Currency Trader Touts Green Credentials While Founder Questions Climate Science
(Bloomberg) -- Neil Record’s currency-trading firm has checked many of the boxes for being environmentally friendly. It has a sustainability office and seeks to align its business with United Nations sustainable goals. The company is also certified as carbon neutral and said it plans to disclose risks it faces related to global warming.
All the while, Record leads a group that fights to limit climate regulation.
Record, a former Bank of England economist, is chairman of the Global Warming Policy Forum (GWPF), a lobbying arm of the U.K.’s main climate-skeptic group. In the past few months, the forum has warned U.K. Prime Minister Boris Johnson that plans to boost subsidies for renewables will endanger the nation’s post-Brexit economic plans. It’s also called on educators to stop “terrifying children with exaggerated claims” about global warming and contends a new climate model predicting polar bear extinction isn’t “scientifically plausible.”
Record, 67, is among a handful of money managers who have close ties to climate skeptics while their own firms simultaneously tout environmental, social and governance credentials in a bid to meet fast-growing demand for such investments. U.S. money manager David Herro at Harris Associates, a firm that also promotes ESG, has raised money for the GWPF’s parent organization. U.K. hedge fund manager Michael Hintze has said he’s donated to the same group and has attended its events while his firm pushes ESG.
Neil Record’s firm, Record Currency Management, was among the first currency managers to develop a strategy that incorporates ESG factors, Henry Wilson, a spokesman for the U.K.-based firm, said in an emailed statement. “In a private capacity, Neil is passionate about the environment and supports informed debate across a range of policy areas.’’ Record declined to comment. Benny Peiser, director of London-based GWPF’s parent organization, didn’t return a message seeking comment.
Record founded his firm in the early 1980s. It managed $5.8 billion in discretionary assets as of the end of last year, according to a report to the UN. The firm manages the impact of foreign exchange, not the underlying assets. As such, its $63.3 billion in assets as of the end of June are notional.
Wilson said Record’s $4.3 billion currency multi-strategy product, which is its main “for-return” product, has returned an annualized +0.62% since its July 2012 inception through the first quarter.
The GWPF is part of the Global Warming Policy Foundation, which was started more than a decade ago by Nigel Lawson, the former Chancellor of the Exchequer under U.K. Prime Minister Margaret Thatcher. Record has sat on the board of its lobbying arm since it was formed in 2014, according to company filings. The following year, he told Unearthed (the reporting unit of Greenpeace U.K.) that he doesn’t view climate science as “settled.”
“I believe that the important scientific enquiry required for us to understand man’s effect on the climate is being hampered by a monolithic ‘establishment’ view that the science is settled,” Record told the publication.
Mary-Hunter McDonnell, an assistant professor of management at the University of Pennsylvania’s Wharton School, said Record’s activities call into question his firm’s stated ESG efforts, especially at a time when money managers are racing to win lucrative clients such as pension plans.
“It’s problematic to be profiting from ESG while at the same time undermining ESG goals,’’ McDonnell said. “It’s unlikely that a firm can really be progressive on ESG while its founder is doing the opposite. Founders’ values trickle into most of the decisions made at their firms.’’
One of Record Currency’s clients is now taking note. The London Pensions Fund Authority (LPFA), whose 5.9 billion pounds ($7.7 billion) are invested in a pool called the Local Pensions Partnership Investments (LPPI), said it will “investigate” Record’s outside activities. Both organizations said they typically focus on an asset manager’s investment strategy and performance, rather than the outside activities of individual executives.
“At LPFA, we take our investments and policies very seriously and are grateful for areas like this being brought to our attention,’’ Robert Branagh, chief executive officer of LPFA, said in a statement. “We believe our investment processes and controls to be robust, but they are primarily aimed at looking at the manager companies and their approaches, not individuals within such companies.”
Richard J. Tomlinson, chief investment officer of LPPI, said the pool’s focus when evaluating investment managers is “ensuring their approach and expertise align with our responsible investment strategy and requirements and the policies of our clients.”
Wilson, the Record Currency spokesman, said the firm doesn’t comment on individual clients.
Two years ago, Record Currency signed on to the Principles for Responsible Investment, a UN-backed framework that helps asset managers incorporate ESG into their investments. That commitment doesn’t require signatories to disclose charitable and political giving of its executives, the PRI has said. But earlier this year, the group began considering requiring asset managers disclose such information, as well as their executive’s outside roles, and may make a decision this year. A PRI spokesman declined to comment.
Record Currency said its sustainability office oversees ESG research and development, investment governance and other initiatives. Wilson, the spokesman, noted that the firm introduced an “ESG tilt’’ in 2018 to its emerging-markets strategy, where more money is allocated toward nations with strong ESG credentials. He also said the firm plans to follow recommendations by the Task Force on Climate-related Disclosures, which encourages companies to disclose their environmental risks. (Michael Bloomberg, founder and majority owner of Bloomberg LP, is chairman of the group.)
The juxtaposition of Record’s work with climate skeptics and his firm’s ESG efforts mirrors a similar situation at $86 billion money manager Harris Associates in Chicago. A Bloomberg News report that Harris Deputy Chairman Herro donated and raised money for climate skeptic groups including the Global Warming Policy Foundation led to one of Harris’s clients, Brunel Pension Partnership in the U.K., requesting more transparency as to the firm’s ESG efforts.
As a result, over the last few months, Harris has hired a new director of responsible investing, Chris Knowland, from index provider MSCI Inc. He’s focusing on formalizing Harris’s climate change policy and working with a shareholder advisory firm and his former employer on climate change-related research, a Harris spokeswoman said in an email.
Harris Associates has also spoken with the Transition Pathway Initiative, which assesses company preparedness for the move toward a low carbon economy, to understand its methodology and discuss future collaboration, the spokeswoman added.
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