We were delighted to host both our first Academic Roundtable and third-annual ESG Investing Forum on Monday, May 20, 2019 in New York. Hearst Tower offered expansive views from the 44th floor of New York City’s first LEED-certified skyscraper– a world-class venue to match the caliber of the speakers, moderators, panelists and delegates this year. Now we’d like to recap the two events and share some of the highlights with you.
Truvalue Labs Academic Roundtable 2019
The morning started early with the first Academic Roundtable, a meeting designed to share research results among the fifty members of Truvalue Labs’ Academic Research Network.
Just one year ago, Dr. Jim Hawley, Head of Applied Research at Truvalue Labs and Professor Emeritus at the School of Economics and Business at Saint Mary’s College of California, announced the advent of the Academic Research Network. The goal of the network was to help academic researchers to make discoveries in the world of ESG and investment risk/opportunity using Truvalue Labs’ unique datasets.
Since then, the network has grown to fifty members, who wanted the opportunity to meet, connect and hear about others’ academic research to date. The first Academic Roundtable was an exciting first opportunity for the network to meet. Academic faculty from the University of Pennsylvania, Columbia University, The University of Oxford, University of Maryland, and the University of British Columbia presented papers and preliminary research results on four very different topics based on their research using Truvalue Labs’ datasets. The response to the papers, to the discussion, and to Truvalue Labs’ Academic Research Network was enthusiastic. See the agenda for more information.
Third Annual ESG Investing Forum 2019
The afternoon began with Hendrik Bartel, Founder and CEO of Truvalue Labs, welcoming delegates and speakers to the event. Citing growth of ESG investing assets expected to exceed $35 trillion (USD) by 2020 according to GSIA and Opimas estimates as a starting point, Hendrik shared that it has been an action-packed year for Truvalue Labs. In fact, the company:
- Released Spotlight, a first-of-its-kind, AI-based ESG event detection solution that helps investors see which events are impacting a company’s valuation
- Entered the index business with industry veteran hire, Thomas Kuh, as the leader
- Launched Truvalue Cloud to leverage our AI to find material insights in your proprietary research data
Keynote Address: The Investor Revolution
Dr. Robert Eccles revealed his latest research findings from his report, “The Investor Revolution,” based on interviews with 70 senior executives at 43 global institutional investing firms. Dr. Eccles shared a macro view from the perspective of investment executives on the six trends affecting increased demand for ESG investing and five actions that companies can take to prepare for the new era of sustainable investing. You’ll find a summary of his research in a Harvard Business school article here.
“According to our survey of large, institutional asset managers, the biggest systemic issues facing society today are Climate Change and Income Inequality and the effect on political instability.”
— Dr. Robert Eccles, Visiting Professor, Saïd Business School at the University of Oxford
“When portfolio managers at large asset management firms start talking to ESG analysts, corporate engagement starts and it is a game changer in the capital markets.”
— Dr. Robert Eccles, Visiting Professor, Saïd Business School at the University of Oxford
Practitioners’ Panel: Emerging Best Practices in ESG Integration
While many topics came up, the themes of the biggest risks and reasons to integrate ESG factors into the investment process were risks around climate change and income inequality leading to political instability and gender inequality issues.
“Engagement needs to be led by portfolio managers and lead analysts— not folks, who are box checkers. Body language is just as important as what is said –
— Michael Kashani, Global Head of ESG Portfolio Management, Fixed Income at Goldman Sachs
“With regard to ESG ratings in particular, investors increasingly express concerns about consistency, transparency and cross-comparability.”
— Sara Anzinger, Director of Sustainable Finance at Fitch Ratings
“We’re seeing two key ESG Integration trends gaining momentum: 1 – Physical Climate Event Risk and 2 -Innovative Green Regulatory Schemes.”
— Mark Savino, Vice President, Research at Morgan Stanley
“Many of the gender diversity initiatives in the financial industry are happening too late–high school + undergrad is where it should start”
— Judy Cotte, CEO of ESG Global Advisors
Research Spotlight: The Future of Climate Investing
Jem Hudson shared an overarching message that “focusing on the people effects of climate change mitigation and adaptation can enhance long-term outcomes for investors — and our world.” State Street’s research indicates that 52% of investors believe that climate change is a very serious problem, and 82% believe it’s a man-made problem. Additionally, nearly 50% believe that political tensions present a major risk to investment portfolios. Learn more about State Street’s Climate Investing Insights here.
