Rethinking capitalism

It’s not every day that The Lens attends an investment conference and hears a key note speech from the boss of one of the world’s largest fund management companies calling for a fundamental rethink of the current capitalist economic and business model.

But that is what happened last month when Anne Richards, the chief executive of Fidelity International, told assorted suits at a conference in Paris that the post-war reliance on constant economic growth at all costs and shareholder primacy was no longer compatible with combating climate change.

In an outspoken intervention at Société Générale’s inaugural European Investment Summit, the chief executive of one of Europe’s largest asset management houses, Fidelity International, said that the economic assumptions of previous generations were being tested and had been “found wanting” and that the industry was “on the cusp of a great disruption”.

Richards, previously the chief executive of M&G Investments, said that the funds industry will have to adapt if it wants to “play a role in shaping” a more sustainable economic model.

The head of the $310 billion fund house said that a transformation of the world’s economic model was needed to “change the system that allocates the scarce resources on this planet”.

The call from Richards for a rethink of one of the central tenets of capitalism followed a similarly outspoken intervention last month from Andreas Utermann, the chief executive of Allianz Global Investors, who told a conference in London that the orthodoxy of pursuing GDP growth, supported by population growth and the maximisation of corporate profits was unsustainable if the world was serious about tackling climate change.

Capitalism in its current form, he was quoted as saying, involved “borrowing from the future while destroying the environment”.

For supporters of more interventionist Keynesian economic policies, as opposed to the laissez-faire free market approach of Milton Friedman, November was a good month.