UCA Funds Management’s new CEO, Michael Walsh (pictured), comes to the role with an extensive background in the financial sector as well as a passion for ethical investing and environmental issues. Originally trained as an accountant, auditor and tax agent, Mr Walsh went on to teach accounting at the University of Sydney before moving into several senior positions across the finance industry.
It was around this time an interest in research led Mr Walsh to developing a business specialising in research, focused specifically on ethical investment and charitable organisations. In various roles throughout the last 12 years, Mr Walsh has been able to combine his professional skills in finance and research with his passion for ethical business practices and the environment.
“A lot of the work I’ve been involved in really comes from wanting to do the right thing,” Mr Walsh said.
“One of my main passions is the environment – of all the things we’re doing in our society regarding the long-term future, environmental degradation is one of the biggest issues in my mind.
“UCA Funds Management really exhibits strong ethical environmental, social, and governance principles – that was one of the things that drew me to the role.”
Mr Walsh said ethical investment principles, such as those espoused by Christian-based financial organisations like UCA Funds Management, continue to capture the attention of many mainstream financial institutions. It is a trend he is eager to strengthen in his new role.
“I think UCA Funds Management is potentially a big and influential investor within the Christian community – we’re also one of the top five institutions in the ethical investment community,” Mr Walsh said.
“We’re a strong voice in ethical investing in Australia despite being small in terms of the mainstream investment world.
“So we’re hoping to improve and build our profile and voice in the ethical investment sector.”
Having amassed a significant stake in investments globally, ethical investment – the once derided bit player of the financial sector – is increasingly at the forefront of contemporary financial thinking.
“Ethical investing has gone from being a cottage industry to being an important player that influences mainstream investment thinking,” Mr Walsh said.
“Ten years ago everyone involved in ethical investing would use the term ‘ethical screens’ as in screening out companies from investments.
“The concept being people don’t want to be associated with unethical business and pick responsible companies to invest in.
“So some companies are screened on ethical grounds and that’s called negative screening. You might then, when building the rest of a portfolio, introduce an overweighting of positive companies. In the UCA’s case we’ve got a lot of loans to educational bodies, we’ve got investments in energy companies and health care companies – so that’s the basic concept.
“It’s actually evolved into the continuation of that – companies that say environmental, social and governance considerations have a part to play in selecting any investment and the best term for that is probably sustainability investment.”
Commenting on the rise of ethical investment Mr Walsh notes its long history as a key driver.
“I think the UCA style – values based on the Wesley principles – we’ve been doing it for 100 years we’ve just formalised it. People can relate to that idea of ‘my money is expressing my values’.
“The fact that it’s based on Christian principles is also interesting from an agnostic perspective because it is Christian organisations that were the pioneers of ethical investment.
“The Quakers also started doing ethical investment a couple of hundred years ago. This links back to expressing your faith in the community in a really tangible way.”
Although a relatively new practice, professional investment management for ethical investments has quickly taken root in the mainstream as it relates directly to diligent stewardship of resources.
“The fact that we’re regulating environmental degradation and environmental costs are now being incorporated into regulation means costs associated with social and environmental impacts are being incorporated into our economy,” Mr Walsh said.
Mr Walsh sees the Global Financial Crisis (GFC) and the increasing awareness around environmental issues as key drivers for reform in financial sectors.
“As a result of financial crashes good corporate governance principles can lead to a much more stable organisation.
“In effect this also means a more profitable organisation than one that’s driven by profit and takes enormous risks,” Mr Walsh said.
“Similarly with the disaster that BP caused in the gulf (of Mexico) – these events have caused a lot of thinking about environmental regulations and safety in the oil industry.”
Mr Walsh says this idea of responsible long-term goals is central to the work of UCA Funds Management.
“One of the reasons I was attracted to the role was its track record of good long-term conservative perspective as opposed to a short term trading mentality.
“People will start to hear a lot more about that, the lessons from the GFC are about risk and about governance.
“I have considerable experience in the ethical investment sector and I can assist in improving our profile and strengthening our voice in the ethical investment sector.”
Mr Walsh also notes the ability of ethical organisations to engender change in other businesses.
“If there’s a company doing things the industry doesn’t like we’re able to add our investment muscle by saying ‘we’re not happy that you’re doing that – here’s a business case for that to change.
“So there is that sort of positive engagement or even activism taking place – you can engage and present a case for change and there’s a fair bit of that happening.
“It’s another reason churches and missions are well placed because companies go into certain countries where there are vulnerable communities and environments. You hear stories of companies behaving really poorly in regards to the environment.
“Churches and missions that are connected can often act as advocates – they can often be really informative sources of information in terms of how communities are being affected in those areas.
“Often there is little regulation and monitoring but there are churches and missions who are connected to advocacy agencies.”
Mr Walsh, who moved from Sydney with his wife Maria to take up the position, is looking forward to discovering Melbourne.
An avid NRL fan, Mr Walsh is also hoping to squeeze in time to get out and support his beloved Bulldogs.
“We’re hoping to get out and see a few games – I’m a Bulldogs fan. We got beaten by Storm in the Grand Final, so we’ll have our revenge,” Mr Walsh said.
He is also looking forward to getting to know the wider Church community.
“Right now a lot of the focus is getting out and meeting people across the UCA,” he said.
“It’s a big commitment. Running a finance company there’s obviously a lot to do, but the plan ultimately is to grow so we can grow our contribution back into the Church.”