Articles

By Mark Hinds Branch Manager & Investment Manager, Charles Stanley Norwich

It already feels like we are overwhelmed with change. A pandemic, Putin’s invasion of Ukraine, The Queen’s passing, two new Prime Ministers, soaring energy bills, inflation cutting real incomes, borrowing costs rising sharply (I think I will stop there, stay with me). But on top of all of this we are told that we will need to face even greater change to ensure we meet Sustainable Development Goals.

So, how do we sustainably cope with all of this change? If this all feels rather overwhelming, a change of perspective can sometimes be helpful. Here’s a really big perspective.

 After around 13.8 billion years of existence, it is fair to say things have changed quite a bit in our universe. More interesting is that the rate of change is accelerating inexorably. This means that the most significant change in our world – which has vastly increased complexity – has all happened, at least in relative terms, very recently

From a modern human perspective, we have been mooching about on planet Earth for around 200,000 years – but it wasn’t until around 10,000 years ago, with the shift to agriculture, that the pace of change (and work) really started to ramp up. Now, in not much more than 250 years, we have experienced an industrial revolution, switched on a digital revolution, and now pour data into an information revolution, aided by AI (Artificial Intelligence), just to speed things up a bit. 

From this big perspective the changes we currently face don’t seem so surprising. Of course, our lives are run from a much narrower perspective, principally that of our lifetime experience. As a reader of this article, it is safe to assume that you will have access to an enormous array of technologies that make life safer and more comfortable by many orders of magnitude, compared to just a couple of generations past. So, have we become a little too comfortable, averse to change and too far-removed from the natural realities of change?

Competition and the evolution of society

This natural force of change is evident in our economy too. It is no coincidence that market-based economies have been responsible for the greatest and fastest improvements in human living standards.

Competition produces the best ideas which, in turn, raises productivity. This has lifted living standards to the incredible level we see today. The most impactful productivity lever throughout history has been the application of human ingenuity. Collectively channelling energy and resources to engineer solutions that allow us to do things better, smarter, faster. So, this is all great news, and well understood, but what is less well socialised is the other vital element for this natural development process to function – and that is the importance of failure. A new technology can only benefit society if the previous solution is allowed to fail.

This is, of course, where society must decide to what extent it is willing to help those adversely impacted. Too much help and collective progress is held back or even halted, too little and we are nothing more than characters in a David Attenborough documentary.

So enough of this big picture nonsense you say, how does this help me as a Charity Trustee?

What it means for you

Well, our job is to help Trustees make sense of the world of financial assets and to manage their Charities’ stored energy and endeavour (an investment portfolio) to support the aims of the Charity now and sustainably into the future.

With eight billion people on the planet and a whole lot of change going on the world is a complicated place, and so we can’t know the future. Instead, we focus our collective efforts to understand where we are now, how we got here, and as a result, infer the likely range of outcomes ahead.

Rather like the natural laws that got us here, we adapt our investment portfolios to survive and grow. Successful portfolios are not those which bet on singular outcomes but are instead diversified for resilience. Certainty is not possible and so it is better to be roughly right than exactly wrong.

Change always presents opportunities for investment and so as we move to a more sustainable future, we can be optimistic that your charity’s investment portfolio can also play a positive part in making things better.