ESG

“So, so I think the S of the ESG and the human element, let's call it, that we're picking up, is probably one of the most undiscovered sources of alpha. And when we do our factor analysis, one of the greatest contributors to the outperformance that we see.”

“We think that this is a time when the U.S. Is going to follow. It's not always the case when you're looking at whether it's investing or lots of other things in life, but it's so compelling in Europe and so important and now being talked about everywhere in th…”

“Private equity can't Continue to claim to represent a superior governance model for investing where that greater degree of control and influence leads to outside returns. And in the same breath, Say that we're unable to affect change as it relates to diversity…”

“I think that if you try and separate it out and make it a different activity, I think that's just bizarre. But if you take it back to one of the reasons I think that investors struggle with it today, I think it's because truly active equity managers know the b…”

“Adding in this kind of differentiated perspective, ESG and credit and equity all at the same time, you just get to more of a dialogue. It's not a gotcha. It's just really trying to understand the company more holistically. And so we think there's a lot of powe…”

“So again, tying it to the financials, tying it to the economics, the fundamental economic statements are really important when you're having these conversations, because otherwise, we're going back to that greenwashing topic again, and it's not just about the …”

“And also companies with these considerations have shown to be able to reduce volatility and trade at higher multiples and access, you know, a lower cost of capital.”

“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.”

“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.”

“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.”

“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.…”

“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.”

“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.”

“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.”

“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 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…”

“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…”

“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…”

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

“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…”

“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…”

“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.”

“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…”

“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 …”

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

“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.”

“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.”

“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.”

“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.”

“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…”

“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 …”

“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…”

“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.”

“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.”

“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.”

“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…”

“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.”

“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, …”