ESG

“I don't think we got that serious with them, but the other one was kind of ESG kinds of things, you know clean tech green energy, this and that and the other. You know, we thought that the right lens on that was much more going to be American dynamism one beca…”

“I think that if you manage money for other people, you're deeply arrogant if you are going to apply your ethical framework onto The way that you invest.”

“ESG is a set of issues, but it's not the same thing as a set of drivers. You know, they're issues to be aware of, screens and filters on making institutional investment, which is different than A, you know, an alpha case reasoned to invest capital in something…”

“He surveyed all the different industries for AI resistance and also just economic opportunity. The one that he wanted to go with was oil and gas, but he couldn't, but the ESG thing was too overbearing.”

“Everyone knows that you can attach like dot AI to your B to B SaaS company and double your valuation. That never really happened in ESG just because I think the money that was actually flowing was mostly in the public markets. From these funds that, like, need…”

“I think there are some very conspicuous, visible actors running some of the largest asset management firms in the world that a few years ago Started to exalt and extol the virtues of ESG to an extent that even at the time, some of us could say, wait a minute, …”

“If social justice or ESG is a big deal for you and your employees, I just would ask you to recognize that there's no worse ESG actor, and no greater offender of social justice issues than the Chinese Communist Party. They suck on the E, the S, and they really …”

“He mentioned ESG a lot in 2016, relatively, and then again in 2021, a little bit in 2022, but by 2023, ESG never shows up at all.”

“How I dealt with it in the novel was to think about the pressure of the CIO, a line that I often repeat to CIOs, which is like, it's three percent of the portfolio, but 97% of our headaches.”

“The ESG movement has been a total failure. You know, from my perspective, because Philip Morris has great ESG scores.”

“So what we're learning, and the findings are still being developed on our team, is that it's these sustainability factors, these long-term factors, employee satisfaction, environmental footprint, things like that, that you would say, well, really good ESG tool…”

“It wasn't a fraud issue. It was a pure governance issue. If people had an ESG filter, they'd have never done that deal ever.”

“Until we get there, I just think ESG will be either a bunch of happy talk on one side, or a bunch of political tools, essentially, on the other side.”

“I actually think a lot of the principles of ESG, as Mario articulated in the FTX example, actually align quite well with economic benefit and managing risk.”

“We knew these disclosures and this regulation was coming, because we could see what was happening in Europe, and we could see that this pressure that was being placed globally on big investors to try to disclose this was gaining momentum in the U.S., even thou…”

“What I would say for sure is that if these banks have spent as much time on risk management as they did on ESG or on woke, then this crisis wouldn't happen.”

“I think the impact space and ESG has done itself a disservice in how it prices its product. So you have these people that are trying to really have exceptional impact, and then they show up to talk to us and their fee load is egregious. And they don't quite un…”

“We do not identify as an ESG company, and I think I'll answer your question by maybe taking a step back and giving some definitions of how we see these terms.”

“So ESG was originally invented by institutional investors who wanted to be able to diversify across new classes of risk.”

“The problem here, and this is a problem to ESG and why it was so vulnerable to this, is it was not well-defined.”

“In the United States, if you talk to the huge asset gatherers, the Black Rocks, the Goldmans, if they get a new investment client, so they come in and they're going to have an investment advisor, and they're going to allocate their portfolio, 10% of them want …”

“Anti-ESG sentiment is at the political level almost uniquely U.S. It's something that happens really only here. It's not nearly as big of a topic in Europe at a sort of polity level, or definitely not at like a local politics level”

“Here's all you have to know about ESG is that Exxon is like the number seven, like top-ranked company according to ESG, and Tesla isn't even on the list.”

“Each of those letters individually means so much and should be worth a lot to a lot of people, but when you stick them together, it creates this toxic soup where you can just hide the cheese.”

“You might be a producer of something that is hurting people or harming the planet, but maybe you're doing it in an efficient way. ESG tends to give you a good mark for that.”

“I think the getting better is what we should be aiming for. I mean, the point is, isn't to reward the ones that already are good. A lot of the point of our granting dollars is to improve conditions, and so I think from a philosophical perspective as part of He…”

“You will have a lower cost of capital, and you will have a higher exit multiple. So the incentive structure should be aligned to doing the right thing, not because it's the right thing, but because you're going to make more money.”

“What you really want in the S is to have more senior professionals, either people of color or women, but in many industries that will take decades. And so to give a score today, I don't know that it means much.”

“The most exciting to me is that ESG will go away. It will not be an investment term in three years, and it has nothing to do with it not being super important.”

