Thomas 0:00

Hello, my name's Thomas, and you're listening to the Pensions and AI Podcast, the show where we explore the way that generative AI is being used across the pensions industry. In every episode, we talk to people in pensions who are working at the frontier of generative AI. You'll hear from super users, builders, advisors, and big thinkers, the people who are shaping the future of how our industry could look and how it can deliver better outcomes for members. This is not a show for people to come and sell you things. Far from it. We're here to share, to have open and honest conversations, to talk about what's really going on, what actually works, and what lessons we're all learning along the way. If we're doing a good job, then you'll leave each episode feeling more informed and confident with Generative AI and better equipped to use the technology both yourself and to shape how it's used in your organization. Now our guest today is Charlotte O'Leary. Charlotte is the CEO of Investors for Purpose, which is an organization that influences and leads the conversation on integrating sustainability and impact into investments across the world of money. Charlotte, welcome to the pod.

Charlotte 1:04

Great to be here, Thomas. Thank you so much for having me. And wonderful to get this opportunity to talk about the connection between AI and pensions, two things you probably wouldn't always associate with each other. But no, it's great to be here. Thank you.

Thomas 1:17

I'm glad that we're meeting on what is a day where it's only a tepid 24 degrees rather than the um the rather awful high 30s of last week, though probably a rather fitting temperature backdrop for Climate Action Week. But um before we get into all things sustainability and planet, it would be really nice to hear from you. So for anyone who's not come across your work before, tell us a bit about who you are, what investors for purpose do, and why that work matters so much.

Charlotte 1:42

Of course. So um I'm Charlotte, as you said, you gave me a very nice um introduction. I have an interesting sort of multi-layered background, which I'll just mention before I move on to investors for purpose. I have worked in asset management and investment consulting for many years. I completed an investment management qualification alongside my degree, which was in psychology. I actually started at UCL studying anthropology and archaeology, which is fascinating because that was all about the emergence of humans and societies. So I studied things like civilizations of Western Asia, domestication of cattle and crop, all these things that you'd never think would be useful in current context, but definitely are for all sorts of things in terms of climate change, ice ages, uh, how we structure money, so the the origins of double entry bookkeeping, all that sort of thing. And so I then progressed onto psychology, evolutionary psychology, child development, cognitive psychology, and I specialized in forensic psychology. So I um did a master's in forensic psychology focusing on behavioural therapy. And a lot of people might think to themselves, psychology, investing pensions, how how does this all come together? And the interesting thing is we often lose sight of the fact that all of our systems, whether it's AI, particularly AI, or pensions, have been designed by us. The incentives, the tools, the mandates, the policies, the regulation, it's all us. And yet often we think to ourselves, we can't change the system, even though we're part of it, which is interesting. And so investors for purpose, you know, is an amazing organization. I would say that, wouldn't I? I lead it. But, you know, really our vision is about integrating people and planet into the way that investors and businesses think, operate, and invest. So that's really the that systems thinking. You know, we can't change anything unless we look at our values, beliefs, and assumptions. And that's absolutely the case with pensions, investments, with business. But also it has to be embedded in the services we provide and how we organize ourselves in our governance structures and also in the investments that we make. Um, so what we do is we provide a space for all of these actors to come together. We have about 500 plus organizational members now, which is really significant and continuing to grow, where we talk about key ecosystem theme areas. So areas where we have identified market failure and systemic challenges rising. So whether it's around people value, particularly important in the in AI and pensions, whether it's integrating impact, so the positive outcomes on people and planet, um, climate innovation, nature and biodiversity, place, because communities matter. And at the heart of it is systems and governance change. How do you actually change accounting frameworks? How do you change regulation? How do you change policy to make sure that those outcomes are possible alongside making a profit? So that's what we do, and it requires training. So we do training sessions with trustee boards, with our members. We also run a lot of different events, educational events, learning events, facilitated workshops. We also produce research on what actually happens on the ground. So we bring out frameworks, lots of different frameworks that pension funds have to try and employ. Um, but what actually happens in practice, you know, and that's what we look at through our research. We speak to the asset owners and we actually find out how it's impacting them. And then we go back to policymakers and we say, look, this was the intention of the policy, this is how it's working in practice, this is what we think needs to change. And so it's a really interesting role because you get to sort of operate at like 10,000 feet, looking at the whole system and looking at how different investors are interacting and also unintended consequences, you know. So it's a really great kind of independent role where you get to see different agents within the system, but you also aren't any of them.

