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We are joined by Philanthropy Impact's Chief Executive, John Pepin, to discuss how Guernsey can affect positive environmental and societal change through philanthropic investments.
Welcome to the Sustainable Finance Guernsey podcast page.
Guernsey Finance is a joint government and industry initiative tasked with promoting and connecting Guernsey as a leading international finance centre.
Named as one of the Green Finance Guide's top 10 must-listen sustainable finance podcasts, our broadcasts feature news, insights and discussion about green and sustainable finance, and the contribution which Guernsey, as a global leader in green finance, is making in this space.
Rosie 0:05
Hello and welcome to the latest Guernsey green finance podcast which is rated one of the top 10 most useful, sustainable finance podcasts by the Green Finance Guide. Guernsey is one of the jurisdictions leading the way in green and sustainable finance. And as part of this podcast series we'll be speaking to and learning from some of the leading global figures in the field. My name is Rosie Allsopp, I'm Communications Director at We Are Guernsey, where the promotional agency for Guernsey's finance industry. Today, I'm thrilled to be speaking to John Pepin, who is Chief Executive at Philanthropy Impact. Guernsey Finance has already worked with John, he was kind enough to contribute the foreword on our Effective Philanthropy report, which was released earlier this year. And he was also a panelist at our event, Guenrsey the jurisdiction of choice for philanthropy. Welcome, John. It's great to have you with us on the podcast today.
John 1:02
Thank you very much. It's good to be here. It's great, great things that are going on there. So
Rosie 1:08
That is great. Well, today, we'll be focusing on how Guernsey can affect positive environmental and societal change through philanthropic investments, and I can't think of a more worthy guest to talk about those issues. So John, can we just introduce you to our listeners, for those who aren't familiar? Tell us a little bit about philanthropy impact, and its goals as an organisation.
John 1:33
Okay, well, philanthropy impact is a charity not for profit organisation, that's working with professional advisors to high-net-worth and ultra-high-net-worth individuals across Europe. We want to increase the capital for good, so that could be philanthropy, could be social investment, could be impact ESG investing. And we want to enable private clients and their families to match their purpose driven wealth strategies with their values. So our focus is on philanthropic giving social investment, impact investing. And the professional advisors that we work with can be anything from financial planners, wealth managers, private client advisors, private banking, tax legal, but we also as part of our network, philanthropist impact investors, trust foundations and charities, because it's important for everyone to learn from each other. And I guess one last thing, what we do is we provide thought leadership events, or different types of events, if you want to get a sense of them. If you go to YouTube, look up philanthropy impact, there's a thing called walk in my shoes. We have seen CPD certified and CISI endorsed training and networking opportunities, we do a lot of campaigning, especially around tax relief. And we have a magazine and other publications. And we're a resource for advisors.
Rosie 2:55
Couple of bits and pieces then?
John 2:57
Just one or two little things quite fascinating because, well the accent is Canadian. And I came over here by accident, around 1999 and then permanently at 2000, so I've been here for 22 years. But I had a really good consultancy, working with third sector organisations around a whole range of really quite innovative things. And I was convinced by someone I knew on the board of philanthropy impact to basically, I can fulfill my own personal goals by coming on down working with philanthropy impact. So here I am running a charity, consultancy, of course is pretty well gone, except for one or two clients every now and then. And that has been true. So I am doing that. My financial costs, they don't even count anymore. But the other goals are really quite good. So yes, sorry.
Rosie 4:00
That's excellent. So you know, achieving your goals. John, tell me why do people continue to invest in philanthropic ventures?
John 4:09
Maybe we could talk just not just philanthropy, but social investment because
Rosie 4:12
Yes sure.
John 4:12
there's similarities between the two, I think there's a number of reasons. One is responsibility. So people want to get back from their wealth, quite often family values come into play, and you'll see them multi generations involvement in this peer group influence is quite important. There might be some kind of life changing event takes place. So someone in the family gets cancer, so they start to support that, sometimes some people want to leave a legacy. And then a lot of families are at certain stages of their development. Look at restructuring their wealth, and I guess the most important thing which always gets left out the list, it can be fun.
