On today’s episode we’re talking about how you can save 10-20% on transportation costs while investing in green infrastructure. My guest is Tyler Wood, Director of ESG and Sustainability at Gravitas Infinitum, a company that builds and acquires companies and projects that address critical problems like waste plastic, CO2 emissions, and bad water. Wood and I discuss the $1 trillion infrastructure bill that was just passed by the Senate that allocates $1.4B to EV subscription programs. We talk about what this means to the future of low carbon transportation and the use of proceeds from green bonds to fund T4L as well as other Gravitas Infinitum projects.
Is it time for financial advisors and asset managers to review modern portfolio theory (MPT)? The nature of our markets has changed dramatically since MPT became the standard for portfolio diversification. How will the rise of institutional investing, AI and machine learning, and the inclusion of ESG analytics affect the CFA certification and education platform? My guest today, Matt Orsagh, is Senior Director of Capital Markets Policy at the CFA Institute, and he spends his time figuring out answers to these questions. As the Institute’s global ESG, sustainable, and climate change expert, Matt is the perfect person to walk us through how these issues might affect the certification process.
Federated Hermes, with $600B in assets, is one of the largest sustainable asset managers in the industry. Dr. Sotiria Anagnostou shares with listeners how their Responsible Investing Office has implemented a sophisticated in-house ESG data analytics and engagement strategy. Based on more than 20 years of experience, Federated Hermes has honed their approach. Their global stewardship team with cross-disciplinary expertise digs deep into the complexity of each company’s entire business model. This process generates more robust analytics than is typically possible using outside vendors or a checklist approach. Sotiria also explains how the second part of the strategy, company engagement, improves investment outcomes as well as building company relationships.
If you’re an asset manager or investor, how would you like to be able to go through the roughly 150 million studies out there, and compare them with each other to target specific ESG data? My guest, Patrick Uribe, is the CEO of Util, a FinTech startup that uses Artificial Intelligence and machine learning to map and measure the impact of every company in the world on over 2,000 sustainability themes. We talk about how having access to this amount of data gives investors a clear picture of a company’s revenue stream: the entire financial and non-financial ecosystem. While AI and machine learning favor large companies right now, Uribe believes that over time both these technologies will improve the timeliness and quality of data for smaller companies as well.
The ETF that Zhang manages and subadvises for, ECOZ, won the best new ESG ETF for 2020. We talk about how ECOZ’s carbon footprint is 85% lower than the S&P 500 Index. Zhang looks for companies that are focused on economic policy, corporate demand for clean energy, and significantly lower technology costs. These factors drive what Zhang calls the new industrial revolution, with the goal of a net zero carbon economy. We also discuss Zhang’s work as a co-founder of Women in ETFs, an organization with 7,000 members worldwide, that helps women advance from analyst positions to portfolio managers.
Saturna Capital’s Sustainable Equity Fund had an impressive Average Annual Total Return of 16.4% for the three-year period ending May 28, 2021, a 1.5% annualized outperformance versus the S&P Global 1200 index for the same three-year period. Carten and I talk about their stock selection process, which looks for consistently profitable, financially strong companies with low ESG risk factors. Carten promotes corporate gender equality, and we discuss her advocacy work with investment industry boards. Carten and I also talk about Saturna’s history with managing assets for the Islamic community in the U.S., which prioritizes personal and family values, leading to Saturna’s focus on long-term value investing.
Fifty-four percent of social media users use social media to research products and services. On today’s program Evan Zall, Owner and President of Longview Strategies, and I talk about marketing your sustainable investing practice, including how to use digital media under the new SEC guideline. We cover the main challenges asset managers and financial advisors face when they start integrating ESG strategies, like how to talk to clients about these strategies and how to incorporate ESG into your existing marketing plan.
See the attached website link for Longview Strategies
As climate risk management takes center stage for US financial regulators, how can investors, corporations, governments, and policymakers use climate risk analytics and software to manage the risks and opportunities from climate change adaptation. Stacy Swann, CEO of Climate Finance Advisors, talks to me about why “translators” are needed to interpret the forward-looking climate data tools being used today by the financial institutions leading the charge to a low-carbon economy, and particularly the TCFD (Task Force on Climate-related Financial Disclosures) framework, the current industry standard to understand climate-related financial risks.
