5 ESG Risks To Focus on in 2015

It is the time of year for lists and reviews of the year. Whilst climate change came back on the agenda in 2014 thanks to the US and China deciding to play ball, here are five ESG risks that will become increasingly important in 2015:

1. The Transformational Power of the Internet of Transparency

Smart phones are transforming the way that people interact. Internet is now available 24-7. The Spring Revolution was supported by social media such as Twitter. In 2014 China began a corruption crackdown. The conclusion of China experts is that whilst there is a political element behind the crackdown, there is also a realisation in the upper echelons of the Communist Party that they are unable to stop online chatter about the corruption of local officials.

The transformational power of the digital revolution is not about creating the Internet of Things but about the Internet of Transparency.

https://gordonanoble.com/2014/11/07/the-transformational-power-of-the-internet-of-transparency/

2. Wall Street’s Cell Phone Litigation Problem

Wall Street execs were the first to use cell phones. They have used them the longest and the most intensively. They were the first to upgrade to more powerful units. It is perhaps not surprising therefore that it is Wall Street firms that are the ‘canary in the mine’ in terms of litigation around the health impacts of long term cell phone use.

https://gordonanoble.com/2014/11/14/wall-streets-cell-phone-litigation-problem/

3. The Uncomfortable Truth about Taxation and Investment

Governments will consider reforms to corporate taxation because they have to. They simply cannot afford to lose revenue from their budgets at a time when their fiscal position is so tight – and will only become tighter as the looming demographic bills for health and pensions become due.

It is not a question of whether governments will act, but how. Already in 2014 we have seen governments act. We will see more in 2015 and company taxation practices will increasingly come under the spotlight.

https://gordonanoble.com/2014/08/29/the-uncomfortable-truth-about-taxation-and-investment-why-investors-can-no-longer-turn-a-blind-eye-on-tax/

4. Inequality on the Rise

In 2014 Thomas Piketty launched Capital in the Twenty First Century. Labeled the most important economics book since Friedman, Piketty has brought inequality back as a mainstream topic. But the reason is because there is a reality that is biting. We are seeing the issue feed through into minimum wage campaigns in the US and UK and can expect more in 2015.

Why Fast Food Strikes in US will not go away – and what McDonalds needs to do about it
https://gordonanoble.com/2014/09/12/why-fast-food-strikes-in-us-will-not-go-away-and-what-mcdonalds-needs-to-do-about-it/?relatedposts_hit=1&relatedposts_origin=34&relatedposts_position=0

5. Asbestos: The Forgotten ESG Risk That Just Won’t Go Away

The global asbestos trade is worth around $500 million, with India importing $235 million. The use of asbestos, particularly across Asia, continues to rise. Its main use is in construction for industrial use, but it is increasingly being used as a low cost ingredient in cement for residential housing. Investors will not just be exposed to future litigation. Asbestos is a classic universal case study, where the impacts of asbestos related diseases will impact the whole of society through increased health costs and reduced economic productivity.

https://gordonanoble.com/2014/10/24/asbestos-the-forgotten-esg-risk-that-just-wont-go-away/?relatedposts_hit=1&relatedposts_origin=42&relatedposts_position=0

Have a great holiday season. See you back in 2015.

Why China’s corruption crackdown will lead to a correction in Australia’s housing market

Australia’s housing market is headed for a correction. Housing investors have heard this so many times over the decades that they have become immune to hearing it.

The market is overheated, but the question is where will a correction come from?

The answer is China.

In 2013 China was the largest source of foreign demand for Australian real estate with $5.9billion invested. We can expect 2014’s figures to be greater with the Foreign Investment Review Board approving $17billion of applications to buy Australian real estate in 2013.

However, the China ‘river of gold’ is about to dry up. The reason is China’s crackdown on corruption.

Last week the Chinese Communist Party announced the arrest of Zhou Yongkang, who was once the third most powerful man in China. The arrest of Zhou Yongkang does have something to do with local politics, as Zhou was a patron of disgraced Bo Xilai. But there is a larger story here.

Since the rise of China’s President Xi, there has been a high profile focus on corruption. In July, China’s press agency Xinhua announced Operation Fox Hunt to “block the last route of retreat” for corrupt officials. The Chinese Government recently sent 20 teams across Asia, including Australia, to investigate officials who had left the country. The Government made 180 arrests as a result.

China is believed to have found more than 13,000 officials guilty of corruption in the first nine months of 2014.

