Purpose Beyond Profit: Q&A with UCA Funds Management's new CEO

It's going very well so far. There are lots of things that I expected and lots of things for me to learn. The Uniting Church is a fairly idiosyncratic organisation with its own distinct culture, so I'm learning all about that. The funds management business, in comparison, is quite straight forward. There were two things that attracted me to this role. The first is that it's a mission driven business, there was an element of 'giving back' that appealed to me. The second was that I felt that my skills and experience could add value to the business and that I could bring some fresh ideas to the table.

Michael Walsh [former CEO] has done a fabulous job over the last five years taking the business through a major transition. Previously, it was relying on various regulatory exemptions and it's now a fully licensed, professionally managed funds management business, so my short-term goals are to build on that platform.

The operating surplus generated by the business is granted back to the church to run social programs and cover operating costs. So, the long-term goal that the board has set for me is to double that grant in five years. I'm spending a lot of my time talking to people, learning about the business and its operating environment and figuring out a strategy that will deliver that outcome.

Essentially, there are four elements to the approach. The first is competitive returns; investors, ethical or otherwise, always expect competitive returns. The second is to invest ethically which is at the core of what we do and how we run portfolios. The third element is to lead by example, demonstrating to the world how an ethical funds management business should operate and drive ethical outcomes. The fourth is to give to mission and make that grant each year to fund community services and strive for a better world.

There's a difference between responsible investment and ethical investment. Responsible investment typically focusses on ESG factors and every signatory to the PRI does that. This is quite different to ethical investment which takes a position on what is acceptable and unacceptable and stems from values. If you look at the RIAA figures, they say that $622 billion of assets under professional management in Australia, which is just under half, fit into the broader definition of 'responsible investment' while that drops to under 5% - which is about $65 billion - for ethical investment. That's still a lot of money and a great trajectory, but there's still some work to do. There are some investors who are comfortable taking a responsible investment position and are unlikely to invest within the rigour of an ethical overlay. Part of our job is to encourage investors to become more and more active.

"There was an element of 'giving back' that appealed to me."

When you've spent a long time working in financial markets, you know that prediction is a very dangerous game. My predictions could be wrong but there are a couple of things that I think could be interesting.

Consumer awareness and engagement has been growing and I think it will only continue to do so. I often refer to an anecdote from around ten years ago when I was working for the Myer Family Company. I was at an investment conference sitting next to someone from one of the big super funds and he was the equivalent of a head of ethical investments. I said to him, "Is ethical investment real?", in other words was it gaining any traction? He responded with, "No, it's just something that the trustees want to be able to say that they do." That was ten years ago. Today, you'd get a very different answer. Super funds today are all clearly very engaged with responsible investing.

My second prediction is that technology will play an increasing role in engaging values-driven consumers. Superannuation is the largest pool of investable wealth for most of us, so we wish to see that invested ethically. The superannuation industry is very focused on member engagement and part of that is because their members are getting older and closer to retirement and historically, they leave their fund when they retire. If you're a business, looking at your customer base and see that one third of your customers, who are over 50, own two thirds of the assets, you know you have got to do something. Engagement through and into retirement, and engaging the younger generation, is hugely important. I think technology will be the way to achieve this and will also enable investors to exercise personal ethical investment choices.

The big one for me is the innovation that's occurring around impact investing. Whether you consider that to be part of the ethical spectrum is a question, but we certainly do. The idea that you invest with ethical underpinnings and making a positive impact is part of our philosophy. The biggest problem with impact investing is figuring out how to create scale and create enough opportunity for diversification in a portfolio. There's a lot of thought and work going into the space, I'm interested to see how it will evolve.

Speaking with a UCA Funds Management lens, we allocate 10% of our portfolios to positive investments. This means, not only do we screen out the bad stuff, there's a lot of work around advocacy and which sectors we will exclude, but it's also about how to use capital to reinforce the good. We come at it from both sides.

I'm a great supporter of board diversity. The boards that I've dealt with as an executive and those that I've sat on are better for having a diversity of views. It's extremely valuable. UCA's position is to encourage companies to aim for 30%, as a starting point, and we've gone further with 50% female non-execs. We're leading by example and we're very proud of that.

If I mentioned one person, I'd be doing the others a disservice. I don't have a single mentor. I've had many bosses who were all very generous with their knowledge in terms of teaching me. I've been very lucky in that I have enjoyed a great working relationship with all my bosses and have learnt something valuable from each of them.

The best piece of advice that I have received is: 'you will die'. So, pay attention to the important things each and every day. It could be tomorrow, it could be in 30 years. I don't mean 'make the most of life' in a flippant way. I mean live as if you're going to die tomorrow and as if you are going to be around for the next thousand years.

If the door of opportunity opens and it feels a little uncertain, walk through it anyway. That comes from personal experience. I had the opportunity to go on a secondment from England to Australia, and then I was asked if I wanted to go to Singapore. When you're young and unattached, it's the best time to do it. I wouldn't be on this side of the world if I hadn't of walked through the door.

"The best piece of advice that I have received is: 'you will die'...live as if you're going to die tomorrow and as if you are going to be around for the next thousand years."

Whenever you look at the big milestones of your career, you might think about a particular role or maybe delivering a certain outcome but that's not the stuff you remember. My enduring memories are working with great teams, creating great relationships, delivering great outcomes. Enduring memories always go beyond the fact that you met budget last year.

I'm a chartered quantity surveyor by background. I spent 15 years in the property industry. When I left university, I did an industrial placement in the mid-80s and in 1986 I started working 'properly'. It was a fabulous time to be working in property in London because it was one of the biggest property booms, there were jobs galore! Then of course, there was the property crash of the early 90s, and it became a very different industry to work in. It was an exciting first job because I was stretched. At the grand old age of 22, I was the project quantity surveyor on a £60 million development. That would never have happened five years before. It was way beyond my level of competence but that made it fun and I learned fast!

Well I've already transitioned between property and finance and that was a semi-conscious decision that I've never regretted. When I think about this business, it boils down to better companies, better returns and a better world. What more could I want out of a job? There's nothing that I'd prefer to be doing right now. Purpose beyond profit is extremely important.