Thomas 6:08

When you're looking at all the people you interact with using AI, what are you observing at the moment?

Charlotte 6:14

It's it's really interesting because it's very fragmented. Um and in some places incredibly well progressed, you know, in other places, you know, really lagging. And I think that is very much tied to governance. Um it's tied to the type of leadership that there is and what your vision is for AI. So, for example, you know, a business that has adopted AI on the basis that it creates efficiencies might only be using it for operational admin. Whereas I think there are some that recognize it can elevate services and products itself, um, it can solve sustainability issues, which might not be obvious or it might feel like a contradiction given how much energy it uses. Um, but this all comes down to then our psychology because how willing are you to use AI, really get to understand all of its possibilities, and then think and apply that to your investments and to your business. So I think definitely we're seeing it at different speeds. Our own experience with pension funds, particularly, is it seems to be lagging quite significantly. I mean, we still have pension administrators who have paper records, you know, so in a cave. And I think so, you know, this is a big, big step change. I mean, we have we have endless reports, don't we? Pages and pages of reports and chair statements we're gonna go through. So the digital world is something that pensions need to embrace. Um, AI is another layer on that, and it's how it helps connect people. I think that's um and it can do it in a sustainable way. Because as I say, you know, you could start adopting it and get really hooked, but we have to understand what the sustainability consequences are of that.

Thomas 8:05

I think it's really interesting that the way we think about this influences what we do. And if I reflect on kind of the conversations that I'm hearing across the industry and especially the events that I go to, so AI is being talked about everywhere, but definitely through the lens of efficiency, training, reinventing the future of work and member experiences, sustainability is almost never a headline topic for that, but it always comes up, and it comes up from question that the audience put to the panel more often than not. It's always one of the questions that seems to be asked the most. So I'd be interested to hear from you. What is the impact that AI is having on the planet and why do we care about that in the world of pensions?

Charlotte 8:46

And it's multifaceted, right? So AI, in a sort of pure sense, is requiring us to build data centers to cool those data centers. And let's face it, after the week that we've just had, that's even more important. So that means using water, you know, significant amounts of water. So the current uh kind of projection of, you know, um the global infrastructure around data centers means that we're using something like six times the water usage of Norway. You know, so it's it it it I mean, it's massive, massive. And if you think about the kind of exponential growth in usage, but then also the investment into it, particularly by the tech firms, which is in an order of magnitude significantly more than the Industrial Revolution, and we're already at six times the usage of an entire country, that gives you an understanding of what we're dealing with. It's not it's not even just that, even the prompts that go into AI use a lot more electricity than a search you would do on the web. So a bit like we're trying to get people to understand their current impact, their current carbon footprint in relation to day-to-day activities they're already used to. We're now trying to get people to adopt AI without understanding the sustainability consequences of that. And we know that social media and tech and all these things become quite addictive. You know, once you are hooked on a particular system, you know, what it works on is human behavior. We've got to be very, very mindful of the energy intensity of its use. But equally, the power of it to bring together data and intelligence is what can resolve a lot of the sustainability challenges. Because so far, if you speak to anybody in any industry, they will just say endless frameworks, net zero, you know, whatever it is in relation to climate, biodiversity, loss, there are so many different measures and metrics you can be using, and there's so much diversity and complexity. It can synthesize and bring that information together in a really comprehensive way incredibly quickly and meaningfully. Now you need to check the data. That's something, you know, you need to check the data, you need to challenge it, you need to question things and be very aware of source material. But that ability to synthesize information is incredibly powerful for unlocking what sustainability can do, that I think is the reason for the backlash we have seen. I think it makes sense to acknowledge that there's been a clear reason why people have pushed back on net zero, sustainability targets, DEI. It's because it's complex, it requires lots of different data, it creates lots of different behavioral change. And what we didn't have, as this has been thought about, is AI, to be able to actually bring all of this data and these insights together. So I think AI can be very compatible, but it has to be directed to do that. At the moment, AI is a force multiplier, so it force multiplies whatever is within the system, you know, whatever that that kind of input is. So whoever is doing the inputting and whoever is doing most of the interaction is is who's shaping the voice, who's shaping how you are interfacing with it. And so this is the bit that comes that is important, I think, which is governance. So yes, we're thinking about operational efficiency, we're thinking about how it can take admin burden away. But we need to be thinking about that top level as well, which is governance. You know, how do you ensure that we are not embedding and force-multiplying a lot of the systemic inequality and issues like around climate and biodiversity that are already embedded in our systems?

