Close up of building in the financial district of London

15 Mar 2023

The City – reflections on London Wall

Harold Hutchinson | Managing Director, Alternative Energy at Investec

Cities have driven innovation and trade throughout history. In his latest update, Harold considers why our urban centres must continue to adapt to benefit civilization.


Cities partly fuel and partly reflect the rise and fall of civilisations. The philosopher A.N. Whitehead put it this way: “Throughout the whole span of civilisation up to the present moment, the growth of condensed aggregates of humans, which we call cities, has been an inseparable accompaniment of the growth of civilisation”.

There are various reasons for this correlation. The defence of citizens behind a city’s walls preserved wealth and provided ring-fenced, administrative advantages for governments. Ports facilitated growth in trade, fostering cultural integration. Emerging coffee houses and theatres allowed an exchange of ideas long before Twitter. Last, but not least, great cities have always been symbols of power (economic, financial, religious, or otherwise). For mega-cities like London today, "all of the above" captures at least some of the drivers.

Great cities have always been symbols of power (economic, financial, religious, or otherwise).

But cities have their disadvantages, too. Defensive walls can be breached by smarter, attacking technologies. Sprawling populations around industrial assets often reflect the human search for work, generating pollution and health disadvantages. Moreover, since Classical times there has been an appreciation that some activities are best promoted beyond the city gates - education in Aristotle's Lyceum, where teachers and pupils walked and talked together in nature, an early example.

Perhaps the greatest danger for any city is that its complex networks of internal and external connections become overly-routinized and impervious to change. In the words of no less than William James: “Most human institutions, by the purely technical manner in which they come to be administered, end up becoming obstacles to the very purposes which their founders had in view”.

The City of London, the smaller city within the greater metropolis, provides a test case today, accused of failing to keep pace with global market developments in a wide range of areas from pension-fund asset allocation to investment research itself. There is mounting evidence that local CEOs contemplating a new listing and fresh capital are increasingly looking west. The headline of a recent Times article read: “Wall Street ‘very optimistic’ of luring over more UK companies”.

This danger is tangible and needs to be addressed, urgently. However, in the longer-term, there is an even greater threat - a failure to value and invest in the intangible assets linking it to broader societal and environmental contexts. Allow me to give just two examples.

In City life, the wfh/wfo debate has become a topical social issue. The debate is heavily driven by incumbent cohorts, mostly male, not by the 'excluded'. How many working mothers, disabled people, the elderly, etc., could be included with more flexibility? The Square Mile should not be a geometrical game of how many people can be squeezed into a square. To succeed, it needs to attract and retain the very best talent. Think of the extent to which greater job optionality could add experience and insight to this pool. Technology makes the integration possible. We should embrace it, and quickly.

In terms of the environment, the Square Mile has historically been a global leader in promoting room for nature, with over 200 small parks, gardens and churchyards within its perimeter. It has an active tree strategy dating back over a decade.  But more trees are not enough. If planted in narrow streets, they trap the pollution from cars, lower air flow, and expose inhabitants to high levels of pollution. Many street trees are male, precisely the culprits for hay fever in spring. Nature creates intricate webs that need careful contextual understanding to avoid local policy mistakes.

Moreover, a better awareness of the linkages within our complex biosphere is a necessary but not sufficient condition for the City's sustainability. The real need stretches to the much wider and deeper picture beyond London Wall. That of preserving and enhancing nature across the UK and far beyond. Here the City can still be a real leader, developing trust in its financial instruments to address the global climate and the biodiversity challenges that affect us all.

In the end, the greatest risk to the City is to lose context, to fail to stand on the watchtower and look out onto the horizon. All cities are ultimately about people and ideas. And, as they realised in Ancient Athens, sometimes civilization develops best by thinking outside of the box.

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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.