Podcast Summary
Achieving Impactful Change Through Sustainable Investing: Leverage your power to make a positive difference and create a more equitable world.
Tariq Fancy was an investor with a mission: to use his position at BlackRock, the world's largest money manager, to make a positive difference in the world.He was thrilled to have the opportunity to be the global chief investment officer for sustainable investing.With control of $8 trillion, he was sure he could make a difference.He was determined to use BlackRock's power to pressure companies to take action on environmental and social issues, and to make sure that corporate governance was fair and just.Despite some pushback from Republican leaders, Tariq continued with his mission.He was determined to use his power to make the world a better place.He was sure he could make a real impact - and he was right.
The Road to Sustainability: Achieving Success Through Environmental Consciousness: Companies must prioritize environmental sustainability to be successful, even if it means sacrificing short-term profits.
Tariq takes a job at BlackRock, an investing company.His boss, Larry Fink, sends out an annual letter to all public companies, stating that companies must have a social purpose and be more environmentally friendly.Tariq gets to work, educating portfolio managers on how to make investments more sustainable.However, not everyone agrees with his plan due to the fact that this money is not owned by BlackRock, but instead by the client.One of BlackRock's own shareholders, Bluebell, sent out a letter in November, further stressing the importance of environmental sustainability.Through this story, we learn that companies must be environmentally conscious in order to be successful, even if it means sacrificing short-term profits.
Achieving Sustainable Investing Through Responsible Behaviour: Sustainable investing requires more than just the market; individual action is necessary for a more sustainable economy.
The debate around sustainable investing is a complex one.Tariq, who used to work at a large investment firm, was skeptical of the potential of ESG funds to generate returns and make an impact.He conducted a study which found that when people read headlines about vague ESG promises, they felt like progress was being made, but this was a dangerous distraction from the hard work that needs to be done.This shows that the individual's role in investing responsibly is important, and that the market alone cannot create a more sustainable economy.It is clear that more needs to be done to ensure that sustainable investing is done responsibly.
Can Reading the Label Help You Make an Informed ESG Investment?: To make an informed ESG investment, research and data collection are essential to form opinions beyond the surface.
Learning about sustainable investing requires one to go beyond the surface and read the label to understand what they are investing in.ESG investing is more than just filling out a checklist as it is accounting for the things that have been ignored in the past.This requires research and data collection in order to form opinions, which was not easy to access a decade ago.Harvard researcher George Serafeim started a spreadsheet to track all the relevant data companies were disclosing to gain a better understanding of ESG investing.He found that many organizations didn't even have the data to begin with, emphasizing the importance of research in this field.It is important to recognize that different people have different opinions on ESG and it is important to read the label to make an informed choice.
Can Companies Make Money by Investing in Sustainability?: Companies can save money and create new products and services by investing in sustainability, which can lead to greater profitability.
George wanted to improve data collection on companies, so he called up different companies to ask what metrics they were measuring and how.This data was used to create a spreadsheet which was then published as a big paper.However, initially his research was met with skepticism.Companies began to realize they could save money by being more conscientious in areas such as employee safety or environmental protection.This eventually led to companies making money by creating new products and services which allowed them to expand.In 2018, an influential letter from Larry Fink sparked a greater interest in these metrics and showed how BlackRock could use its power to influence company boards.This was a major step forward for George's research and the start of a virtuous circle.
Investing in ESG: Taking Responsibility for a Sustainable Future: ESG investing can be an effective way to make a positive impact on the planet, but ultimately, it is up to individual investors to take responsibility for their actions.
ESG, which stands for environmental, social, and governance, is a way for investors to make decisions that are both financially sound and beneficial for the planet in the long-term.To make informed decisions, investors need reliable data on how companies are performing on ESG metrics.BlackRock’s decision to invest trillions of dollars in ESG spurred a virtuous cycle which has led to more data being collected.This data has enabled investors to make wise decisions and influence the direction of the market.Tariq Fancy cautioned that government action is urgently needed, but in the meantime ESG is a good way to make a difference.Ultimately, ESG encourages investors to take responsibility for their actions, and even one grain of sand can cause a big change.