Thomas 12:50

How do you think about that as a leader at Investors for Purpose? So, you know, you've got the opportunity to shape how your team think about and use AI. How do you explore that day-to-day?

Charlotte 13:01

Um, I think one of the best ways to get anyone and you know, groups, it doesn't matter what the sort of size of team, to really get is to is to get them to use it without realizing that they're using it. And I I don't mean that in a in a concerning way. What I mean is Um people are very resistant to change just by nature, because we're questioning, we're curious, we want to understand what the purpose of it is, all completely legitimate. I think you have to make people champions and advocates on the basis that they can see the benefit to them and the benefit to the people that you rely on, to your citizens, your customers, your clients. And the best way to do that is to kind of give them that immersive experience. So one of the things that I've looked at is projects that bring in a number of different team members to understand how AI could be beneficial to our members, you know, and to our clients, and by virtue of doing that, actually working with it to understand the benefits to themselves. And that's powerful because it's no longer a set of issuing guidelines or frameworks, but it's something that they feel ownership over, which I think for AI is really important because I think it it does make a lot of people very nervous because we've heard about replacement of jobs, we've heard of things like that. But if we empower people to use it effectively, because AI at the moment is only as good as the inputs that go into it, the data that's fed into it, and how it is used, then I think that's probably the best, the best way to integrate it with your team. And then you're doing something else, you're actually upskilling, which I think is the power of this. And maybe something slightly different that people might not think about is it builds diverse skills. So you can interact with AI and encourage yourself to be curious because it's providing you with the information. You can question it, you can challenge it, you can test out your own ability to think differently. And that's really powerful because actually the most powerful computers are actually in our heads. Oh, you know, they're our brains, you know, and our neural connections are absolutely amazing. We can train ourselves to think in different ways. So for me, that's the power of AI, you know, the kind of immersive experience, getting people trained in it, upskilling, feeling that they have autonomy and power over it, um, and bringing it into your team that way.

Thomas 15:42

What I'm hearing there is that if you're someone that is nervous about the climate impact of AI, your personal decisions aren't necessarily binary. You use AI or you do not use it. But instead it's being it's about being mindful around what, why, when you use AI in order to have an impact.

Charlotte 16:03

Yeah, exactly that. And anything that we can do, everything that we do in life has an impact. We we often just don't think about it. The choices that we make when we go to the supermarket and what we choose to eat or don't eat, you know, um, you know, all sorts of consumer choices make a massive difference. I say this all the time about pensions. The most important thing you can do on sustainability actually isn't all the things that you think about in your own home. Of course, those are important to drive good behaviors, but actually just changing where your pension fund is invested. 21 times more powerful than anything you can do in your own home. And most of the time, because of the amount that we are giving individuals to do within more and more compressed time, we just can't kind of remove the noise to make clear strategic decisions. And I think if you use AI for anything, it should be that. It's to try and help bring this sort of mindfulness to the way that we are making decisions. So that instead of it feeling like we're a hamster on a wheel and decisions are just being thrown at us and we're trying to bat them off, mostly with short-term thinking, it's actually giving ourselves a buffer to be able to step back and say, what are the things that are going to make the biggest difference here? And I think if you can use AI for anything, I think it would be for that.

Thomas 17:29

Have you got an example of when you've used that in that way?