Shehriyar Antia, Vice President, Head of Thematic Research at PGIM, walks us through their recently published Megatrends Report. How do institutional investors understand climate change risk repricing? How do fixed income investors deal with available data that is estimated rather than reported? How can equity investors turn climate risk into opportunity? Join us for an in-depth discussion of the ways climate change is affecting the investment landscape.
Seeds is an exciting new Technology platform that financial advisors can use with clients to help them align their values with their investments. Zach Conway, Founder and CEO of Seeds and Managing Director of Conway Wealth talks about how Seeds works and how it developed through his firm’s focus on balancing life and money. He launched Seeds with a $5B RIA, and has recently partnered with Just Capital and Alliance Bernstein. We talk about how the interest in ESG investing from financial advisors has reached an inflection point, and new technologies are needed to facilitate client engagement.
Preeti Sinha, Executive Secretary at United Nations Capital Development Fund (UNCDF), talks about their newest innovative programs, like the UNCDF 500. This initiative will support 500 companies in the LDCs (Least Developed Countries), focusing on women’s economic development, climate change, and biodiversity. And their newly launched partnership with 100 Women in Finance, which has 20,000 members worldwide, will support women leaders in African economies as well as mentor young women to become future leaders.
We discuss how these and other UNCDF initiatives in collaboration with official lenders make long-term sustainable finance available to developing countries by extending maturities on lending programs.
William Burckart, President at The Investment Integration Project (TIIP), talks about 21st Century Investing: Redirecting Financial Strategies to Drive System Change, the new book he co-authored with Steve Lydenberg, one of the pioneers of sustainable investing. Burckart explains that the nature of risks threatening today’s investor portfolios are fundamentally destabilizing. These challenges are new and encompass social and environmental issues that are systemic and threaten long-term investment returns across all asset classes in ways that traditional risk management cannot cope with. We talk about how system-level investing responds to these challenges.
See the Attachments tab for details on research and publications mentioned in the podcast conversation.
Enviva is the largest supplier of sustainable wood biomass in the world. Jens Wolf, Vice President and General Manager at Enviva Europe, explains how the U.S. has a promising opportunity to provide low-carbon renewable energy and heat solutions to enable the transition to a net zero economy, as targeted by the E.U. and U.K. Today, bioenergy is the largest renewable energy source in the E.U., with the U.S. having the potential to meet 65% of the sustainable wood pellet demand, representing an approximate trade value of $1.6B. The low-carbon profile of sustainable wood biomass allows energy and heat producers to reduce their carbon emissions footprint by more than 85% on a lifecycle basis (compared to coal) creating an opportunity for investors and policymakers to transition to a green economy.
The clean water challenge: Only 3 percent of water on earth is fresh and potable for healthy human consumption, and 70% of this is used for agricultural production. Paul talks to John Simon about how Total Impact Capital is using blended finance to fund social enterprises with expertise in achieving several of the United Nation Sustainable Development Goals, including #6: Clean Water and Sanitation for all by 2030. For example, investors funded water delivery franchises in East Africa and supported water cooperatives in Central America to deliver cost effective, full-time access to clean water.
Listen to three of the co-authors of Values at Work: Sustainable Investing and ESG Reporting, a book recently published by the Yale Initiative on Sustainable Finance that is galvanizing the conversation about ESG reporting in the investment world. Paul and his guests, Dan Esty, Christina Alfonso-Ercan, and Todd Bridges, talk about the challenges and opportunities of the current ESG reporting frameworks and what we can do related to policy integration and risk analysis at the company level.
Ardian, a global PE firm with European roots, manages US$110BN. Since Ardian started their ESG platform, they have completed 130 ESG roadmaps for companies in their portfolio, using their Sustainable Buyout Investment approach. Candice Brenet, Managing Director and Head of Sustainability and Digital Transformation talks about how their process has reduced both emissions and employee absenteeism by 50% at one of London’s major airports.
Hughes discusses their process for ESG integration, which includes Schroders Sustainability Accreditation, enabling clients to distinguish how ESG factors are considered across the firm’s products. The second phase of their process will include impactIQ, a platform encompassing the firm’s proprietary tools. impactIQ will enable Schroders to identify companies that build businesses that can adapt to social and environmental pressures in order to reduce risks and increase returns.
