YouSaid · the spoken record

Ashley

lines on the record: 42
first: 2019-03-25
most recent: 2019-03-25
sittings or episodes: 1
sources: podcast

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“Debate has come on a long way in the last 15 years and I think there's now been a very real view that engaging in thinking about some of these ESG risks is actually integral to being a fiduciary and that has really been the reason we've seen so much increased momentum elsewhere in the world in terms of integrating ESG. But look today we still see a bigger share of the world's assets under management that integrate ESG in Europe. The US is catching up very, very quickly. But then there's some interesting twists to that. The fastest growth area of the world at the moment is Japan and that's a combination of both the introduction of a stewardship code requiring investors to be stewards of capital and importantly their sovereign asset owners saying that they want to see their managers integrate analysis of ESG and that's just a process that's”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Be very proactive in articulating that they felt failure to manage ESG risk could be a long-term risk for their ability to service long-term pensions. And that resulted in them very quickly asking of their third party managers, the people they were giving their assets to manage, really putting pressure on them to demonstrate they were thinking the same way and managing risk the same way. In other areas of the world, in contrast, there was certainly a debate about fiduciary responsibility and a view that as a fiduciary you're responsible for preserving and growing capital and making the right investment decisions to support that and that maybe integrating ESG would be in conflict with being a fiduciary. If this environmental risk or if this water stress risk is not going to crystallize itself as impairment to value then why would I be doing it? Now look back”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Europe, I think it is very fair to say, is the region that has led the ESG agenda over the last two decades. There's a confluence of things that took place in the late 90s, early 2000s that got the ball rolling in Europe before other regions. And they were things like the Cabri Code focused on corporate governance. There were initiatives where governments mandated municipal asset owners to report on their ESG reporting. There was emergence of requirements by stock exchanges to report on how companies were thinking about their ESG risks. But the thing that then very quickly started to build momentum around it was some of the larger asset owners quickly embraced the view that over the medium term, and remember some of these large asset owners are pension funds where they're really thinking about very long-term liabilities, started to”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“For 30 years, it's not as efficient as we would need it to be in order to really recycle plastic to the volumes that would be relevant for the supply chain of the plastic industry. But the other thing we need to think about here is how do we change human behavior? There is probably not as good awareness of the different kinds of plastic what can be recycled as there would need to be in the average household. The waste collection, the waste recycling industry would have to change from what it currently structured like. But I think there is growing reason and growing optimism to believe that in the next 10 years something that has maybe been something we've hoped for for decades really could see a transformation. I think we should be open and optimistic about human ingenuity and our capacity if we have the right incentives and the right leadership by corporations to see a transformation in the plastic supply chain in the decade ahead.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“not reintegrating plastic into the plastic supply chain is having real consequences for particularly marine health. We've seen a lot of documentaries, a lot of movies now made around this debate. We have some global ambassadors in terms of building consumer awareness and regulatory awareness of plastic. And just two weeks ago we saw some of the largest companies involved in the plastic industry globally embark upon a new alliance to stop plastic waste. This was the oil companies, the plastic companies, the consumer product companies and the waste companies commit to spending a billion and a half dollars thinking about how to re-engineer the plastic value chain to take plastic waste and put it back into the supply chain. The technology's there. The technology to recycle plastic has existed.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“More than a decade. Just to frame that, we had a disincentive to maybe think about business as usual. We had broad public awareness of a potentially less well-understood side effect of business as usual, and we started to see industry regulators provide an incentive to innovate around alternatives. And that's not dissimilar to what we're starting to see with plastic today. Last year, in many cities in developed world, a combination of a little bit of a regulatory change and a little bit of, I'd say, change in consumers' expectations, we may find the plastic drinking straw for all but really medical uses assigned to history forever as we see growing awareness of the side effects of single-use plastic, or maybe put another way, the growing side effects of”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“To consider fossil fuels as long-term alternatives. We started to make them just a little bit less efficient than they had been historically. We also started to put in place some subsidies and some incentives to invest in making solar more efficient. And what we've seen, and it really is just in the last 10 years, the levelized cost of energy. Think of this as the break-even power price you need to commercialize solar power in Europe, has fallen from about 140 euro megawatt hour to closer to 40, and we anticipate it will fall further in the years ahead. Now, as a result of it becoming so quickly economic, expectations for how we will deploy solar power in northwest Europe has really transformed. The IEA's estimate for global solar power generation by the end of next decade has increased 15-fold.