Charlotte 17:31

Do you know what I what I really love about AI, and I'm very mindful about the way that I use it. I've tried different types of AI tools, I've interacted with it extensively, I challenge it extensively as well, because it likes to kind of be compliant and get you to comply with a certain set of behaviors. So it's really important you have your own voice in it. Is all of the things that I think, um, one way I can describe it is my brain is on as soon as I wake up in the morning, kind of connecting things across different domains and disciplines. But what I love is it helps synthesize all of what's going on so that I can focus on the key things in my day, that the really strategic priorities. So I know I've got to put a proposal together that's got to work through a number of different things. I can construct all of that in my head, but to actually detail it in a document would take quite some time. What's great is I can have all of that conceptual framework, feed it into AI, and it can give me a full proposal document that could have taken me a day or being in and out of, you know, between meetings, whatever. And that means I've then cleared that from my head to be able to free up that time to think about other strategic priorities. And in a business where we're trying to integrate people and planet, we're trying to have positive outcomes, that's really powerful. Um, particularly in small businesses, small businesses that are trying to compete with large businesses. The type of economic environment we're in right now is challenging. So using AI to support you in doing that, I think, um, you know, can make a massive difference. So that's how it's helped me. The other thing I would say is it's really good for things like systems mapping. Um, now I I don't know how your mind works, but I I think actually one of the power most powerful things we can ask people is how how do you think? You know, we often don't ask that question, do we? But I think in like mind maps, like lots of interconnected opportunities and risks and things and reinforcing feedback loops. But the most powerful thing is I've been able to distill that type of framework into imagery to help my team understand what's going on in my head. And that's been so powerful because suddenly it clicks in a way that quite a static traditional document just doesn't. So it's the fact that you can create different ways of portraying information and visuals and data to create actions that historically we've found really hard. And so that I love, I love that. That works really, really well.

Thomas 20:21

You said you tried lots of different tools. What have you settled on? Everyone seems to have one preferred family of models that they they fall in love with.

Charlotte 20:28

Yeah, I know. And um, I I try not to get into that that trap too much, only that the pace of um technology development is so significant. I mean, I I I mentioned about the investment they're all making into this. So I think one of the key things not to do is get too anchored or wedded on a particular model. Having said that, I do think you need to go deep into an AI model to really understand it, you know, from the way they govern themselves and they set their frameworks all the way through to what the sort of technology development is like. But you're absolutely right. I there are voices, there's like a tone of voice, isn't there, with each of them? And I think you settle on something that speaks to your narrative and your language and more closely aligns. And so, you know, I've tried a number of different tools, and where where I've landed is on Claude. Now, there are lots of different reasons to that, and it's certainly not perfect. You know, there's still a lot of that checking and review that needs to be done. But I I found the way that it builds narrative aligns better, and I'm more comfortable with it, but also from a kind of governance perspective, it more aligns with um the work that we're doing. So, yeah, but I but the other thing to be to note, which I'm sure everyone is aware of, is your tech stack. So your tech stack makes a big difference, the tools, the technology, That you've decided to use because a lot of it is not integrated, which means that you have to have different layers of AI tools because Claude won't be able to work with different types of AI tools. So, yes, I have one that is preferred, but ultimately I think we still need a lot of flexibility around what we're willing to use. And I certainly do. So we have a few different AI tools.

Thomas 22:26

I'd like to talk about investing for a little bit because we've spoken about investment AI a couple of times now. Pension funds will be investing in AI, surely, whether they realize it or not. You know, they'll hold shares in big technology companies, in companies that are building data centers and investing in building out kind of new and big models. SpaceX was obviously in the news over the last couple of weeks as it's gone through its IPO. One of the big stories in the news was actually, you know, pension funds are going to be holding shares in it. Do you hear pension funds or people in the industry talking about being mindful in where their money is being used to build out data centres and in the impact that that's having?