“Expanding the scope of climate change dialogue to include: 1 – Achieving Paris Agreement Targets, 2- Debating Carbon-Pricing Frameworks and 3- Policy Efforts on Sustainable Cities.
The impact of cities on climate change is massive, and the work that organizations like C40 Cities like Seattle are doing is highly impactful.”
— Jem Hudson, Vice President, Senior Researcher at State Street Center for Applied Research (CAR)
Academic Highlight: Leading-Edge Actionable Research
Dr. Henisz of and Dr. Sampson shared fascinating research demonstrating specific links between ESG and performance. Covering topics from how short-termism drives firm behavior that affects ESG metrics and subsequent performance on multiple dimensions, including credit risk.
“Board members’ interest in ESG integration into financial analysis has doubled.”
“There’s a link between ESG data from Truvalue Labs’ materiality-adjusted ESG scores and credit risk and the cost of capital.”
— Dr. Witold Henisz, Professor of Management at The Wharton School, University of Pennsylvania
“Two key impacts of short-termism: Less productive labor force and higher cost of capital.”
“CEO turnover is more common in short-term focused firms. Firms are less discounted in long-term oriented firms.”
— Dr. Rachelle Sampson, Professor of Logistics, Business and Public Policy at the University of Maryland
Expert Panel: Measuring Impact through the Lens of The SDGs
Himani Phadke, Senior Product Manager at Truvalue Labs moderates panel of experts: Chantal Line Carpentier, Chief of the New York Office of the Secretary General, United Nations Conference on Trade and Development; Dinah Koehler, Executive Director, Sustainable Equities at UBS; and Brian Svendahl, CFA, Managing Director, Co-Head, U.S. Fixed Income at RBC Global Asset Management.
This expert panel discussed the reasons why adoption of the 17 UN Sustainable Development Goals (SDGs) has been higher than with previous global frameworks and the challenges that exist around measuring the impact thereof.
“The Sustainable Development Goals (SDGs) have been adopted in part because they’re easy for clients to digest.”
— Brian Svendahl, Managing Director, Co-Head, U.S. Fixed Income at RBC Global Asset Management
“The SDGs are about all of us and follow where population growth will be.”
— Chantal Line Carpentier, Chief, New York Office of the United Nations Conference on Trade and Development
“How we define risk has to change, and how it influences opportunities is also important. Go beyond risk and return to materiality.”
— Dinah Koehler, Executive Director, Sustainable Equities at UBS
Expert Panel: Innovations in ESG Indexing
Among many topics, this panel ESG index experts shared background on the evolution of ESG Indices from applying ESG data in a binary way via ESG selection or deselection criteria to a focus that also evaluates risk and supports engagement strategies.
“Many early ESG indices were based on selection, now it’s more about beta.”
— Tony Campos, Head of ESG, Americas at FTSE Russell
“ESG Investing drivers are often from regulation that forces business into ESG investing. In Netherlands, on the other hand, clients have to opt out not to have ESG investing.
— Fabien Labouret, Managing Director, Global Head of Investment Strategies and Barclays Investment Managers at Barclays
“You can use ESG indices to show how results are being delivered and how impact is working by measuring performance.”
— Bernd Henseler, Head of Americas at Solactive Americas Inc.
Finding Alpha in ESG Data
Dr. Malinak closed the event with highlights on how Truvalue Labs’ ESG data can drive dozens of strategies for achieving quantitative outperformance and gaining ESG research insight, including several written studies that prove that Truvalue Labs’ data can not only be used for ESG integration and fundamental research purposes but also potentially for finding opportunities for outperformance.
It’s a Wrap
In closing, we want to thank everyone, who joined in on the event, the speakers, moderators, panelists and wonderful delegates, who actively participated in making two events a success.
Session presentation decks from our ESG Investing Forum are available.
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