Peter Hugh Smith went to Ampleforth College and Reading University before going straight into fund management, following in his father Andrew Hugh Smith’s footsteps by choosing a career in the City of London. Peter credits his father, a practising Catholic and former chairman of the London Stock Exchange, with making him the man he is today. “He was a religious man, and I believe that my personal ethics and how I look at the world have come to a large extent from him.” He admits that before joining CCLA he hadn’t engaged much with Catholic social issues, but he was instantly and instinctively attracted to the company when they approached him to become CEO in 2019. “My attraction to CCLA does come down to my Catholic upbringing and education, and I didn’t realise until recently the extent to which it has formed who I am,” he says.
CCLA is an unusual investment management company in that it looks after investments for charities, religious organisations and the public sector. With over 36,000 different clients, it is the largest organisation of its type in the UK. It traces its roots back to 1958 with the launch of the Church of England Investment Fund, which allowed church organisations to pool their funds and access professional fund management services. Local authorities and the Charity Commission soon followed suit. Following the introduction of financial services regulation, CCLA (Churches, Charities and Local Authorities) Investment Management Limited was created in 1987. Still going strong today, CCLA is about to launch the Catholic Investment Fund in response to increasing demand from Catholic clients.
“I’m very pleased being a Catholic that we can do this,” says Hugh Smith, who was headhunted for the role of CEO from his job as managing director of Link Asset Services, one of a string of top roles he has held in the City over the course of his 30-year career. While he concedes that the City has come on by leaps and bounds in terms of its understanding of ethical investment from the 1980s and 1990s – when his father ruled the roost – especially when it comes to addressing environmental considerations, he believes that it has a lot to learn regarding social issues.
“We are stewards of our clients’ capital,” he says, “and I don’t think we are fulfilling that responsibility, getting companies we invest in to address those issues.” Which is where CCLA comes in.
While the firm is like any other investment management company in the sense that it manages money for people who want a return, the culture and atmosphere is different “in a good way” because of the focus being on charity and the not-for-profit sector, and on “good investment”.
In that sense, “it is not just about the return,” Hugh Smith explains, “but about doing the right thing. It is about getting the balance right between return and also investing in a way that is in line with our clients’ ethics and perspectives.”
The Catholic Investment Fund was launched to do exactly this for CCLA’s increasing quantity of Catholic clients. The idea is to invest only in companies that act in alignment with Catholic social teaching and to avoid those which undermine Catholic doctrine, such as companies producing abortion facilitation drugs or engaging in human stem cell research. To ensure nothing is missed, CCLA has appointed a “faith-consistent investment committee” comprised of senior and respected figures from the Catholic Church, whose job is to oversee that the companies proposed by CCLA for investment align with Catholic values. The committee considers rigorously “the impacts on human beings and the natural world of products, labour standards, health and safety, people-management, community relations, responsible marketing, data privacy and corruption,” CCLA explains.
Alongside investing money for its clients, CCLA engages actively with a number of causes as part of its mantra to do good, which is in line with Catholic teaching. Encouraging firms to improve their environmental practices has been an area of ongoing interest for over a decade now. More recently, however, they have been raising awareness among companies around the issue of modern slavery which, Hugh Smith says, is present in the supply chains of almost every company in Britain. “When I joined CCLA, I knew modern slavery existed, but I thought it was more about sweatshops in Asia, but it’s a lot more pervasive than that and affects 25 million people, some of whom might be around the corner from your office. I was horrified and disappointed in myself that I didn’t understand it better. Lots of these people are trapped in the supply chains of companies.”
Rather than ceasing investing in companies that might, mostly unwittingly, have people working as slaves within their supply chain, CCLA’s approach is to work to make change happen from within. “When you sell your stake in a company you no longer have a vote or a say, you’re giving up your right to cause change,” he explains. “By engaging with those companies we can cause change. It takes time, it’s slow, but it’s effective, because we are the owners of these companies. We are already seeing how by having conversations with companies, and improving their procedures and processes, we are having an impact. If we can help one person, that is a success. It’s not about eradicating slavery, but we are doing our bit.”
Another area of interest is on improving poor mental health in the workplace, which hugely affects how well a company operates and runs in line with Catholic teaching around preserving the dignity of the human person. If a firm looks after its staff, it creates a healthy environment where individuals are happy and feel supported and business can flourish, explains Hugh Smith. “We believe in the common good. A company is only going to be as healthy as the community it lives in.”
Before the pandemic, one in ten people had mental health problems, while post-pandemic the number is closer to one in five, he explains, admitting that the past year working from home, isolated from colleagues, hasn’t always been easy. To encourage firms to take mental health seriously, CCLA plans to create an index where the performance of companies is recorded and ranked. “Ranking is a good way of promoting change as no one wants to be at the bottom,” he says.
The launch of the Catholic Investment Fund is timely, with Catholic social teaching so high up on the mainstream agenda at the moment, not least with new US president Joe Biden being so open about his faith and naming Pope Francis as a personal inspiration. Hugh Smith agrees that there has never been so much interest in ethical, and now specifically religious, investing and that this is the natural next step to improving how the City of London operates in the modern era.
While his father’s City of London was dramatically different to the one he inhabits, Peter is certain his father would have been proud of the work he is doing at CCLA.