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“was really very low. The alternative ways to generate electricity were dramatically cheaper, relatively easy to scale, and as a result there being no disincentive to use conventional fuels and no incentive to invest in making the alternative or the renewable fuel cheaper, we literally had 100 years where there wasn't a lot of investment into thinking about the commercialization of solar. And then a few things started to happen. The first was broader both public and regulatory awareness of the potential climate change risk associated with hydrocarbons. And as soon as that became, I think, a feature of the public debate, we started to see mechanisms around the world, like Europe. We created a European carbon market. We started to create a friction or a disincentive.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“I was blown away when I started to look at this that the first solar array that was ever installed on a rooftop in a city was in eighteen eighty four here in New York. I hadn't appreciated that solar technology had been around for so long. So solar is a technology that's been kicking around then for 130 years but has not really seen a transformation in the economics of the technology and the use case until really the last decade. Why would that be? Well we actually worked out very efficient ways to mine coal we managed to build really efficient infrastructure for moving coal around the country. We also managed to innovate around nuclear fuel and over the years we managed to work out ways to get access to pretty low cost gas. So the economic incentive to pursue technology that had a conversion rate of just 1%.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“You mentioned it earlier, but the issue of plastics and plastic waste has gotten a lot of attention in Europe and even in the US. You've been thinking about that issue a lot and wrote about the fact that solar, which has really become mainstream, might be a good blueprint for solving the plastic problem. Explain that a little bit.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“the shape of the conversation you have when you meet with management teams. It really is about a small cap company with low reporting doesn't mean it's disengaged. But you won't have to have a very long conversation with the small cap company to understand whether they are engaged. And in contrast with that, the large cap company is going to have a lot of data to share with you and you may need to work a little bit harder to work out whether that really is the essence and the culture of the company or this is part of their broader communication strategy with the market.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“$20 million of post tax earnings, we probably don't want them as shareholders to be spending a lot of money on their corporate social responsibility reporting. But in contrast with that, it might actually still be a company that only has one site. It may just have one factory. The CEO may have been personally involved in hiring many of the people that work in that company. That company may be a real part of the local community and have really strong culture and values and proactive engagement in thinking about their environmental impact, their water scarcity, how they engage with their employees and their communities. Really belying the risk of greenwashing and the disconnect we see between the levels of large cap and small cap reporting of ESG engagement, the real message that we take to our investing clients is these headline scores should inform you”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Is something that is a not inconsequential burden on a company. Big companies, that's easier to absorb. Smaller companies, that's an issue. So in contrast with what we see for large caps, with smaller cap companies, we typically see less disclosure. This is a challenge because it doesn't mean that small cap companies are disengaged. If you think of”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“You're absolutely right. What we've seen over the last 10 years is there are some invisible forces that seem to be compelling and shaping corporate disclosure. Larger cap companies, maybe we could call it Tall Poppy Syndrome, very proactive in reporting their ESG engagement. The second consideration is the stock exchange you're listing on. Listing requirements certainly shape corporate reporting. Who owns your shares? If your shares are owned by institutions integrating ESG, the management team will typically have started to respond to the questions they're getting with more proactive reporting. And lastly, environmental sensitivity, so we do find very big companies listed in developed markets a very, very good job at explaining their management with the SG risks. But this isn't free to actually analyze this data, report this data, to get this data ordered.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“maybe just identify where the ladder is to ensure they don't own them. But that means the risk has transitioned from the false negative to the false positive and the false positive that I put a company into a portfolio that's analyzing ESG that isn't as good as the ESG scores suggest they actually are and nobody that's integrating ESG into the investment process today wants to find themselves owning the next major environmental catastrophe when they've told their client their investment process is orientated towards making sure that doesn't happen.