Corruption in China has been endemic across the dynasties. In recent years, China’s problem has been the rise of ‘princelings’ – the sons and daughters of Chinese officials who were living lavish lifestyles. The anger at princelings has surfaced on a number of occasions and has surprised China’s communist hierarchy.

China’s censoring of the internet is well known. Even so, there has been a massive rise of social media. The conclusion of China experts is that whilst there is a political element behind the corruption crackdown, there is also a realisation in the upper echelons of the Communist Party that they are unable to stop chatter about the corruption of local officials. The fear is that anger at this corruption has the capacity to create the kinds of responses that were seen in the Spring Revolution in North Africa.

In short, China’s Communist Party has come to the realisation that its hold on power will be determined by the way they handle corruption.

For Australian real estate what this means is that the driver of investment from China has changed. In the last five years there has been strong appetite to invest as a way of Chinese investors securing capital.

But transferring capital to Australia now raises new questions. In the current climate Chinese investors are unlikely to want to draw attention to themselves by transferring large amounts of capital internationally. This is not to say that the capital is illegal, it is simply human nature to want to lay low when there is such intense political scrutiny of transfers.

The transfer of capital to Australia will not stop. But it will significantly slow down. When it does will be hard to judge and will be determined by how much is already in the pipeline.

But over the next 18 months we can expect a significant slowing of Chinese capital investing in Australian real estate.

This may well be the trigger that will lead to an assessment of housing value, and a correction in the market.

Why it is time to focus on the economic development of Australia’s regions

It is pretty obvious that Australia is a big continent. What is less obvious is why our regions have been so economically constrained and what we can do about it.

Over the last twenty years, as Australia’s cities boomed, the conversation about economic development in the regions was sporadic – but never dominant. Whitlam’s support for economic development of Albury-Wodonga, or Windsor and Oakshott’s support for the regions represent blips in a debate that has otherwise focused on the economic benefits of urbanisation.

Policy makers may not have said it, but there has long been an assumption that it is the economic growth of cities that matters most. Whilst there is no doubt that urbanisation is one of the megatrends of our time, we need to start to integrate regional and city economic development if we are to ensure that scarcity pressures in our cities do not lead to an imbalance in our national economy.

From London to New York we are seeing price pressures in major cities. There is no reason to expect that pressures will subside any time soon. The reason for this is that the factors that are driving price increases will continue. A major driver of price is emerging markets such as China where private wealth is seeking to secure capital by investing in premium property in established markets. In the Australian context one of the drivers has been Chinese investor interest in residential housing. This is good for Australia’s economy because it stimulates the local construction sector but it also potentially imbalances the economy.

With price pressures in our major cities showing no signs of abating we need to think about the way regions can act as a pressure valve.

Over the next decade we will start to see 4.5 million baby boomers transition from the workplace. For the first time in their history they will be able to choose where they live, rather than needing to live close to where work is located.

The evidence suggests that some baby boomers will actually seek to live in inner city areas where urban amenity is high. But not all baby boomers will be able to afford the sky rocketing inner city prices. For boomers whose superannuation account balances are not large, the regions may be attractive, enabling downsizing whilst maintaining living standards.

However in order for the regions to act as a release valve for cities we need two things; to reform land supply and build infrastructure linkages.

Land supply is a major issue. In a continent as large as Australia, how is it that land pricing is not cheaper in the regions? Economics 101 should suggest that it should be possible to sell a house in a major city where land has a high scarcity value and buy cheaply in the regions where there is far less scarcity pressure. Yes, there is a differential, but is nowhere near what it should be.

The reason for this lies in the way land is managed in regions. Land up to the edge of a town can be owned by a farmer who has no incentive to sell. Even if an individual wished to, land is zoned rural and cannot be used for housing.

The zoning of land made sense in an era where governments had to pay for infrastructure in the form of water and electricity connections, but does it make sense now when it is possible to go off grid?

Improvements in solar technology, water storage and mobile phone connectivity mean that it is possible to live, and indeed build communities, that are not connected via wires and polls to the grid.

This libertine idea that people should be able to live where they choose would send shivers down the spines of town planners who have got used to the power that has been progressively handed to them to control the way we live.

The fear of planners, and politicians, is that if planning was deregulated then it would ultimately result in political demands to retrofit infrastructure. But is this actually the case? If development was allowed with the clear understanding that infrastructure will not follow then the political expectation can be managed.

