For more than two decades Noreena Hertz's economic predictions have been accurate and ahead of the curve. In her #1 best-selling book "The Silent Takeover", Hertz predicted that unregulated markets and massive financial institutions would have serious global consequences whilst her 2005 best-seller, "IOU: The Debt Threat", predicted the 2008 financial crisis. Her books have been translated into 17 languages.

Many have described Professor Hertz as a visionary and she is one of the most influential economists on the international stage. Her unique, integrated approach combines traditional economic analysis with foreign policy trends, psychology, behavioural economics, anthropology, history and sociology. And her work is considered to provide a much needed blueprint for rethinking economics and corporate strategy.

Hertz is the Duisenberg Professor of Globalization, Sustainability and Finance based at Duisenberg School of Finance, RSM, Erasmus University and University of Cambridge. She is also a Fellow of University College London. She has a PhD from the University of Cambridge, an MBA from the Wharton School of the University of Pennsylvania and a BA from University College London.

Noreena played an influential role in the development of (RED), an innovative commercial model to raise money for people with AIDS in Africa, having inspired Bono (co-founder of the project) with her writings. She advises major multinational corporations, CEOs, NGOs and politicians, as well as start-up companies, and sits on various corporate and charitable boards. Her op-ed pieces have been published in newspapers such as "The Washington Post", and "The Financial Times" and she is regularly profiled and featured in leading print and television media in Europe, the United States, Asia and Latin America.

Hertz is also a much sought after "keynote speaker" and has spoken alongside such luminaries as Bill Clinton, James Wolfensohn, Hernando de Soto and Jeffrey Sachs at corporate events and also at ones organised by International Organisations such as the World Economic Forum at Davos.

Awards and Accolades:

Young Global Leader, World Economic Forum; Top Ten Most Followed Professors on Twitter; Top British Public Intellectual, the Guardian; Best of Young British, New Statesman; One of the World's Most Inspirational Women, Vogue Magazine; One of the World's leading thinkers, The Observer.

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Noreena on Sustainability, October 29, 2010

Dialogue magazine

"Sustainability in Context: Measuring the impact on financial situations"

DIALOGUE:

Does sustainability have a broader application than the environment and environmental impact?

NOREENA HERTZ:

I think it's a very reductionist definition of sustainability to think of it only in terms of green issues. The term has been used in a multiplicity of ways. From a company's point of view, sustainability involves an understanding of what it takes to survive today, and in the future. That incorporates issues like the environment, but also things like labour relations, human rights, employee discrimination, equal opportunity, and the company's role in society. In other words, what does it take for a company to succeed today and in the future, beyond what one would associate with a standard balance sheet or a profit and loss statement?

DIALOGUE:

Does that mean it goes beyond the things that the CFO of a company would think that shareholders should be interested in?

NOREENA HERTZ:

Well, it may go beyond what he or she currently thinks shareholders should be interested in, but I would argue that, actually, all of these issues are issues that shareholders should be interested in. If we take a case like BP and we look, with hindsight, at the company and how it works, we can see a host of issues that analysts and institutional investors should have been aware of and interested in: for example, the discrepancy between a very strong focus on personal accident safety reporting and a lack of reporting on the safety of industrial core processes.

DIALOGUE:

If I'm a bank executive and I want to address the issue of sustainability in a comprehensive and concrete manner, where do I start?

NOREENA HERTZ:

There are a few areas where sustainability interacts with what the bank does. One is the kind of products that the bank offers. Then of course, there's the issue of how analysts evaluate companies where sustainability also needs to come into the picture. Then there are issues around the bank's own brand and reputation. Those are three of the main elements we could look at. One of the most interesting is the area of valuation. I think we are increasingly coming to see that risk is being underestimated by analysts who are only looking at a very narrow set of metrics in judging the success of a company.

DIALOGUE:

Can sustainability issues be expressed in terms of metrics?

NOREENA HERTZ:

One of the challenges is that not everything can be quantified. Relying purely on quantitative assessments can easily be to our peril. Take value at risk (VAR) measurements that became such a focus; banks all felt that they had a safe capital cushion because they were just looking at this one number. And then they stopped thinking about what the number actually meant. So when we had multiple defaults, they were ill equipped. That's a really clear example of why looking at numbers on their own can really be inadequate. The challenge for analysts, who normally do just look at numbers and can extrapolate and create nice models, is, "How do I now mine qualitative data? How do I understand it? What do I ask? How do I find out about it?" If you don't take these issues into account, you run the risk that you're going to value a company in a particular way and six months down the line there's going to be a lawsuit related to some aspect of their operations. There have been some innovations in this area over the past decade, where we?ve seen things like political risk being introduced into assessments. We're seeing a company like Goldman Sachs now saying that it is conscientiously going to be looking for sustainable factors in its analysis of a company. But it's not going to be as simple as being able to plug some numbers into a model. Smart investors realise that there's a risk attached to only looking at an annual report. In fact, in a study by Thomson Reuters that came out recently, only 12% of CEOs felt that annual reports actually provided sufficient information.

DIALOGUE:

In many annual reports, you?ll now find a section on CSR. Sustainability presumably goes beyond that.

NOREENA HERTZ:

Corporate Social Responsibility (CSR) activities have not traditionally been viewed as having a real impact on a company's bottom line. The part of CSR and sustainability that is about sponsoring a local community event, for example, is potentially something that will be rewarding for one's employees and will create a sense of internal cohesion. And there are studies that show that these sorts of projects do have a positive correlation with employee retention, with the positive feelings people associate with the companies that they work in. But, I'm talking about something much bigger, which is about how we actually value companies.