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“The amount of data available to analyze was pretty limited, and the risk of getting it wrong was really the false negative that there was a good company that you wouldn't have been able to identify because they didn't have a CSR report that you didn't put into the fund. Roll on ten years, there is a lot more data, which basically means this has become more expensive. It's not always clear that the data is been disclosed because the company has had a cultural revolution and really is integrating consideration of ESG into all of their business decisions. All this has become an integrated part of their corporate communication strategy that we understand our industry is expected to report on these metrics, so we're going to report on these metrics because shareholders demand it. Now, clearly the investor integrating ESG is trying to identify the former.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Is a real consideration for anybody trying to integrate ESG into the investment process. I said back in 2007 we only had $160,000 data points in our global database. I think today we're pushing 6.2 million. And that's not because we went and looked for more, it's because companies gave us a lot more data to analyze. In essence, belying the risk of more proactive corporate reporting of how they engage with ESG is a situation where you'd hope this become easier. It's probably becoming harder. Ten years ago, a corporate that really believed in ESG would stand out from the crowd. The CEO would want to start a meeting talking about ESG. They may have become a little evangelical, but they would be saying, before we start to talk about performance or outlook, I want to talk about initiatives that were integrating into our strategy that we believe will create long-term value. So identifying industry leaders was relatively”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“To be ill placed conclusions, they can crystallize themselves as real business risk. We've obviously now started to see a very real growth in cyber attacks on corporations. Europe's new legislation on GDPR and consumer data protection has started to see situations where data protection incidents for corporations are potentially going to create liabilities that impair shareholder value. So I think a feature of the world we live in today is maybe the half-life of short-termism is shrinking. And a short-term move to manage costs that we could have had 10 or 15 years ago would not quickly translate into a potential business risk. I think in the world we live in today, some of these decisions need to be considered not just in the near term performance we can generate.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“The first thing I think that's a reality in response to the last point of competition is that corporates have been incented to push hard to overcome competition. And at any point in time when a corporate is required to think about how it can preserve or grow its pricing power, its cost base, its balance sheet, you have to reconcile short-term levers and potentially the long-term liabilities or implications those may have. There are things that corporations can do to try and create pricing power, to try and lower manufacturing costs that may involve outsourcing our manufacturing, pushing supply chains deeper into the emerging markets. Maybe not investing as much as we maybe need to in technology or data protection, cybersecurity, that are obviously options that you can consider, but if those prove after the”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“The way that I frame it is that in a world where you've got finite human talent and finite capital doubling down on businesses that are subscale, that are typically falling outside the top three to five in the industry is something that needs to be given further consideration versus maybe what would have been the decision tree a few years ago. Because to the extent that you're committing capital and committing human talent to businesses that are going to really struggle to thrive, there is a real opportunity cost. And I think what we're seeing now is increased willingness to say, look, these are our podium finishing divisions. This is where we are actually top three in our respective markets. Let's focus our time. Let's focus our capital on our people on making sure we get these right and increase openness to selling others. And I would anticipate this will likely remain a real feature of European”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“If corporates engage with where they are really competitive and are open-minded about where they may have operations in their portfolios that maybe are not as good as they need to be in order to thrive in that competitive landscape, I think one feature we're likely to see more of, and it's certainly been a feature of the last couple of years of corporate strategy, is increased focus on corporate structure and corporate simplification. We've seen over the last two decades a reasonably high level of activity in the US markets where companies have been spinning out or selling to strategic investors or selling to private equity investors non-core or maybe subscale divisions of their portfolios. In the last 12, 18 months, we've started to see this become a”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Another feature of this is the notion of everything as a service. You don't need to own a factory any longer to have a product manufactured. So we certainly have a situation where global growth remains intact, but it's getting, we're encountering much more ferocious competition to actually monetize it. We're starting to see a situation where asset-like businesses are encroaching into incumbent marketplaces, meaning that actually even where you've created pricing power, The durability of that isn't as good as it used to be and that is creating probably one of the most globally ferocious competitive landscapes that most corporations will ever have encountered.