Another shibboleth that needs to be tackled is the idea that big farming is better than small farming. History has played a part here. There is no doubt that giving returning diggers from World War 1 small plots of land that were destined to fail was not a sensible public policy.

But 100 years later farming is changing. There are now opportunities to build niche farming businesses, and in fact we are seeing more and more innovation in this area of the farm sector. Small farming has an economically important role to play in the agribusiness sector, and yet it is structurally not supported.

Opening up Australia’s regions also needs infrastructure – but it needs is the right infrastructure. In particular we need fast connectivity to the city, both in terms of transport and broadband. We need to dump the idea of a fast train from Sydney to Melbourne and focus on more practical fast connections between major cities and regional centres. This has unfortunately fallen off the policy radar.

If we were able to open up land use in the regions then this would act as a pressure valve on our cities. Price differentials in city and regional housing would enable retirees to unlock capital and maintain living standards in retirement. It would enable small businesses to set up where costs are cheaper. It would enable innovative agribusiness to develop niche products to serve growing global markets.

Achieving change is never easy. Part of the problem is that our so called city slickers need to start thinking about the bush in a different way. The economic challenges that our nation faces however means that this is just too an important piece of reform to ignore.

Sandfire attack raises question: is it time to legislate sustainability reporting?

On 13th November 2014 Sandfire Resources announced that it had filed proceedings in the Federal Court against ESG researcher Centre for Australian Ethical Research (CAER) in regards to research profiles that CAER had provided to ANU.

In taking legal action Sandfire Resources has not just focused on the output of ESG researchers but has drawn attention to the gap between the information companies provide and what investors need to make informed decisions.

One of the foundations of responsible investment has been the idea that investors should engage with companies. But what do we do with companies that do not respond to engagement requests?

Sandfire Resources may be upset at CAER’s review, but responsible investors have long been frustrated that listed companies willingly choose to ignore requests for information.

In 2008, I approached the Australian Council of Superannuation Investors with a proposal to develop a benchmark of sustainability reporting practices of ASX 100 companies. My argument to ACSI was that whilst there were good examples of sustainability reporting in the Australian market, many companies either did not report in any way on sustainability, or reported in a way that was of limited value to investors.

As responsible investment develops a key question for investors is how to address the impediments that exist to implementing environmental, social and governance (ESG) practices in the market.

How can investors who are trying to integrate ESG factors into portfolios do so if they don’t have relevant information from all players in the market?

By creating a benchmark of sustainability reporting this provided a mechanism for investors to review the sustainability reporting practices of companies over time.

ACSI’s first benchmark of sustainability reporting practices in 2008 found that sustainability reporting was distributed according to a bell shaped curve with outliers being best practice reporters (16%) and companies that provided no reporting (17%).

ACSI has now been producing an annual report on sustainability reporting for seven years. This year’s report found that 85% of ASX200 companies provide some level of reporting on sustainability factors. Interpreted another way, there are 15% of companies that still provide no reporting at all.

Frustrated at the lack of response from laggard companies, last year ACSI publicly disclosed the names of 8 companies that had been rated at ‘No Reporting’ for four or more consecutive years. In 2014, 5 of those companies now provide some level of sustainability reporting.

If companies such as Sandfire Resources take legal action when they are not happy with the output from an ESG researcher, should investors be taking legal action when they get no response from a company to their information requests?

A better way than institutionalising legal conflict could be to legislate sustainability reporting. This would be far more efficient. It would remove any debate about what information a company should provide. Legislation could simply require that all companies report according to the Global Reporting Initiative. Other countries have already gone down this path.

By taking legal action Sandfire Resources has opened up the debate on sustainability reporting. The way Sandfire has done this may not be optimal but it will put a spotlight on sustainability reporting. This is something that investors have been seeking for the last seven years.

Whatever the outcome of the legal action, we can guarantee that the bar on sustainability reporting will be raised in coming years. This may either be through companies voluntarily lifting their reporting standards, or through legislation.

Links

ACSI Sustainability Reporting Journey 2014
http://www.acsi.org.au/images/stories/ACSIDocuments/generalresearchpublic/Sustainability%20Reporting%20Journey%202014.Jul%2014.pdf

ACSI Sustainability Reporting Journey 2008 – first report
http://www.acsi.org.au/documents/Sustainability%20Reporting%20(website).pdf

Wall Street’s Cell Phone Litigation Problem

It is 1987 and Gordon Gekko stands on a windswept beach with a cell phone to his ear. He is talking on the world’s first mobile phone – the Motorola DynaTac 8000X. It wasn’t cheap back then costing $3,995 – which in today’s terms is close to $9,000. Not surprising only the wealthiest could afford these phones, and Wall Street was the epicentre of an industry that became a global phenomenon over the next decades.