Charlotte 23:04

I think we are starting to hear about that in the pension space, particularly as a result of consolidation. I think there has been a bit of a lag. I mean, anybody who's been working in the sort of UK pension space specifically, but even more broadly, there's just been a huge amount going on from, you know, the pension schemes bill turning into an act. You've got massive amount of consolidation at kind of local government pension scheme level, and also with DC master trusts that requires shifts in governance, shifts in operations, shift in teams. So that I think there has been a little bit of like a pause while we go, okay, we've got to, you know, bed in all of these different structures. Um, but definitely, you know, I've seen that focus on AI, particularly from a governance perspective, and how they are thinking about alignment with sustainability goals that they have. But also, you know, the the the it's not even really an elephant in the room because many people have seen the interim pension commission report and work by Pensions UK on living standards, is that we've got a pension crisis. So I think it is interesting, pensions do need to look at it, but I'd also implore a kind of systems thinking perspective, which is that I think AI can help, and and tech can help support us addressing the pensions crisis, which is a lot about auto-enrollment, auto-enrollment levels, um, about how we include people within the system, about how we understand the connection between the things that we invest in and how they can support members to be more engaged. And I think often we're treating these things in silos. You know, we're going, let's look at DI and ESG and AI at a governance level. Let's look at it in our investments, let's look at it in relation to members. That's helpful, but you have to look at the interconnection of all of that. What I've been really impressed by is the schemes where they've created a theory of change. And they've worked that through from everything, from the way they govern themselves, the way they review it, the way they invest, who they invest with, how they then interact with their members. And some of this can be evidenced by projects like Deliberative Democracy or Citizen Assemblies, member savings panels, and then also investing into solutions that help their members and create positive outcomes. So really thinking about a wider interpretation of fiduciary duty and members' best interests, which I think is amazing because it's not over it's not even just the fact that it creates positive outcomes, which is amazing all by itself, it's the fact that it actually makes it more efficient to run as an organization. It's a great investment case, but it's also a great business case. And so I think where you can actually create those positively reinforcing feedback loops, you don't have to go after the investment case and keep giving people data over and over again to back it up because they start to see it. And that's what we've seen with some of our members. They look at the good governance of integrating positive outcomes, they start to employ it in the services they offer, they make it more inclusive, they drive up contributions, that increases their assets, that means they can invest more in private investments where many of the opportunities are, they bring the cost of capital down. It's all positively reinforcing. I mean, that's amazing. But that mindset isn't natural to us because when we go through education, when we go through our different vocations, we're taught to specialise. We're taught to have one particular area we focus on. And it's really interesting. There's um a book by an author uh surname Epstein who talks about range. And in the context of systems, complex systems, we're talking about climate, pension systems. We actually need more people with range than we do with specialisms. It's really, really good. You have to have people who really have that specialist deep knowledge, of course. But actually having the range is so powerful for business, for pensions, for investments.

Thomas 27:29

You mentioned a theory of change. What is a theory of change and what why is it important to have one?

Charlotte 27:35

So a theory of change is really like um an investment philosophy, but it's but it's saying, right, where are we now? Business as usual, investment as usual, where are we trying to get to that this kind of future we're trying to create? And what is what's likely to happen in trying to get from business as usual to this future state? And how do we plan our business to deal with this structural change? So, in a fossil fuel company context, this could be, we know that over time the demand for fossil fuels is going to diminish and the appetite for renewables is going to increase. We therefore need to change our business model to move away from fossil fuels, which is obviously incredibly cost-intensive, operationally intensive, but also the investment case is not playing out of the long term. And so we need to invest and pivot into different types of energy technologies. And then what you're trying to do is then work out well, in order to help get us there, what do we need to be supporting in terms of policy changes? How do we need to be structuring ourselves differently? What sort of solutions do we need to be creating? So you really, really work through that theory of change. Now, a lot of people who will argue about this will say it's only possible to do what we can within the environment that we have or with the fiduciary duty that we have. And that makes us market takers. You know, the only thing we can really do is what the markets allow us to do. But it's really interesting because once you start to think about the universal owner principle, that you can't diversify away these risks. You know, you can't somehow invest somewhere else that doesn't have a climate. You can't invest somewhere where we don't have nature. So once you get that into your way of thinking, you then think very differently about the levers that you have. So for investors, you know, I think a lot of people traditionally thought, well, you know, our lever is stewardship and engagement with individual companies and capital allocation. Now, of course, those two tools are still very important, but clearly in a systems sort of or using a systems lens, policy is massively important. If you think about net zero, you know, net zero is not just an investment goal, it's a scientific target, apart from anything else, but it's also a policy target. So the only way you can really actually influence that is by getting involved in policy. So that's what's so interesting about the theory of change. The theory of change also changes how you think about your own agency. And it changes how you think about the levers you have to be able to act. And I think the most powerful event I was speaking at recently was alongside an ex-pensions minister who said to me, but I don't understand why pension funds don't engage with us more. By the time they've engaged, it's usually the consultation process, by which time most of the debate is relatively fixed. And he said to me, I was pension minister for about nine months, but I was expected to have deep, intimate knowledge about every single pension structure, how they invest. And he said, Politicians need to hear from industry. They need to hear from the people who do this day in and day out. So one thing I would say on this point about theory of change is we we need to be getting involved with policy work. We need to understand that we need to make capital allocations, we need to be investing, we need to do the company engagement clearly, but we also need to look at, you know, some other tools, like how AI can support us in delivering that, like how we change accounting frameworks to actually deliver and show what that value looks like on a balance sheet. And we need to change uh legal frameworks to make it possible for investors to, you know, have positive outcomes on people and planet alongside profit.