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“And maybe the generation of sea turtles that returned home previously found themselves in a situation where only state owned enterprise could raise funding, then now in a position where they can access private capital to build some really very innovative, not only industrial-facing B2B companies, but also consumer companies and technology companies. And the challenge there is a lot of global growth for multinational corporations over the last two decades has come from China. China now is seeing very real innovation in domestic companies that is creating a credible source of import substitution. So monetizing China's growth set is becoming more challenging. And the third is the rise of the internet. And it doesn't matter which industry you're in. Typically at the moment we're seeing some encroachment with a digital alternative and look as our global markets institute recently wrote a”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Years to 2012, it's given back half of that appreciation. So the historic kind of 80s and 90s view of the world of the US, Europe and Japan juking it out for global growth. Japan had been taken out of the equation by this FX headwind. Japan is now certainly back in the global competitive dynamic. The second is really the return of the sea turtles, some very, very bright Chinese graduates that have been educated in many of the best schools in the world that have had five or ten years' work experience in market leading multinational corporations are now returning home to China. The big difference in the China they're returning home to today versus the China of 20 years ago is that China today has very, very deep private capital markets. It's a very big venture capital industry, a very big private equity industry.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“tied to your supply chain it could be tied to working capital management it may be counter cyclical M&A or CapEx but those are the four levels we're playing with and look there's a million ways to do each of those four but if you just distill every industry to how we access growth how we create pricing power how we create cost leadership and how we manage our capital there's a few things taking place in the world today the first and most differentiating for me I moved to Asia in 2010 working in GSustane to try and find Asia's great companies and in doing so the list at that time had a very large representation of US and European companies obviously that meant I was in region when Japan had the great earthquake and subsequent to that the change in government changing economic policy and a dramatic depreciation in the yen the yen had appreciated by 100% in the 15”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“No, I think there's some real changes taking place in the global competitive landscape, but maybe just to distill this to how to think about competitive advantage. There's typically only really four levers that company has to play with to generate superior returns on capital. You can grow faster. Asset turn is really important to preserving returns on capital because typically your balance sheet and your cost base is growing. Making sure you've got access to top line growth is an obvious potential source of differentiation. The second is commanding a higher price. If you can deliver the same product but charge more for it by virtue of the technology, its performance, maybe even aspiration, then that is able to potentially cover maybe inefficiencies in the balance sheet or the operating cost base. The third is incur less cost, create the same product for much less cost is a way to keep wide margins. The last is obviously just to use less capital and that could be”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“That is unique to each industry to determine what is material and how do companies engage with it. It's been an evolutionary process over the last 15 years since we wrote our first ever report on ESG. But I think we certainly feel at the moment for the near 30 sector frameworks that we have that we're able to arrive at a reasonably objective indication of whether a company has identified what's material, whether the policies and the performance they have in place suggests they are really managing these risks and that becomes the input we feed in. The one thing I'll say is this isn't a conclusion of this company's good or this company's bad. It really is more of an indication as to whether this company is engaging and how well it's engaging relative to its peer group in managing these risks. Accidents unfortunately do happen and as we'll come back to maybe later we're certainly seeing now”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Well, yeah, an unfortunate admission of GS Sustain is in the early days we had to collect it all ourselves. And when we first launched the product SGS Sustain in 2007, a lot of our graduate analysts were collecting the data from company CSR reports. At that point, we only had 160,000 data points in the database. But the good news is we're actually now able to source this through some of the larger market data vendors. We have seen as the rise of investor focus on ESG has grown that the market data providers have moved to meet that demand by providing access to the data. We use all of the available, publicly disclosed communications that the companies make around their board structure, their incentives, their energy intensity, their emissions intensity, health and safety in the workplace, attrition, to build a mosaic.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“A real moat or a real source of competitive advantage around their business with a view that if they have the ability to defend the current higher returns into the medium term will be more durable. And then lastly an appraisal of how proactively engaged the company is in managing and engaging with the ESG issues that are specific to their industry. The question is really pretty simple. We're trying to work out are these companies really that good. It's a three-phase process. Are they already good? Do we believe they can defend that through their operations? And then this is the real wrinkle of ESG. Do we believe from their public disclosures the corporate culture is robust enough and forward thinking enough to be able to preserve those industry-leaning returns into the medium term?”