>Gunilla Hjalmarsson:
Yes, they definitely have a responsibility, a two-fold responsibility in fact: both as the owners of the financial institutions that are mainly to blame for this mess, but also as the main customers of these institutions. They were actually in the front row and were definitely among those that could have been the whistleblowers.

Carl Rosén:
Yes, but the problem is that if we as shareholders cannot exert influence, then it is difficult to blame us. The key question is really whether we as shareholders will get some rights in the US. In Europe, you can actually exert influence, but shareholder rights in the US are more or less a joke – you cannot nominate your own representatives and you cannot vote on executive remuneration. As long as shareholder rights are so weak, it will be difficult to create some kind of decent capitalism because, whether we like it or not, the US is the most important and largest financial market. The habits and the remuneration systems are influencing and will continue to influence other parts of the world.

Here you can really be self-critical, because institutional investors and shareholders as a collective are extremely poorly organised. I think it is definitely appropriate to be self-critical about the lack of organisation and commitment to lobbying in Washington, where the business industry in the US is extremely strong.

Mirza Baig:
It is easy to point fingers when things go wroing. I think there are several parties that have to take responsibility and investors are one of them, but ultimately it was the companies and their boards that took excessive risk and adopted a strategy that resulted in the economic crash. I fully accept Carl’s point that with limited shareholder rights in the US, there is little that active investors can actually do. However, if you look at other markets where there are enhanced rights, particularly in many European countries, the same issues occurred to one degree or another.

As investors, we need to take responsibility collectively. It was investors that were pushing companies to produce ever-increasing quarterly results, it was investors that did not ask sufficiently challenging questions of management when they adopted high-risk strategies, and it was investors that did not scrutinise the accounts and the quality of earnings to ensure that they were sustainable. If we are going to come out on the other side in a better position, we all need to take responsibility and ensure that all stakeholders are moving in the same direction.

Ulrika Hasselgren:
From an overall perspective in terms of who is responsible for this situation, there is one quote that I would like to use: ‘Those who stand for nothing fall for anything.’ This can be considered for each of us and for the whole market. If we look at the events of the past 12 months, it is a good reminder that the financial industry has, for a very long time, stood for very little. Of course, there are several reasons for this, one being that the time horizon is too short and another that some have acted as if it was a game and not a profession. By that, I mean that there is a glaring absence of ethics in the industry. Too often decisions are still taken on the basis of what is allowed by the rules rather than what is right or wrong from a fiduciary standpoint.

Steve Waygood:
I fully agree with what Carl said in terms of the lack of universal global governance standards. I think that the current crisis gives us an opportunity to revisit that. I know that measures are being taken to close that gap, but I would go further than just the failed governance environment and lack of oversight. You could in fact argue that institutional investors have been promoting increased leverage and increased risk-taking and we have been rewarding companies that have been piling sub-prime credit onto their balance sheets with ever higher credit ratings.

We have had failed models of the financial risk and return trade-off, which assumed very courageous things that turned out to be quite wrong. Generally speaking, there has been a systematic lack of understanding of the financial risk that has been shored up. It is not just a failure of oversight – that would imply that most investors were aware of the problem and I actually think it goes beyond that. Many investors were not even aware of the problem; their models were wrong. One or two of the credit rating agencies have subsequently come out and said that they accept that their models were wrong. An over-reliance on the credit rating agencies is, I think, significantly to blame as well.

Jeanett Bergan:
I would like to point out another issue that comes back to even more fundamental views in the stock market itself. Even in Norway, where shareholders have good rights, several listed companies are not really interested in sharing their ownership power – their motive is simply to attract capital. We need to work more to make companies aware that if they want to be listed then they need to share ownership rights. Our experience is that the different roles are not always understood, even in more sophisticated markets.

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