We should not overlook the fun aspects of these.
No, no. Why? Why bother if it's not fun?
Rosie 5:07
Exactly. So you've been with philanthropy impact for more than eight years, and you have extensive experience in the area, before that. Can you talk a little bit about how client demands changed in that time, and what's driving that change?
John 5:25
I think it's very complex. And there's a lot happening. If we start with the fact that we're in a world of transition right now. So you have a widening gap between the rich and the poor. There's resource consumption, environmental issues that you guys are really concerned about. And climate change. So all those things are having an impact on what's happening. One of the big changes is that people are more values driven, so they want to use their capital for good. And quite often, they contextualize their givings now within SDGs. And it's important for advisors to understand that so they can support their clients. There's a whole discussion going on around the whole issue of harm versus good. So on one hand, I invest to do maximise financial returns. On the other hand, I get some of the profits way or some of the money away to do good. Well, there's an issue about how you balance those two. There is a shift in language, in terms of giving and people are taking a more investment perspective and being more impact driven and wanting to achieve impact. And I think data and technology are going to play a more significant role. And in the near future. There's a significant growth of donor advised funds. And so it's interesting that there's even some discussion now amongst some of the major trusts and foundations of actually closing down and folding all of that to donor advised funds. There's a wide variety of reasons for that. But I think that's just on the edge of of happening, then the other issue, am I talking too much?
Rosie 7:10
No you are perfect.
John 7:12
I'll take a breath. Okay. The other issue is that there's a growing discussion about the power imbalance that exists between funders and recipients of funds. And there's some real shifts taking place, some really interesting stuff around transformative philanthropy, entrepreneurial philanthropy, so Dame Stephanie Shirley, for example, has done some really brilliant giving over the last 20 years, which has really started to address that power imbalance, the same thing with Ise Bosch in Germany, who has written a book about transformative philanthropy. So there's some really excellent examples of people starting to address that whole issue. The other thing that's really bubbling up is really quite important is the role of professional advisors in this whole area. I mean, that's our purpose, right is to work with professional advisory team does. So when we did research a few years ago, we had to decide, should we continue as an organisation and work with professional advisors to achieve what we want to achieve? Or should we just close down because we're strong believers, and they don't exist, just because you exist, you shouldn't be actually impactful as well. And what we found was that professional advisors, the ones who are supporting the clients and their donor journey, are not only getting benefits as advisors for the first but also increasing giving. So an example ultra-high-net-worth individual who has been supported by their advisors, on their donor journey, give 17 times more a year, so different strain was 70,000 so 335,000, give or take a few pounds here and there. And I guess there's a change taking place in the last several years in the types of giving. So you get growth of venture philanthropy. And it's not just in the UK and Europe, but also it's spread to Asian version, there's African one, there's now an international group. So that's really quite growing. And then the whole issues I mentioned around transformative philanthropy, and entrepreneurial and emerging philanthropy. So those are all quite key things. I think, though, if you want to talk about the future, which talk a tiny bit about that. I think technology is going to play a pretty significant role in the future around this whole stuff. And we're monitoring certain things to see whether you know what the impact is going to be. So people think that I'm smoking dope and I talked about monitoring quantum computers or looking at Metaverse and stuff like that, but I always feel it's important to be prepared, it might come to nothing but it might come to a lot so who knows?
Rosie 9:58
We got to keep an eye on what's going on energy they say technology is increasingly important in every area of life. And it changes so quickly. So it's important to kind of stay on top of that. So some people listening might be familiar with the concept of the great wealth transfer. John, can you speak a little bit about that and how the younger generation is driving change to traditional philanthropic ventures?