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“All reasonable approaches to picking stocks typically work over time. Value strategies, growth strategies, income strategies, quality strategies, they all work over time. The textbooks weren't lying. What I'll say though is there is one really quite persistent source of outperformance that we identify in that the market fails to typically adequately value great companies. And yes, we know that high quality companies typically trade on a premium, but what we observe is high quality companies that stay high quality companies can really outperform over the medium term. So GSustain aims to identify companies most likely to remain as industry leaders. So industry leading returns on capital over at least the next three to five years by analyzing just three inputs. Are these companies already generating industry leading returns on capital? The second input, does it appear that they've built a”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Into the strategy. So very much depends on the investment approach. I'd also say this has definitely been more of a feature of the equity markets for the last 20 years. We've seen real momentum in the equity markets over the last five years, but we're also now starting to see this focus migrating into the credit markets.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“those positions for the next five years, and maybe where those position sizes are very difficult to unwind quickly, given the concentration of the fund, I'd say now for many of those investment managers integrating ESG is a core input into the investment process, because if you're going to own a stock for five years and it's not engaging with these ESG risks, the probability of it manifesting itself in impairment to value clearly becomes much greater as the holding period grows. In the middle of those two extremes, it really very much depends on the nature of the assets you're investing. If they're captive, because maybe you have a large captive asset base within the asset management firm, the level of engagement may be lower if you are using or if you're typically managing third-party assets, then in function of who your investors are, they could be very real requirements to be integrating you.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Not that focused on corporate governance and environmental social issues in the last couple of years have really compelled investors in the local markets to be more engaged with these business risks. So a groundswell of forces in the capital markets to drive this change, but then also some theme shaping the global economy that are meaning that there's value in integrating ESG because companies that are failing to do it are having some accidents and companies that are doing it very well seem to be navigating some of these global trends more effectively. And we just think about this. The reality is in the 1970s and 1980s to be a good company, you really just had to be financially sound and operationally excellent. To be a great company today, there's no option on financially sound and operationally excellent. But you also really have to be engaging with your communities, your employees, your regulators, the environment, customers.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Says, Ashley, we don't think you're doing it the way we expect you to. So, what we have definitely seen in the last 12 months is a real step change in the intensity of investment management firms integrating ESG. Historically, those that have been doing this have made big investments in stewardship teams, in responsible investment teams, in ESG teams, but many of them have had that team maybe slightly annexed from the investment process. And what we've started to see in the last 12 months is them effectively been removed right into the heart of the investment process to ensure that they have a better dialogue with their investors and a better dialogue with the corporations they're investing in to ensure they really are integrating ESG as has been expected. On top of that, we're seeing stock exchanges demand more corporate reporting of how they're managing ESG. And we've seen several equity markets around the world initiate new stewardship codes. So maybe some of the markets that previously were”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“where you identify potential opportunities potentially to collaborate with other investors, and lastly to report on the progress. Now, as soon as asset owners commit to doing this, they're putting pressure on asset managers that are managing assets on their behalf to do the same. But I think we're going to look back in a few years' time and realize that 2018 was an important milestone for this initiative. One, it was when we passed 2,000 signatories, but also it was the year in which the UN indicated that over 180 of the institutions that had made this commitment were in their eyes failing in this commitment. And they indicated that if they didn't step up how they were integrating ESG, they may potentially be removed from the list of signatories. And this has real implications if the reason you have managed to gather assets is that you've committed to integrate ESG, and then the sponsor of this process”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, a headline soundbite on this has to be that integrating ESG for professional asset managers is becoming a business imperative. I think there's two reasons for that. One source of the driver you can attribute it to development in capital markets. And I think the other you can attribute to broad evolution, global macro trends, global industry trends that are meaning that corporates that fail to engage with the ESG risks can create very real impairment to their shareholder value. Maybe just to run through a couple of these. On the capital market side, there has been a very real growth in the number of asset owners that have committed to