Wall Street execs were the first to use cell phones. They have used them the longest and the most intensively. They were the first to upgrade to more powerful units. It is perhaps not surprising therefore that it is Wall Street firms that are the ‘canary in the mine’ in terms of litigation around the health impacts of long term cell phone use.

The links between brain tumours and cell phones are hotly contested. As telcos fight a growing public relations battle that is flaring through social media, a little known legal case has continued to make its way through US courts.

On 8th August 2014 Judge Frederick H. Weisberg issued a judgement in the Superior Court for the District of Columbia in a long running case alleging that brain tumours of the litigants were caused by cell phone use.

Weisberg did not make a judgement on whether cell phones cause cancer. What he was examining is whether the evidence that was being presented by trial lawyers was permissible under the Court’s rules. To do this he went through an exhaustive process under the Dyas/Frye test which is essentially about whether an expert uses a methodology that is generally accepted in the relevant scientific community to arrive at his opinion.

Weisberg ruled that a number of expert witnesses were permitted to present evidence in the next stage of the trial. But he also made some thought provoking comments:

“If there is even a reasonable possibility that cell phone radiation is carcinogenic, the time for action in the public health and regulatory sectors is upon us. Even though the financial and social cost of restricting such devices would be significant, those costs pale in comparison to the cost in human lives from doing nothing, only to discover thirty or forty years from now that the early signs were pointing in the right direction. If the probability of carcinogenicity is low, but the magnitude of the potential harm is high, good public policy dictates that the risk should not be ignored.”

The significance of Weisberg’s judgement is that he has inadvertently provided an independent verification of research. The research that he has admitted to the next stage of the court process will no doubt be challenged, but the methodology that the researchers have used has been accepted by the Court.

One of the problems that medical researchers in the radiation field have found is that their work is criticised by parties with strong commercial self interests. Weisberg has no such pressures. He is simply a judge doing his job.

The question for investors is what does this all mean?

In the heated discussion about whether cell phones can cause cancer it will be litigation that will ultimately determine the issue. The insurance industry understands this.

In 2010 Lloyds of London produced a paper, Electro-magnetic fields from mobile phones: recent developments, which discussed the potential for litigation. Lloyds stated:

“If EMF is proved to cause an increased risk of brain cancer it is likely the insurance industry will see claims under product liability policies for bodily injury….The issue of asbestos and its implications is widely known throughout the insurance industry, and many comparisons can be drawn with EMF – the initial impression that it was a ‘wonder product’ coupled with potential very long-term serious health issues not understood at the start of its use. Like asbestos any EMF litigation will probably be long and complex – similar issues could occur such as the definition of an actionable injury, policy triggers and apportioning liability….Should EMF prove to cause brain cancer, or any other adverse health effects, it is likely the main effect on the insurance industry will concern product liability claims for bodily injury.”

Lloyds concluded their report stating “With regards to the implication to insurance, as the current scientific evidence stands, it is unlikely that insurers will be liable for compensation for bodily injury on product liability policies. However, as asbestos has shown, new scientific developments coupled with a small number of key legal cases can change the situation very rapidly.”

Insurers have already taken Lloyds’ advice to heart by excluding coverage of radiation risks from insurance contracts.

In the meantime the debate will continue. New evidence is coming out on a regular basis demonstrating the links between cell phone use and cancer. A recent French study for example that came out in May 2014 (see links) found a positive association that was statistically significant for heavy users of cell phones considering life-long cumulative duration.

Whilst the telco industry may fight to the wall on litigation it may be employers that will ultimately bear the brunt of litigation claims.

A significant question for Wall Street firms is how they will manage this risk. Currently Wall Street firms supply and pay cell phone bills for their employees. Work is structured in such a way that it is impossible for an employee to work without a phone.

If a court determines that there is a link between cell phones and cancer we can expect that, because Wall Street has the greatest exposure, it will be first to be hit. Compensation, which would most likely be based on lost earnings, would be significant for an industry that routinely pays out multi-million dollar bonuses.