Ringger brings 25 years of experience as a pioneer in sustainable finance to his new company, Globalance. The company is designed to be an interactive platform for investors to assess current portfolios against other models and indexes. Ringger talks about how investors can use the Globalance Footprint, an analytic tool that provides economic, social, and environmental impact information about investments in the 6,000 companies that Globalance covers. The Globalance World Portfolio is another tool that allows investors to compare the climate impact of their portfolios against industry standard investment indexes like the S&P 500.
Lutz describes the new US Diversity Index, the first of its kind for US companies and directors that includes ethnicity along with gender. We also discuss the launch of the Governance QualityScore (GQS) Index family, designed to help investors identify large and mid-cap companies with strong board structure and shareholder rights as well as those aligned with UN Global Compact principles. In addition, we talk about ISS ESG’s role working with institutional investors to explore climate-related risks through a suite of possible solutions.
Open the Attachments tab to read Lutz's recent article at ISS ESG: Conversations on Climate.
Ellis, together with Nikolay Djibankov, leads the Matterhorn Group at William Blair, a full-service wealth advisory group developing and executing sophisticated financial and philanthropic plans for individuals, businesses, and nonprofit institutions. Ellis and I talk about their two portfolios: The Gender Parity Strategy and the The Matterhorn/Refinitiv Diversity & Inclusion Strategy. Ellis explains how the companies they own incorporate a diversity and inclusion social contract into stakeholder engagement. According to Ellis these companies will be the winners in performance and customer loyalty and attract a high quality workforce. Ellis also belongs to the Thirty Percent Coalition and working groups at Intentional Endowment Network, and US SIF to advocate for diversity and inclusion in the workplace.
As the key developer of the sustainable investing framework for Aegon Asset Management, Rich focuses on how to invest alongside sustainable megatrends in fixed income. We talk about the huge issuance of labeled bonds ($444B in 2020): green bonds, social bonds, and sustainable bonds. Rich shares a practical approach to identifying sustainable megatrends and opportunities across the fixed income spectrum. We also discuss how sustainability can help identify opportunities to uncover upside return potential and avoid downside risk by investing in companies that are sustainable leaders and improvers.
Visit the Attachments tab for a Bio and Profile on James Rich, as well as the 2020 Aegon Sustainable Fixed Income, Sustainability Report.
After eight years doing development work in the public sector as a U.S. Federal Government Boren Scholar, and four years in the private banking industry focused on ESG and SRI, Williams has recently launched ImpactVest, dedicated to private equity impact strategies that use the GIIN (Global Impact Investing Network) tenets. Williams shares the startling statistic that only 4% of impact funds are currently invested in Africa. We talk about the lack of private capital allocation to impact strategies in both developed and developing economies, particularly regarding gender equality, climate risk, and access to financial services.
Jake Moeller, Senior Investment Consultant at Square Mile, talks about the dramatic increase in assets under management going into sustainable and responsible investment strategies globally since 2016, with 30%+ AUM in both the U.S. and Europe incorporating ESG analysis. Moeller and I discuss how Europe continues to be 5+ years ahead of the U.S. in enacting regulatory policies related to greenhouse gas reductions and achieving net zero carbon emissions. He explains how these policies are influencing corporate business models and the cost of capital today.
According to Essayas, the Covid-19 pandemic and the growing number of storms, fires, and other environmental disasters have affected every aspect of ESG analytics across all sectors of the economy. What will this mean over the next few years? Join us for this discussion as Essays explains that ESG metrics will be more dynamic, with more collaboration across data and analytics platforms leading to more standardized ESG methodologies.
Join Paul as he interviews sustainable finance experts from top companies and global organizations like Trucost, United Nations Capital Development Fund, FTSE Russell, and Allianz Global Investors.
Listen to thought leaders like Amit Bouri, CEO at the Global Impact Investing Network; Mona Naqvi, Head of ESG Product Strategy, North America at S&P Dow Jones Indices; Peter Schechter, Co-Founder at Immigrant Food; and Rachel Gutter, President at International Well Building Institute.
Paul regularly consults with RIAs on ESG marketing and advisor education. He has written for Investments and Wealth Monitor, and co-convened the 2018 and 2019 Sustainable Investing Conferences at the United Nations.