Thomas 31:41

Do you think then schemes and investment managers should be engaging with the companies that they're invested in to shape how they are using AI?

Charlotte 31:51

I think they definitely should, yes. I think asset managers are in an interesting space because, of course, they have lots of different investors, lots of different demands. Sometimes those can clash depending on what the goals are. And so when we talk about creating a theory of change, the other reason for having that theory of change is then being really clear about who you align with. Once you've created that theory of change, does that actually align with the advisors and the investment managers that you've picked? Have you checked that with them? And do you understand what their theory of change is? Because in a world where we're all exposed, asset managers are also exposed. So actually turning around and saying, well, we just do what our clients want us to do. I understand that. But as a business, you also need to have a clear theory of change. And so I think we need to be more transparent and more explicit about that because that helps align you on those corporate engagements. Now, the reason why I mentioned the policy work is that I think it would be so much easier if you had a common framework. Individual corporate engagements are intensive, there's a huge amount of research that needs to be done, there are meetings that you need to go to. There are lots of different layers of it, whether it's executive compensation or climate targets, whatever it is that you are engaging on. And actually, the question mark is: is your time better deployed changing the underpinning frameworks for how businesses run? And therefore using that lever than individually going to every single company to try and change what they're doing. And that, for example, is why I've been so involved with fiduciary duty, not just in terms of pension fund trustees, but in terms of business. Because if you actually align company directors with what pension funds are trying to do, members' best interests, wider understanding of stakeholders, you start to align the investment chain. And then you're not talking about different things. You're not potentially supporting the breach of fiduciary duty by pension funds by acting out of alignment. So I think if we get better alignment between the different actors within the system, you actually remove a lot of the burden because a lot of what we're doing is sticking plasters on a system that is telling us this doesn't quite align or work. And so, yes, it is necessary and it is meaningful in the current context, but it's about again stepping back and saying, Well, is my time best deployed doing each individual corporate engagement? Andor doing the policy work that would actually change all of that. And so I think that's the reframe about theory of change and systems, is it gets you to think very differently about your agency and about how you collaborate with others.

Thomas 34:45

Do you think we've got the skills and experiences in industry in order to try and achieve some of that policy change? Like individual engagements sound tangible, a physical thing that you can imagine and envisage. Changing and reshaping a framework sounds kind of there's an abstractness to it which kind of makes you go, okay, where do I start first?

Charlotte 35:05

Do you know what? It's I'm very much in the camp of both and you know, I'm I'm not in this polarize it's this or it's this. I think you need to do company engagement and you need to do policy engagement. And in fact, the company engagement produces the evidence base for the policy engagement, you know, and and and that's what I mean about all of these things being reinforcing. When we go to policymakers, we're doing it with case studies. You know, we're doing it with live examples so that it's much harder to go back and say, well, you haven't got any evidence for this. There are no cases that demonstrate this. And so the more that you have, and this is what we've been developing within the platform, is case studies from within our members, much, much easier to push on policy because then they've got safe harbour. Oh, the industry wants this. This makes sense for investors. You know, that that's much easier. And you can see in the current political environment how challenging and polarizing narratives are. So I think the more you can give a kind of clear evidence base that's based on the investment case, based on the business case, the more it lands.

Thomas 36:20

We've spoken about the impact of AI on the planet, but you've also spoken recently about the impact of AI on people. And in particular, and I wrote this down because it really stuck with me. You said it creates the risk of a greater inequality in access to long-term financial security. Can you tell us a little bit more about that?

