Steve Waygood is Chief Responsible Investment Officer at Aviva Investors (Steve's corporate page and LinkedIn). He has been a crucial player in the rise of sustainable finance in the UK over the last 20 years.

Our conversation covers:
-The role of insurance companies in finance, and their particular interest and leverage on sustainability.
-No one anywhere in the world understands the whole of finance.
-Many ESG funds are trying to beat the market ('maximise alpha'), on the assumption that an ESG perspective gives you superior information or insight. (The alternative is to change the market, so that we are all heading in a sustainable direction.)
-It is possible for a market to be efficient (the assets prices reflect the information) and have market failure (there are important negative impacts which are not included in the prices). For Steve, climate change is a market failure; chasing alpha alone will not deliver a sustainable world.
-A potted history of 'ESG' innovations in Aviva (as a proxy for how this has played out across the industry), including:
  >Process innovation: the role of engagement (meeting directors of companies to push them on issues) and voting in formal governance (the Annual General Meeting, or AGM).
  >Organisational innovation: from having specialist analysts in one dedicated team, to now having people with ESG skills embedded in each of the analytical teams.
  >Political economy innovation:  having collaborations like the UN Principles for Responsible Investment (UN PRI) and also using multilateral spaces, like the climate COP, for wider change.
-His current focus on 'macro-stewardship': "taking a more holistic view of our stewardship responsibilities and actively engaging with policymakers, industry bodies and peers, regulators, standard setters and other influential parties to advocate and push for changes that will help create a more sustainable economic system."
-His main challenge: the 'tragedy of the horizon', meaning that by the time you reach the horizon, and experience the risks for real, it is too late to do anything about them.
-Priority: drive innovation through the whole asset management and asset owning institutions, so that they all recognise that without steward  that is systemic then all our business models will be deeply harmed by climate change. Therefore it is in their interests to rise up and challenge those governments that we lend money to, to deliver what they said they were when they signed the Paris Agreement.

This is part of a series of interviews about innovation for sustainability conducted for the UCL Institute for Sustainable Resources, as a contribution to a module in this Masters. You can find out more about these interviews, and the module, here.