The question is whether Wall Street is already experiencing claims? There have been high profile Wall Street executives that have passed away in recent years from aggressive brain cancers. Wall Street firms are unlikely to want to proactively disclose litigation but it is a question that should be asked.

Wall Street firms also have some tough decisions to make about managing future risk. If we were to see a change of behaviour in the way firms manage their employees’ cell phones then this may be an indication that they are aware of the problem. At least one Wall Street firm has recently moved to no longer paying cell phone bills for its employees. Employees that have been spoken to believe that this is part of a cost cutting exercise, but wider factors may be at play.

What would Gordon Gekko be doing in these circumstances? The way he was smoking those cigars he may not have made it this far to worry about it. But if he did he would no doubt be shorting his own company.

Links:

Dariusz Leszczynski – molecular biology scientist who has advised The World Health Organisation. Dariusz is currently visiting Australia giving public lectures. See his blog for details:
https://betweenrockandhardplace.wordpress.com/

Reuters: Are wireless phones linked with brain cancer risk?
http://www.reuters.com/article/2014/11/11/us-brain-cancer-mobilephone-idUSKCN0IV26Y20141111

Transcript of Judge Frederick H. Weisberg judgement on expert witness in telco / brain tumour case:
http://ehtrust.org/wp-content/uploads/2014/08/Expert-Order.pdf

Gordon Gekko’s cell phone:
http://www.slate.com/blogs/browbeat/2010/09/23/gordon_gekko_s_cell_phone.html

Gaëlle Coureau, et al., Mobile phone use and brain tumours in the CERENAT case-control study,Occupational & Envtl. Med., May 9, 2014 (available at http://oem.bmj.com/content/early/2014/05/09/oemed-2013-101754.abstract

The transformational power of the Internet of Transparency

The phrase the Internet of Things has quickly become part of the lexicon but it is not gadgets that will drive transformational change, but transparency.

At a Transparency International seminar recently, China experts discussed that country’s crackdown on corruption. One of the experts at the seminar commented that the internet was largely responsible for this.

Since the rise of China’s President Xi, there has been a high profile focus on corruption. In July, China’s press agency Xinhua announced Operation Fox Hunt to “block the last route of retreat” for corrupt officials. In the last week, Xinhua announced that after the Chinese Government had sent 20 teams across Asia it had made 180 arrests.

China is believed to have found more than 13,000 officials guilty of corruption in the first nine months of 2014.

Corruption in China has been endemic across the dynasties. In recent years, China’s problem has been the rise of ‘princelings’ – the sons and daughters of Chinese officials who were living lavish lifestyles. The anger at princelings has surfaced on a number of occasions and has surprised China’s communist hierarchy.

China’s censoring of the internet is well known. Even so, there has been a massive rise of social media. The conclusion of China experts is that whilst there is a political element behind the corruption crackdown, there is also a realisation in the upper echelons of the Communist Party that they are unable to stop chatter about the corruption of local officials. The fear is that anger at this corruption has the capacity to create the kinds of responses that were seen in the Spring Revolution in North Africa.

In short, China’s Communist Party has come to the realisation that its hold on power will be determined by the way they handle corruption.

The transformational power of the internet has been most evident in developing countries, but change is also occuring in the developed world.

One of the most significant aspects of the digital revolution is the way that it has changed access to the internet.

According to the Pew Centre, in the United States the rise of smart phones has led to a shift in the way the internet is accessed. Nearly two-thirds (63%) of cell phone owners now use their phone to go online. According to the Pew Centre, because 91% of all Americans now own a cell phone, this means that 57% of all American adults are cell internet users. The proportion of cell owners who use their phone to go online has doubled since 2009.

Given that smart phones have only been around for a short time, it is hard to predict how they might drive change. They will of course be used for day to communication through channels such as Facebook. But even the way Facebook is used is changing, evolving beyond being just a ‘person to person’ communication channel.

Politicians now use Facebook – and if they don’t, they probably won’t stay elected for long. Institutions, including corporations also use Facebook, to varying degrees of success. For business it is important to understand that in this new world, every engagement, no matter how small, has the capacity to be shared to a wide audience. Successful businesses are those that know social media is not about appointing a couple of 21 year old kids to run a Twitter account. It is about making sure every aspect of a business can withstand scrutiny – particularly the way you handle customer complaints.

Other sectors that are evolving in their use of the internet are activist groups. It has never been easier to create a group – which is a lesson for established institutions. But there are new rules around the way groups work. There is no autocratic structure. There are no ‘minutes of the last meeting.’ Successful activist groups are those that are collaborative and share – not just amongst local peers but globally.

