– we need refreshment for tired hearts –

'O, she is rich in beauty; only poor,
That, when she dies, with beauty dies her store'

Romeo and Juliet

A question for ageing fund managers. “What has been the biggest change you have observed in 50 years of service?” One can’t be sure of the response. But a strong candidate must be the advent of what is broadly described as ethical investing. A time–served employee would remember the investment culture half a century ago. In those days an investment trust director would have shuddered at the thought of giving shareholders’ money to any cause beyond their immediate financial interests. A Christmas tree for the office hall marked the boundary of acceptable profligacy. 

30 or 40 years ago the boundary began to shift. The scope of ethical investing was gradually widened as new concerns arose – tobacco, car safety, slave labour for example. Today the term ethical investing subsumes a number of satellite groupings such as Socially Responsible Investing (SRI) and Environmental, Social and Corporate Governance (ESG). None define specific action. They merely express what ethical investing means for different investor groups. Ethical behaviour, however, is not evidenced by the payment of lip service to a limited range of external criteria. It is a mindset, and it embodies the only route to enduring prosperity for business and investors. We noted as much 30 years ago.

Ethical investing owes its origin to the insistence of stakeholders that business address the wider implications of its role in society. It seeks to promote a socially conscious business culture. That is one which serves the interest of all stakeholders in a business. These are taken to include shareholders, staff, and suppliers among others. Ethical investing today particularly concerns itself with environmental issues. All this embraces a high purpose and represents radical change. The result amounts to a prescription for more enlightened and so sustainable business practice. But it goes only so far. Ethical investment addresses the measurable impacts made by business on the human condition in the round. It focuses less on the immeasurable impacts – damage to customers’ confidence and expectation for example (see article Sept. 1996). Those experienced in the field of the emotions, of aesthetics, of the mind are little referenced.

One understands why ethical codes have little to say about the hidden impacts of the current pandemic. Mental and emotional assessments belong to a parallel universe beyond the boundary of legitimate corporate concern. Companies hold no brief to burrow into the depths of our souls. And yet one senses that any ethical code so prescribed must be omitting something important. One such among many others is a due concern for the plight of the arts.

No ethical code can address all the social implications of business conduct. In pursuing their own concerns, ethically–minded investors recognise that businesses have no obligation to support activities extraneous to their central purpose. In practice many businesses do give valuable financial support to cultural activities not immediately connected with their corporate goals. Our firm does so. This is partly in tribute to the local community that enriches our working lives, partly to build goodwill more widely, and partly because the cause is worthy for its own sake. Sadly hundreds of worthy charities shiver as they queue for support post-Covid. Many play a priceless and indispensable role in our emotional wellbeing as well as in our national culture. They deserve every available form of support. There is nothing to prevent business from supporting activities manifestly beneficial to the deepest level of our experience. The door is already open for a push towards more business support for the arts. Businesses that decline to offer financial support can hardly be considered unethical. They are fully entitled to prefer other social causes of their own choosing. The ingredients of ethical behaviour are not capable of exhaustive definition. Investors’ voices need to encourage as well as deprecate.

The arrival of Coronavirus prompted government and its citizens to revalue the contribution of medical workers to the public benefit. Government and nation including its businesses should now revalue the role of music, drama, painting and all the other streams of creative activity in our society. The Culture, Media and Sports minister announced in July a £1.7 bn package for the arts in the UK. That was welcome and substantial viewed in absolute terms. However, in relation to the scale of the need, to the vital part the arts play in our well-being, and in the context of government spending overall (est. £840 bn in the year past),
it is far too little.

Government claims to be following the science when it comes to helping heal bodies. It has little or nothing to say about how it proposes to help heal hearts and minds. The psychosomatic effects of Covid should be as much part of relief programmes as the physical ones. One local example. Small choirs (some near us) are unable to sing together for their own pleasure and that of others. Members miss the music. They miss the togetherness even more. Virtual presentations of various kinds are a valiant attempt to restore some of what is lost. But they cannot replicate the essence of a living performance shared in the flesh. Nor can they provide the restorative quality of companionship. 

In a broader context, the biggest impact of arts starvation is not on the artists themselves, appalling though that is. It is on the population as a whole. It is a hunger which hurts millions. Investors in one form or another, whether individually or through institutions managing pension and insurance company funds, make up a large part of those millions. Only the concerted voice of investors can bring the arts within the focus of ethical concern.

Apart from the social costs of quarantining the arts, there are hard economic ones. The Office of National Statistics estimates that the performing arts alone are worth £11 bn a year to the UK economy.
Unlike some other government assertions, it is manifestly true that the UK’s orchestras, chamber music groups, ballet, opera and drama companies, painters, aesthetically creative people of all kinds are “world class”. Yet here is Andrew Lloyd Webber signalling the possibility of moving his shows overseas. He says social distancing makes the UK stage unviable. It makes economic sense to back our most successful sectors as having a prior, not residual claim on available resources.

Investors, business, and the government can each contribute to the cause. Investors, because they ultimately shape business and government priorities; business because it is the conduit for a large chunk of national income; and government because it has the capacity to redirect the necessary funds. Trustees and other custodians of unrestricted funds have a particular contribution to make by embracing the cause of the arts within their own ethical investment criteria.

Prospering companies meantime can at least reconsider their existing level of financial support for creative activities in the community.
They can also impress the economic importance of the arts upon government.

Investors can play a decisive part in furthering the cause. Their views may be most effectively channelled via collective bodies such as the
Investment Association and the Investor Forum.  Collective bodies can help escalate the plea of myriad individual voices.

Such a widening of ethical concern would be a big further step in the evolution of investors’ social awareness. Many of those charged with the management of other people’s money have already moved some way in response to the urgings of social conscience. Historically every attempt to widen investors’ social focus has met stern opposition. Obstacles must be expected. Nevertheless we hope history will place an elevated concern for the arts in the comforting line of social issues successfully tackled by investor intervention. 

On behalf of our clients we already appraise the response of companies to ethical investment concerns. As liberators of our hearts and minds artists should be considered as important as the healers of our bodies. They deserve the same recognition and support. We can all help to make it happen.

This is not to ignore other sources of mental refreshment quite as powerful as the creative arts. Live sport is the obvious one.
Financial resources being limited, difficult choices are inevitable.
Support allocations will always involve subjective judgment. Why should artistic endeavour enjoy a prior claim? History may help find an answer to the dilemma.

Six hundred years ago artistic creativity in Europe burst into bloom, nourished by the generous hand of the Medici family. Since then, economic prosperity has usually marched in step with a flourishing culture of the arts. Healthy and successful nations have needed the refreshment of emotional outlets. Artists provide them. At a time of national distress their presence is all the more vital. Without them we might as well try to cross a colourless and uncharted desert without water. And our sportsmen need water just like everyone else. For all our sakes, ethical investors can help get the well refilled.


1st October 2020





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