John 10:25
I think I have to take a look at subgroups within. And I don't use the term next generation, because next generation could be someone who's in their 70s, waiting to take over from the family, right? So I use the term millennial, Gen Z, and we also talk about women of wealth. Because women of wealth, control approximately 50% of liquid assets today in the US, but I think it's similar here. And it's expected within two generations, it'll be 70%. And their approach or whole approach to this is really quite different. And then you have Gen Z, and for her like, technology's just natural. That's just the way it is. And then millennials, but what you see is that it's creating a new type of wealth management, and professional advisors. If they don't pick up on this, I think we're going to be in trouble. So we have a small group of very, very wealthy millennials, Gen Z, women of wealth. And it's really clear that they want to live their values. And if their professional advisors are not responding to that they're firing them doesn't matter how long they've been with a family. So it's, it's pretty serious for a lot of these young people. So it's more important to live the values that achieve good then necessarily to maximise financial return investment, performance, transparency, and clarity important they have, many of them have a strong belief in social entrepreneurship, and social impact investing. Notice, I didn't use the word ESG. Because there's real interesting discussion going on out there, everyone has different dragons. But there's discussion going on now about impact versus ESG, etc, etc. So if their focuses a lot on impact investing, and you have groups like Nexus, and the impact, and tonic who are all moving in these directions, some market trends 73% of the younger generation and UK, so they have more opportunities to tackle social issues through impact investing. Research by Morgan Stanley showed that 84% of millennials cite investing with a focus on ESG impact as a central goal. And then values alignment is where most sustainability minded investors start. That's from tonic. So there's a lot of information that's showing trends and their impact, really, it's gonna be quite significant, I think, some of the stuff that you guys are doing around environment.
Rosie 13:09
It's really interesting. Now, what impact can financial centres like Guernsey have in philanthropic ventures? And what do you see as the areas of opportunity for Guernsey and our place in the global response to the climate crisis?
John 13:26
I think you have a significant role to play. I mean, there's a lot of competition out there for Guernsey, I won't mention who they are. But there's a lot of competition. And I think as you guys can be exemplars I don't know enough about but I'm going to ask you a question later on, if I may, about it, but not now. But I think there's real opportunity. And your relationship to professional advisors in their firms is really key to achieving this because wealthy people, wealthy young people, women of wealth, want to live their values. They want to discuss their motivations, their ambitions, and they want to do sustainable investment. And thats sutaianble investments across the continuum of investments, a spectrum of investment, everything from philanthropy, social investment, to impact ESG investing, etc. So I think that you can play a pretty significant role. I think we're running a couple of training sessions during your Sustainable Finance Week, but we will talk about that in a minute. And so, if you also think in terms of climate change, it's just not an environmental issue. It's an economic issue. It's an educational issue, equality issues, gender equity, racial equity, etc. It's a cultural issue and a local community issue. And it seems to me that the changes affects us all. And then Guernsey as I said, can be a pretty significant exemplar and demonstrating addressing all those issues. So not not too big a challenge for you is that?
Rosie 15:14
we're very good at rising to the task.
John 15:15
I think there's some things to keep in mind, though, as this goes on, which are really important. One is to continue to educate and to learn about the key causes and solutions to climate change and the concomitant issues related to it, to commit resources supporting the work that addresses the causes and impacts of climate change, to coordinate or integrate activities. So there's a joined up approach, there's just not one organisation, and your organisation sort of central to that in Guernsey, isn't it? because you bring together all these different types of groups and stuff. And it's also another activity is to steward investments for a post carbon future, and then organisationally to decarbonise your organic operations, and to continue to develop, practice, learn from others and share your learning. So those are the key, I don't know how many were there, 1,2,3,4,5,6 points I made, So that's what we can measure.
Rosie 16:26
Wow. Yeah, we look forward to meeting those challenges. It's predicted that some of the countries most affected by climate change are also some of the poorest and we are seeing this played out in Pakistan, at the moment with the flooding. Do you believe this is an area that philanthropic investment can have an impact? And if so, how?
