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Profession / Affiliation
Editor of literature on CSR, Responsible Banking and Positive Impact Investing, lecturer on sustainability topics linked to investing and finance, coach for organizational culture, change management and leadership development, investmentbanker.
Editor Responsible Investment- Banking
Founder of Positive Impacts Investing and Finance
80797 München | Schwabing
Definition of Responsible Investment Banking
Investment, finance and banking has tremendous opportunities to help clients to contribute to a sustainable society and to resolve challenges that have been described by John Reddington, former chief advisor to the UK Government as “the perfect storm”. The world polulation is increasing from 2,5 bn to 9.5 bn within just 100 years (from 1950 to 2050), access to food, fresh water and infrastructure eduction and health services for all will support the people and reduce social tension while offering great business opportunities for companies. We see growing urbanisation and climate change as pressing issues. Sophisticated value chains, effective use of resources using much less than today is needed. As financial intermediaries between companies, investors, individuals and stakeholders financial institutions play a key role in alignment of interest between investors, communities, shareholders, stakeholders, clients and society and can help all actors allocating capital in a sustainable manner
By moving the tripple bottom line apporach really into the centre of finance and investing, the financial industry can go beyond GDP and create positive impacts for people and planet and instill multi-stakeholder cooperation, foster innovation that the public and private sector pursue collectively, embracing a new economic reality and a new definition of capital. This goes far beyond the current paragigm requiring that financial institutions and investors must be prepared to skip business with companies that do not follow International Standards or do not respect human rights. It means shifting the focus entirely to people and the opportunities for people, planet, profit that alignment of interest, cooperation and collective effort provide.
Areas of Expertise
investment banking and capital markets, Positive impact investing and finance, sustainability, decarbozation and climate friendly markets and sustainable value chains, corporate culture and leadership , change mangement. Karen Wendt has researched and lectured on ESG issues in banking and structured transaction in investment banking on ESG to meke them bankeable for more than 8 years.
Karen Wendt has more than 20 years expeience in investment banking. Se works for a Top Tier International Financial Institution and heads the Equator Principles (EP) team. The Equator Principles are the most widely accepted standard in identifying mitigating and managing environmental and social issues in finance. Karen was instrumental in the creation of the Principles since their flegling stages in 2003 and has worked with her peers in other institutions successfully on creating what is now a global level playing field. She is sitting in the Steering Committee of the Equator Principles Financial Insitutions Association (EPFIA) for her Institution and involved in the creation a voluntary Global Administrative Law. She was a co-author of the EP in 2006, has actively co-lead in and supported their strategic review and was instrumental in drafting EP III. Since the creation of the Equator Principles Financial Institutions Association (EPFIA) in 2008, Karen Wendt is sitting in its Steering Committee of the EPFIA. She has experience with human rights due diligence, international labor Law, environmental due diligence and the creation of action plans and mitigation strategies for large international transactions in various industries and regions to minimize environmental and social risk. Karen Wendt conducts stakeholder dialogue with international network organization in regard to ESG. She holds an MBA from the University of Liverpool, UK. In addition she is the editor of books on the subject of responsible investment and finance and positive impact creation,
Karen is a convinced ambassador of the Principles and experienced in creating Management Systems, strategic positioning of both institutions and international network organisation with regard to ESG, the instillation of strategic partnerships, and in advising boards and senior management on implementation.
When she joined the EP initiative in 2003, she was keen to combine her negotiation skills and international expertise gained in project finance and at the EU Commission, with the strategic skills she learnt at the Strategic Development Department. She also witnessed an economy and a society in intense transition between 1993 and 1994 working as a guest professor teaching market economy at two universities in Russia and Belarus.
Co-creating EP has convinced her that changing the parameters of the global economy to an approach that internalises negative externalities is feasible. Various sound initiatives can now be bundled together, allowing movement to the next strategic level.