Charlotte 36:38

Yes, I think I've talked about AI as being a force multiplier, and some of the work that we've looked at has been on pension savings gaps. And I dislike the term, if I'm honest, because a gap assumes, a bit like mine, the gap in the underground, that it's something relatively negligible, although obviously in some places it it's bigger. But the the gaps we're talking about are chasms in reality. If you ask anyone about gender inequality, they will be able usually to quote you things like the pay gap, maybe things around research differentials in terms of funding and spending, maybe even the seismic difference in the amount of VC funding that goes to women. But what people a lot of people don't understand is the pension savings gap between men and women. And it's not just men and women, on other metrics as well, like disability on ethnicity, it is also significant on dependency as well. So households where uh, you know, there's a single parent and dependence, really, really seismic. And that can seem quite abstract. Well, what does that mean? So if there is something like in the order of a 48% gap, what does that really mean? And the reality is it can be the difference between retiring into something that is manageable, a manageable amount of income, to poverty. That that's that's the reality. And what does that mean? And why is that challenging? Well, it's challenging for its own reasons, but also because a lot of people won't be able to retire because it's just simply not enough to retire on. So then you've got um an aging workforce that needs to work longer in a system that is becoming more and more dependent on AI and that is fracturing jobs. But AI is also then doing other things. So it's creating more of a gig type economy, more fractured work. A lot of those things have been demonstrated to be problematic in a pension system that works on the basis of even employment throughout your life. You then end up with pension pots in lots of different places. It's very difficult to account for and understand and make decisions around. And it becomes much more precarious for people. So I think, and I and it seems like we've gone through this process of thinking about things like fiduciary duty and thinking about pension adequacy without really accounting for AI. That that was the bit that really stood out for me. How on earth can we because the pension system was built without AI and without understanding these sort of significant forces. So that for me is the big, big question mark. We have to come to terms with that, but we also then have to work beyond the pension sector to address it. Because this isn't the this is something that could pull the pension system apart, but it's not something the pension system can resolve all by itself. This isn't a employers need to do X, pension providers need to do X. It's a whole system because the pension system sits on top of effectively who we value, who and what we value. And at the moment, that's the question mark. I mean, we have a million um young people not in education, employment, or training, you know, and that's only increasing because of things like AI and the use of AI. So the question mark there is how do we create a system that recognizes that that work is fracturing and it needs to value people differently? And what does that mean in terms of the public and the private sector needing to come together to address that systemic framing?

Thomas 40:31

I think it's one of the brilliant things about AI is that whereas before you might have to find kind of your kindred tribe to have those conversations and seek people out, or get lost in your own head, grappling with those thoughts and trying to find a way forwards, you can sit down with a tool and have a conversation and get out the things that you're thinking, explore different avenues, use that as a route to have the new novel thoughts and ideas that otherwise you might never have stumbled upon, or that would just take you so much longer to discover.

Charlotte 41:02

And and this is it, exactly. So what's interesting in you know, with human behavior is willful blindness. We're often the worst judges of what we can't see. And if anyone knows the sort of Donald Rumsfeld's known unknowns, unknown knowns, known knowns, the struggle that we have is that even when we know, we often have created systems and structures and incentives that mean we don't pursue something because we often work on a backward-looking basis. It's the same for performance, track record, business case, investment case, all of these sorts of things. Whereas what AI can help us with is our blind spots, that willful blindness, because it recognizes where we have deficits. It recognises these sorts of cognitive behavioral biases that we have, and it can help reshape our thinking. And that's powerful because when you speak to, when you speak to, when you um interact with AI, it feels as though you're speaking to somebody independent. And it's much harder to argue the logic of an independent actor than it is somebody who shares a different political view than you. That's very easy to be quite polarized about and just to kind of write off. I think it's it's helpful when AI challenges and questions your thinking and provides you with alternative facts. Obviously, everybody's aware of what's going on, you know, in the social media world when it comes to quite binary narratives. And so I think the thing that AI can do is really challenge us on that. You might have this view, but is it have you tested it? Have you challenged it? And that plays into that theory of change piece that we were talking about earlier, which is as you are putting together a theory of change, actually have that back and forth with AI to really um check the extent to which you have thought about blind spots, areas you might not have considered or thought about. And I think that creates a more robust model for how you work, and it it challenges us to expand our diversity of thought, um, which I think is really, you know, really important. So, yeah, there are lots of there are very good applications of AI in order for us to change the trajectory of things, but it it's only as good as the inputs. So if we don't get it to challenge us, if we don't implement good governance, if we only see it as an administrative tool, then it will fail to give us the kind of positive outcomes I think it can.

Thomas 43:54

How long has Investors for Purpose been running now?

Charlotte 43:57

Oh, so originally we were pending. Pensions for Purpose and Karen founded uh Pensions for Purpose in 2017. Um, and we've formally been running as a limited entity, like a full limited entity since 2021.

Thomas 44:11

What I'm always amazed by when I hear you speak and when I talk to you is how passionate you are, but how you almost have this like limitless energy to kind of run at some of the problems and issues that people really struggle to get to grips with and can find really tiring or daunting or or worrisome when I talk to friends and family about AI, they worry and ruminate quite deeply on things like the impact on people and the impact on the planet. How are you able to keep up that energy and that determination? You know, what would you say to people who are really worrying about this stuff around what they can do, what they can influence, whether they should influence it at all?