Examples of this are the activist campaigns on coal divestment that are popping up in campuses across the globe. There is no hierarchy behind these groups. The internet provides the ability for a group to communicate with its members but also with other campaigns across the globe. Success in one campaign is quickly adapted into the campaign tactics of another campaign.

We are in the middle of a transmogrification. How the internet will definitively shape business and institutions will only become clear over time.

But what is clear now is that the transformational power of the digital revolution is not about creating the Internet of Things but about the Internet of Transparency.

Asbestos: The Forgotten ESG Risk That Just Won’t Go Away

Investors have been living with the false impression that asbestos is a legacy issue from the 1960’s that has been dealt with.

Nothing could be further from the truth.

This week Dave Oliver, Secretary of the Australian Council of Trade Unions met with senior management at James Hardie seeking a commitment that the company will honour its responsibility to compensate Australian asbestos victims.

James Hardie has for many years been dealing with the legacy of its asbestos production in the 1950’s. After James Hardie sought to remove its asbestos liability by moving its corporate headquarters to the Netherlands, a national campaign led to the company funding the Asbestos Injuries Compensation Fund to pay out claims to asbestos sufferers.

The problem now is that the Compensation Fund is running out of money.

Dave Oliver said this week “I am deeply disappointed that James Hardie’s management were rigid and not prepared to be flexible. The fact of the matter is James Hardie has a moral obligation to compensate the victims of asbestos-related disease and cannot transfer that responsibility.”

The ACTU’s fight comes as workers and neighbours at a factory in Melbourne’s Sunshine North have been contracting asbestosis after the site was left unsecured. The factory had at different times been owned by James Hardie and CSR.

Whilst asbestos in the developing world is subject to intense focus from trade unions and the media, which is a result of the thousands of people that have died from asbestos related diseases, we are unfortunately now witnessing the start of what may be a future asbestos epidemic in Asia.

Having been driven out of developed countries, asbestos producers did not go away but turned their attention to developing countries. The global asbestos trade is worth around $500 million, with India importing $235 million.

The industry has powerful friends including the Russian Government. Russia is the world’s biggest exporter of asbestos with the industry employing 38,500 Russians, many at Uralasbest, the world’s largest asbestos mine.

The Russian Government has used its global influence to promote asbestos in a number of ways including through a Russian government delegation that defeated the listing of chrysotile asbestos as a hazardous substance at the UN Rotterdam Convention conference. In March 2013 scientists from around the world criticized the International Agency for Research on Cancer, which is part of the WHO, for its collaboration with the Russian Government and industry representatives over a study of health effects at the Uralasbest mine.

The asbestos industry also has an active global lobbyist, the International Chrysotile Association that seeks to prevent the introduction of asbestos regulations. Examples of the way asbestos lobbyists seek to stop regulation includes the work of global public relations company, APCO Worldwide, who lobbied the Malaysian Government to defeat a ban on asbestos, proposed by the Malaysian Department of Occupational Safety & Health. In Brazil, in 2012 the industry also fought in the Supreme Court against a proposed ban on asbestos.

Despite the industry’s lobby efforts litigation continues. On October 9 2014 Japan’s Supreme Court ruled against the Japanese Government in a case brought by 89 former asbestos workers opening up the possibility of compensation.

However, the use of asbestos, particularly across Asia, continues to rise. Its main use is in construction for industrial use, but it is increasingly being used as a low cost ingredient in cement for residential housing. With the average asbestos victim living for just 155 days from the time of diagnosis, it is unlikely that future victims will have the chance to be heard, let alone represented. Investors will not just be exposed to future litigation. Asbestos is a classic universal case study, where the impacts of asbestos related diseases will impact the whole of society through increased health costs and reduced economic productivity.

The question for responsible investors is whether governments acting by themselves will ban asbestos globally.

The interest of the Russian Government in promoting and preserving its asbestos industry has raised questions about the role of international bodies such as the World Health Organisation in setting standards. The myth that asbestos is safe, whilst refuted through scientific evidence, is being promulgated in global forums by an industry that has strong commercial incentives.

There has unfortunately been a lack of engagement by investors around asbestos risks. The growth of asbestos use in developing countries threatens to create a future asbestos epidemic. Investors need to find their voice on this issue.

Disclosure: Two members of my extended family have passed away from asbestos related diseases so, yes, this is personal.