integrate what are called the UN principles for responsible investment. Only six things you need to do, but they are basically to agree to”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Start to bite in terms of plastic waste, in terms of water stress, in terms of climate change. But I think the real opportunity set, which we shouldn't lose sight of is in the next 30 years as the economy continues to grow, we're either going to see some inflationary trends as we try and satisfy this human demand or we are likely to see not only the market, but regulators and corporations move to incentivize real innovation to address some of the challenges we're going to confront. And those innovations are likely to see us transform the way we think about doing business, transform our approach to supply chains. Currently we only recycle about 9% of what we consume. And I think in the next 30 years, we should be anticipating changes to how we meet human demand and human aspiration, really with a wholesale reform of industry structure and supply chains to help navigate the otherwise potential pinch points.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“With one another, the internet only really got going in 1993. Smartphones, digital media are all much more recent developments. But as a result of this, we live in a world today where there are more people living a more resource-intensive lifestyle with more capacity to consume and increase connectedness, which means we're seeing a real convergence in aspiration and expectations. Many of those themes are going to continue to grow. We think there'll be another 2 billion people living on the planet by 2050. Again, that migration to cities is likely to continue. Incomes likely to continue to grow, and expectations similarly likely to continue converging. Yielding a situation where we've got more people wanting to live this more resource-intensive lifestyle, but the challenge becomes finite resource with which to fuel it. And we're starting to see some of the unintended side effects of global growth, which is a great tailwind for corporations.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“Look, the last 25 years is worth just framing in context because it's a short period of a history of our species, but one of unprecedented change. There are 2.2 billion more people living on the planet today than there were in 93. That's a 40% increase. A lot of that's come from the emerging markets, but it's not as though developed markets didn't grow. The population of the US today is 25% larger than it was in 1993. The other consideration is that that increase in population is nearly six times the current population of the US. Most of those new people living on the planet are living in cities. And the reason that's of note is that actually people who migrate from a rural lifestyle to a city lifestyle are typically consuming about two and a half times more stuff than their rural peers. Income per capita over the period doubled. And on top of that, we've seen obviously a transformation in how we connect.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“seeing engagement in working with governments to think about energy ministries, national companies, sourcing elements of the content for oil field developments from the local economy and relying all of that a belief that minimizing environmental impact and health and safety issues should be integrated into the project plan from day one. It's wonderful that we found it. I think in the first instance it was not our expectation to see it but what we encountered was a tipping point for the oil industry in migration from a world of just focusing exclusively on financial and operating metrics to a much more holistic approach to managing the business and one that was really focused on long term partnership with resource owners. And we wrote the report. We had a great pleasure of presenting it at the United Nations and it inspired us to look at other industries and whether we were evolving the same way and over the course of the next three years”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“We had to spend a lot of time looking at corporate social responsibility reports that frankly we probably had never invested as much time or energy in as with hindsight we should have been doing. But we very quickly started to realize that something was changing in the oil industry. It was an industry that had historically competed for access to resource through providing the best engineering solution and the best excess to capital. But what we were starting to see was some of the companies had almost pivoted their approach to competition to positioning themselves as the best partner for the host nation to develop their scarce hydrocarbon resources with. And we were seeing a very clear shift towards a blanket ban on any activity that would constitute bribery and corruption. We were seeing investments been made in thinking proactively about community development.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT
“It's a really interesting story. I think it is often the case with some of our best ideas. There was some outside influence. And in this instance, it came as a result of a letter from the United Nations then Secretary General, Kofi Annan, to ask whether we would be prepared to write a research report looking at whether good companies generated better returns. And it ended up in the lap of our oil team that I was a member of in Europe in 2003. And look, I have to say, an oil analyst receiving a letter on do good companies generate better returns when we knew our industry had an unfortunate history of health and safety incidents, environmental impacts, community unrest, and at a moment in time when it was quickly becoming part of the global warming debate, seemed an uncomfortable piece of research to have to write. And we had to spend some time researching things we never considered.”
2019-03-25 · Goldman Sachs Exchanges · Why ESG is Becoming a 'Business Imperative' for Asset Managers · IDENTIFIED FROM THE TRANSCRIPT