-term investors
“It’s been said before but this is a particularly important moment: the contract between business and society is fundamentally changing,” Peter says.
Businesses will need to strike the right balance between different stakeholders, including shareholders, governments and employees.
He talks about recent debate concerning dividend payments. “I’ve been uncomfortable to see that the payment of dividends has been slightly vilified. It’s easy to forget that dividends pay people’s pensions and support the work of charities.
“The key is time, and taking the long-term perspective. What you don’t want is dividends being paid if long-term investment in the business is being curtailed.”
“If you can find businesses that have those things in balance, you’ll make better returns over time than with businesses trying to cut corners and make shorter-term decisions.”
Long-term investors have a role to play in keeping businesses in robust financial health. "There's a huge job to be done in terms of re-equitising businesses around the world. What we want to guard against are businesses that are economically viable but not financially viable because they've got too much debt.”
Investing for a better future
Peter Harrison talks about how our sustainability reporting helps clients to understand the impact of their portfolios on people and planet, and how we can invest for a better future, aligning with client values.
“We’re helping them see and understand the impact of their investments, giving them the data and transparency to help them make their own choices. It’s shining daylight into dark corners... and daylight is a great disinfectant.”
COVID-19 and the shutdown of much of the world’s transport infrastructure have led to cleaner air and clear skies, Peter says, but the climate crisis remains pressing. “I believe we’re in a climate emergency. Our analysis says the changes taking place at the moment are consistent with 3.9 degrees warming – which is a terrible outcome.”
He sees a crucial role for our business and people as champions of change. “We have a huge part to play in encouraging businesses to transition [to a low carbon economy],” he says. The way to achieve this will be through “employees who feel a high and strong sense of purpose. We’ve got to hold ourselves to very high standards. We cannot at any point be hypocritical.”
If you were unable to join this live webinar but would have liked to listen in and pose your own questions, more will be held in coming weeks. Please look out for invitations from your usual contact.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.