She has undertaken research on investment banking culture, the role of alignment of interests and values and the impact of leadership behavior on trust and value identity.
„The business of business is business, Milton Friedman replied, when asked what economics contributes to the welfare of society (Milton Friedman, 1972). In his view, business contributes much to the welfare of society by producing goods and services, supporting economic growth and providing employment. But questions of finite planetary resources, climate change vulnerability, loss or reduction in biodiverse natural habitats, decrease in ecosystems services, drilling in the arctic, poor labor conditions in many markets, questions over human rights, accompanied by social unrest connected to infrastructure projects, speculation in natural resources and soft commodities and the question of access to drinking water have brought new meaning to responsibility for business and the financial industry in particular have reminded us that we have to redefine the role of business and finance and replace the principal – agent theory by a wider more inclusive multistakeholder approach focussing on alignment of interest..
The major resource in investment and banking besides efficient IT systems and competent staff is trust. Trust is the fuel banks more than any other type of company run on– and if the source runs dry, the vital role of this otherwise invisible source becomes very apparent. Banks can be described as organizational beings advising society: „Give me your money, I will care for it and keep and invest it for you. You can have it back anytime, anywhere with interest and compound interest. You even do not need to move it physically with you.“ The question is, does society still believe it‘s true.
The effect of lost trust became evident following Lehman Brothers’ bankrupcy. Banks were wary of lending to each other and clients became nervous about their savings. Despite all the bailout funds, emergency parachutes and political declarations, what remains today is a huge loss in trust and the indirect effects of the crisis like the creation of bailout programmes, state guarantees, solvency crisis of states have not yet been counted.
Obviously markets are not always information efficient and rationale and market failure may be a by-product of lost trust, In the crisis it has manifested itself by malfuntion of the interbank market and lending running dry. The principal agent problem does not exist solely between shareholders and management,banks are agents for their cleints as well. Individual Fund providers providing their funds for custody to banks do have a smilar principal –agent problem and may have quite different needs and expectations than shareholders about where banks should invest clients’ money they provide to their banks for custody. Serving these two very different principals at the same time can be like riding a horse from opposite sides if banks do not manage to align interests between shareholders, stakeholders, clients and society. Financial institutions are bes placed as financial intermediaries to proactively instill alighnment of interest. Reestablishing alignment of interest, directly targets the question of purpose of investment and banking . Just profit per se or creation of measurable positive impacts for communities and the climate.
Equator Principles Financial Institutions Association, FNG, WWF, UNEP FI, World Vision, FidAR
Hobbies & Social Engagement
look for solutions for a sustainable sucoiety Responsible Investmentbanking and Positive Impacts, speaking at conferences and being there, writing and editing books, Corporate Culture and Leadership, interviewing people, being curious about new endevours, mountains, sun and the sea, music, spend time with my children, partner, family and friends, coocking, reading walking and skiing, meditation.
To truly unlock the full potential of impact investing rather than let it become just another interesting satellite activity it must be put center stage, at the core of every strategy,and imbedded into the products and services, the entire value chain. Responsible investment banking and impact investing must provide investment solutions appropriate in scale to existing megatrends (1) massive demand at the base of the pyramid; (2) the need for radical resource effectiveness, climate friendly markets and green growth; (3) access to nutrition, fresh water, health, education and ecosystem services for a growing population, (4) while of course managing environmental and social risks according to International Standards and developing Global Administrative Law.
Positive Impact investing and finance is a process by which investment managers screen, evaluate and monitor and advise investments . Whereas “socially responsible investment” (SRI) screens to avoid portfolio exposure to socially or environmentally harmful investments, impact investing actively and intentionally seeks to create a positive, measurable impact through profitable businesses. and therefore increases the options and choices of investors rather then decreasing them. Alignment of interest through positive impact investing has will become part of the fabric of institutions, influence decision makers and change investment and banking culture. It will become integrated into the DNA of investment and banking, creating commitment over compliance.