Regulation  

Importance of ethical leadership in investment sector increasing

Omar Kodmani, senior executive officer and global head of international business development at EntrustPermal, says: “Ethical leadership in our profession is much deeper than a check-the-box exercise.  

“It is about having an internal moral or ethical compass ticking along inside you at work throughout the day. 

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“While increased regulation and general pressures to maintain profitability may cause investment professionals to want to just get by with the bare minimum, the CFA Institute’s Code of Ethics and Standards of Professional Conduct require us to go the extra mile.

“The ethical leadership programme that we have rolled out in the UK brings these issues to life, helping mid and senior level management to realise that ethical dilemmas arise rather frequently and there is a proper framework for dealing with them.

“For some professionals, this is a natural reflex. For others, ethical leadership can be learned through case studies and group projects. While some may be motivated by the belief that ‘good ethics is good business’, we believe good ethics makes investment management ‘a noble profession’.”

Combining leadership, business and ethics

Amanda Young, head of global ESG investment research at Aberdeen Standard Investments, says: “I have completed both leadership courses and modules on business ethics in the past.

“What I had not done before participating in this course is combine the two into understanding how to be an ethical leader.

“Setting the tone from the top is so important in steering the right culture in a business. Ethical decisions are not black and white, and the shades of grey needing to be explored were extensive.

“However, if I took one thing away it is this: there is a distinct lack of focus on the client in everyday investment decisions. If you keep the client at the heart of every process, you will be steered in doing the right thing when faced with areas of grey.”

Live experience needed

Alexandra Haggard, managing director, strategic product management at BlackRock says: “Investment professionals only get ‘live fire’ experience. We don’t get to practice our craft the way athletes and others do.

“CFA UK’s ethical leadership programme is an opportunity to explore decision-making and the potential impact on clients, shareholders and employees.

“As our business gets ever more complex, as the regulatory environment gets more challenging and as societal obligations evolve, the programme puts participants in scenarios based on real life issues and helps them think through how to respond in a safe environment – one where the consequence of a mistake is a learning opportunity, not a risk event.”

Eoin Murray, head of investment at Hermes Investment Management says: “The key challenge of ethical leadership is never losing sight of the interests of the ultimate beneficiary. The link between financial wealth creation and environmental, social and governance considerations delivers that better alignment with the people that we serve.