Charlotte 44:52

Yeah, I think it it's natural to worry. It's it's natural to be resistant to change because we want to try and fill in all the gaps. We want certainty. And all the things that we're talking about require us to sit with the discomfort of uncertainty. And why do you think we love talking about data and modelling and scenarios and testing? But because it creates certainty in our prehistoric brains that synthesize emotions and create a fight, flight, or foreign response do not work well in catastrophic scenarios. So when we talk about climate crises and we give people emergency briefings and you know horrific-looking imagery, the difficulty is that those who've already processed it can get their minds around it. Those who haven't resist it straight away because it provokes something very visceral. So the thing that people who are experiencing that, and also for us who are trying to help people navigate this, is not use such catastrophic language when trying to get more people on board of this. It's actually having empathy. So I think this shift in AI and the shift we're talking about in terms of incorporating people and planet, this sort of wider view of fiduciary duty requires us to have different leadership. It means we need to have empathy. You need to accept that multiple things can be true at the same time, that we could be facing a climate crisis, we are facing a climate crisis, that we do have biodiversity loss and global ecosystem collapse, but simultaneously people are really struggling with this. And it's very emotionally difficult, and it's impacting them socially, financially. So without that empathy, I think you lose people because what happens is you become defensive, then you get very angry and you reinforce your current position because that feels safe. That's what that's what typically happens with human behavior. And so what you do is you entrench people in their current positions. You don't create a safe space where people think, right, I can I can talk about this at my own pace, I can go through this journey. And so for me, the thing that I've wanted to create and build with investors for purpose is a place where people, no matter where they are on the journey, can come and talk to others and feel in a peer environment where there isn't judgment, you know, there's there's this sort of openness. And that's what I think plays in the positivity I have because it's always coming from a constructive place. This isn't about tearing people down, it's about sharing best practice, it's about pointing to what good can look like and not limiting people's abilities to affect change, you know, show what's possible. Um, and I'm so I'm very much in the camp of let's push what's possible for people and not exclude. I'm I'm not into excluding people on the basis of anything. I think you can bring people along on a journey, everyone's gonna go at a different pace, and so that that's why I enjoy it so much. That's what gives me energy. Don't get me wrong, I have my moments. It it, you know, you you come across things that, you know, really do make you despair, but I think the overall movement is is very positive and very constructive. And you see the amazing, you know, work that people do, and you need to use that, champion it, and push it forward.

Thomas 48:43

I think your words will resonate with a lot of people listening. And so if they want to get involved in Investors for Purpose and some of the great things that you're doing, what's the best way for them to do that?

Charlotte 48:52

The best thing to do is become a member, and you can become a member or find out about membership by uh emailing membership at investorsforpurpose.com.

Thomas 49:02

And what are the sorts of things that you offer that people can get involved with?

Charlotte 49:05

So we do community interest group sessions, online sessions around our theme. So you can pick area, you know, as a starting point, you could pick an area that you want to look at and understand in more depth and then connect with peers. You can also get access to our research, which shows you what people are doing in this space, you know, what good looks like, what the challenges are. We've also got a member directory of what our different members are doing. We share thought leadership across our membership, and we also do in-person masterclasses and we share the work we're doing on policy. So everything that we do is about openly and transparently sharing. We're not going to change any system if we keep locking down data and information and research. We need to open up and share that. So that's what people can be involved in. And it's a really, really, I think, positive, constructive environment that is not about having a minimum level of knowledge. You can come in with no knowledge and build up over time.

Thomas 50:09

I think that's a really nice place for us to come to a wrap. But was there anything else that you wanted to talk about before we do?

Charlotte 50:15

No, I think that we have traversed quite a lot, I think. And um, I think it's good to finish off on something empowering and practical that people can do. And the one thing I will leave everyone with is we all have power to change the system. We're all investors. Whether you are invested in a pension, you are working for a business, you are hiring people and investing in people, you are creating mandates, you know, shaping investments in real estate, whatever. You know, whatever you are doing, we're all investors. But many of us don't see ourselves that way. And so I think the most powerful thing is to think of yourself as an investor and to use your agency.

Thomas 51:05

Fantastic. Charlotte, you've been a wonderful guest. Thank you so much for joining.

Charlotte 51:08

Thanks.