John 16:50
Definitely yes. And there's a lot of different models out there of charities and NGOs and stuff supporting this. And some of the reasons, really interesting approaches. So they might use social investment, they might use microfinance, they might use grants and stuff like that. But from another perspective, yes, because I think the city or venture capital firms and others can play a significant role, as well. So in our 'walk in my shoes' series, which is on YouTube, there's a conversation between a person called Gary Vaughn Smith and our board chair, Rennie Hoare, and what was really intriguing to me. I just found it so fascinating. It was really neat example, a VC firm, a going into Africa, building the capacity, farmers in the specific area that they're working in. So in effect, using blended finance, and plants, etc, or whatever to do that. And then having a company that they invested in that distributes the goods or the farming, which made a profit, and then from a venture capital perspective, was quite productive. So it's really interesting example. So it's just not philanthropy, just not social investment, I think it could be also impact investing, as well. And if we were to look at this from the investment return spectrum of capital perspective, I think there's an interesting way of doing this, I came across this the other day. So if we say, traditional investments, so what do I say, as an investor, I'm aware of potential negative impact on the environment, but do not choose to mitigate it through my investments. So I'm happy to be giving money away from the profits. But I'm also not gonna just want to invest to maximise financial returns. If we talk about responsible investment, I want to behave responsibly, if we talked about sustainable investment, don't ask me to define these terms, because everyone has different definitions. I want business to have positive effects on the world and help sustain long term financial performance. So it's a nice balance from an impact investing finance. First, I want my investments Capital to help tackle climate change. But of course, I want to get decent returns impact investing from an impact? First, I want to contribute to addressing climate change, even if it means taking more risk, or reduced return. So again, it's really what you want to accomplish. And then from a philanthropy perspective, climate change is an urgent priority for me, and I don't need my capital to be returned to me if I can create enough impact. So there's, if you come at the spectrum of capital, those different ways of expressing yourself and what you're trying to do, you start to put it in that perspective. I think it means that some very wealthy people and funds can see okay, but maybe I'd really want To do impact first or finance first or whatever, as opposed to just sort of investing,
Rosie 20:06
It's a big difference, and there's lots of sort of choice along the way really as to you know, where, where you want that investment to go. So, as we mentioned earlier on September, is a very busy time for Guernsey Finance. And we will be holding our third Sustainable Finance Week. And we're thrilled to have philanthropy impact along and will be hosting two fringe events. What do you think people will be able to take away from those events that you're running, John?
John 20:43
I think, the two of them one on Wednesday 21st, and the other on Thursday, the one on Wednesday, is all about growing demand from clients to have support on their donor journey, as a normal part of their service from their professional advisors. So that one's going to talk about the commercial opportunity that advisors are missing, not meeting the client needs, what the implications are, how do you actually help clients achieve this? Learn about what what is actually happening out there around philanthropic giving and social investment, learn how to integrate this into your service offering, not just as an individual, but also for the firm because you get a number of firms, we have individuals who really support this, but the whole firm doesn't support it in an obvious way. And we'll talk about how to have these conversations with clients. So that's the one on Wednesday. On Thursday, it's similar themes, but it's a different process of focus. So right now, under the regulations, suitability discussions mean, I talk to you about your current finances, your risk profile, etc, etc. And then I come up with suggestions for you in terms of investment, simplifying a much more complex process. And we think that should go to the next level, around suitability, which is talking to clients about their values or motivations, ambitions, and how to set their priorities to achieve those in terms of impact investing, sometimes contextualising within SDGs. Tied to that is the new FCA consumer duty regulations that are coming out planning stage now, and part of that we see is that you cannot deal with consumer duty issues without talking to your clients about their values and motivations. So the training is really an important element of planning, but implementing consumer duty issues. And then the other side of this, of course, is the EU methods to issues around sustainability. And again, the same issue applies around having those kinds of discussions. So we, cover a lot of that. We talked about how to have those discussions. And how this improves client engagement, retention have developed new businesses so so how to is that positive impacts of doing so? Does that sound okay?
