Disclosure certainty 4/5 debate potential 2/5

Management teams reach out inbound to Impactive for ESG guidance

Lauren Taylor Wolfe · Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146) · Jul 2, 2020 · at 28:18

Lauren Taylor Wolfe, co-founder of Impactive Capital, describes how corporate executives proactively seek her activist fund's advice on improving ESG metrics.

0:00 / 0:07exact quote · 7.6s
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“We have a lot of management teams actually calling us for inbound requests on what can I do to improve my profile and what should I be focusing on?”

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More from Lauren Taylor Wolfe

Insight
Passive investor ESG proposals are mostly value-neutral or value-destructive
“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.”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 20:27 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
Prediction Not checkable as stated
ESG will become a primary driver of activist investing profits
“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.”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 13:06 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
Assertion Supported
Higher corporate ESG disclosure leads to greater rating agency dispersion
“His name is George Seraphim, and he actually just put out research that demonstrated the more a company discloses about ESG factors, the greater the dispersion in ratings from folks like MSCI and Sustainalytics.”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 30:10 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
Insight
Impactive advises companies to sacrifice near-term margins for long-term IRRs
“We are the rare activists that will say, you know what, you should make this investment that might diminish your margins in this quarter or the next The next couple of quarters, because we have such high conviction in the longer term IRRs, and we have the capi…”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 40:50 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
Insight
Allocator liquidity demands push activists toward short-term, growth-harming interventions
“I think there's an obsession with the short-term, and it's been created because there's so many allocators that need simply quarterly or monthly liquidity, but that's just insane. And I think for activists, it's even worse because it encourages activists to pu…”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 48:28 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
Insight
Companies only take ESG seriously when tied to business rationale
“However, for any company to take ESG seriously, it's, the ESG change has to be linked to a business case and business rationale.”
Lauren Taylor Wolfe Jul 2, 2020 ▶ 13:20 Sustainable Investing 8: Lauren Taylor Wolfe – Activist Perspective (Capital Allocators, EP.146)
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