“I said, I think someday, just like back in the eighties, you used to have to carry two business cards, one with a bug on it, union bug, and one without, and never get them mixed up. You're going to have two pitch books. You better not bring this pitch book to …”

“I'll tell you how it happens because we have a lot of Wall Street firms who have a conflict of interest. They can wrap it into this new bottle and slap on another 40 base points of fees for it.”

“So ESG today is broken. And I think it's largely meaningless.”

“We're going to put social and governance with environment. It's all that's going to do is hold back the environment, right?”

“So, you know, ESG, that's going to be a mega trend. Doesn't, I don't care whether anybody agrees in the trend and the mandating of it, but everybody's mandated to do it in Europe. So all of the money goes into, to ESG.”

“I would say a lot of it is hype. It's a lot of happy talk. It's a lot of feeling better about yourself saying you care about ESG.”

“And it's not impact investing. It's not ESG. It's not just like, oh, well, we're going to see incremental returns. Like it is going to be the source of American innovation and it is a great place for the top venture firms to be investing.”

“Global multi-asset class portfolios that are really We think have the same expected return as a more broad based, if you will.”

“I actually think that if you, in the world state that I see, in the end, people will really be incorporating these things fully, and it won't even be something that will be described as something else. It will just be an expected part of a person that's going …”

“So for example, we do equity work in China on an ESG basis. So our offering in equity to China is a naturally ESG focused offering”

“Doing ESG in the developed world is a big enough challenge because The data needs to be cleaned up. It's often it's self-reported data. Therefore, it doesn't experience that much scrutiny or criticism, but doing it in China, you double up the challenge. Sourci…”

“Yes, we're going to raise. And the main reason is because ESG is happening now and there's a big opportunity right now.”

“And then I'd say the ODD, ESG, and DNI, those are all new dimensions that are very important today that really weren't part of the consciousness of us or even the industry 20 years ago.”

“Our data suggests that's not the case. There's actually a positive correlation between managers with great ESG programs and the returns that they generate because they think about this, and it is good for the business, it is good for The underlying company's l…”

“The reality is the ESG stuff is just pre-financial risk. I'm on the Future of Finance Council at the CFA, and it's actually Roger Irwin who instructed me on this. He's like, look, we should just be thinking about ESG as pre-financial risk. It will become finan…”

“Like we've seen through the recent crisis, ESG does offer some downside protection. That's in the data.”

“I think that the real pathway is For ESG, goes through employee motivation. If you think about it, the moment you are doing some version of ESG, presumably your employees are more on board. They feel that the company has better goals, the company is more conne…”

“And the team at JP Morgan did a really nice analysis of our data. They were unbelievably thorough. I was deeply impressed by these guys, and it came basically with very good analysis and result, and it's kind of nice to have somebody like a third It's a little…”

“The next big foray for us and things we're spending a lot of time on now is more data oriented culture work. And I think that's going to become a source of meaningful differentiation. And some of that's being enabled by a lot of the work that's going on in the…”

“We just basically came up with the concept of, for our portfolio to become sustainable, We need to make sure the capital market to be sustainable, and for the capital market to be sustainable, we need to make sure society must be sustainable, and for the socie…”

“Last year, GPF made a very clear, explicit statement to our active managers that GPF expects all our active managers to integrate ESG into their investment analysis and decision making, and also, we Choose the active managers who control the negative externali…”

“A lot of asset managers keep telling us, we do this much analysis on ESG, and we do this much analysis on this, and we hire this, we buy this information set, and I said, and in the end I said, how do you use it for investment decision making? And then a lot o…”

“We think that it will become increasingly one of the more important tools in the activist toolkit, and it will be a source of profits and value to drive, again, sustainable businesses in the long run.”

“However, for any company to take ESG seriously, it's, the ESG change has to be linked to a business case and business rationale.”

“And they might have 10 or 15 ideas for ESG change. And, you know, of those, call it 10 ideas. Five might be value neutral. Three might be value destructive, a waste of time or a waste of capital without return. And two might be value accretive.”

“You have two companies doing exactly the same one, but one leads on ESG and one doesn't. You're willing to pay more for the cash flows of the one that leads on ESG because those cash flows are less risky. They're less volatile.”

“I think in this current moment of COVID, S is going to get its day in the sun.”

“Even the ratings agencies themselves often don't agree on whether a company is a good ESG company or a bad ESG company.”

“The other thing I would point out is there is an opportunity in a restructuring to hit the reset button. You have this moment in time where you can completely rethink governance and put in place best practices in terms of governance and executive compensation.…”

“On the mission-driven side, I tell people really two things. One, what are they doing as a manager, as a management company to embrace ESG? Two, pull some investment committee memos at random and see how they talk about ESG.”

“It's just not realistic to ask analysts who are in there trying to figure out what the competitive forces are or what pricing power is to deal with this as well in an hour.”