Rosie 23:33
Yeah, sounds absolutely perfect. Perfect, well.
Trust me, trust me, Finally, we're very proud of the work that's been done in, Guernsey with Guernsey Green Finance. That's our own initiative for greening the financial system. John, do you have an opinion on what Guernsey could do next?
John 24:03
I'm not an expert on Guernsey. And so I don't have a direct answer, but I'd like to do two things if that's okay. One, I'd like to turn it back on you to let me know and others know what's actually happening. But also, that list of priorities that I mentioned earlier about educating and learning committing resources, integrating approaches to join up stuff, investments to post carbon future, decarbonising operations and developing practice learning from others and sharing learnings. So, maybe you can answer the question, what is what is going on? What's happening but also, are you addressing what I think are those key priorities?
Rosie 24:54
Well, I think if we haven't already addressed them. They're certainly in our mind and there's there's plans afoot. So that, you know, we've already talked about Guernsey is already very much at the forefront of being a good global citizen. We've got the Guernsey green finance initiative, we were the first place in the world to launch a regulated Green Fund product in 2018, which has channeled nearly 5 billion into green projects. So far, we participated in the launch of the United Nations FC4S, European green finance network in 2018, as well. So those are really those good things that we've done so far. The other thing going back to COP26, which happened last year, UK and Guernsey announced they've reached agreement in principle to extend the UK ratification of the Paris agreement to guarantee if we look at the 75% of assets, under management of funds in Guernsey, there's a managed administered or sponsored by firms adopting the UN principles for responsible investment. And actually to coincide with the sustainable finance week, we are launching a report that provides it's it's the how to transition to a net zero economy with an extensive piece of research that provides practical guidance for all of the industries, you know, insurance, funds, pensions, banking and private wealth to continue that journey. So, and also sustainable finance week, which we have, you know, some globally renowned speakers, there's an awful lot going on, and I really feel and it's my job to bloke as he's from bit but not afraid to do that. And I think there's a lot that we're building on from last year. And yeah, we're continuing to do our best to be the best global citizen that we are. It's very unusual for the tables to be turned back on to me and for me to be answering the question on this podcast. But is that alright?
John 27:11
That's pretty good. What I what I find intriguing about all this, and I'm still learning this is how important being an exemplar is. And I'm hoping that in doing that other jurisdictions are picking up and trying to copy what you're doing.
Rosie 27:31
I very much hope so. And to be described by somebody like you as an exemplar is is very, very flattering to do so thank you.
John 27:39
And I wasn't even paid for that.
Rosie 27:44
Thank you so much for joining us on the podcast today. John, it's been wonderful to, for you to give up your time for us. And for us to hear your insights. I'm very much looking forward to meeting you when you come over in September, and philanthropy impact will be running an event on Wednesday 21st of September, which begins at eight am and finishes at 11. And one the following day between 10 0' clock and one o' clock. I'd like to thank you for tuning in and listening to today's podcast, we've got quite a back catalogue of interviews and panel discussions on the Guernsey green finance podcast channel. You can check them out by searching for Guernsey green finance wherever you get your podcasts.
John 28:28
Can I mention one more thing when you close it goes. Keep in mind the sessions that we're running this a maximum of 10 people. So if you want to be involved in that you should join quickly.
Rosie 28:40
You heard the man register now. And if you enjoyed today's episode, please leave us a review or a comment because we always love to get your feedback. You can learn more about the investable opportunities with biodiversity finance and about ghazis at sustainable finance offerings. And registration is open for sustainable finance week including those sessions that John mentioned, that's been held in Guernsey between the 19th and 23rd of September. We'll be hosting market leading keynote speakers, informative panel sessions, and there's an opportunity to network with Guernsey leading sustainable finance practitioners.
John 29:23
Rossi Thank you that was a lot of fun. That was great, really enjoyable. Plus, it's a good learning opportunity. So thank you for sharing all that stuff
Rosie 29:30
with. You're very very welcome. It's great to meet you
Transcribed by https://otter.ai