YouSaid · the spoken record

Katherine Collins

lines on the record: 59
first: 2019-04-16
most recent: 2019-04-16
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Two roots. You know, we'd go to church every day when I was little, and so there was this root of kind of spirit that was very deeply set. And then we go outside all the time, every weekend we're down at the creek, we'd go see the hawks migrate. It was just a normal part of life, and it's only later in life I'm realizing how important those two roots are for me and that a lot of folks don't have either at this point. And so in my case, those have been the roots that have seen me through the toughest times. And then on the tactical side, we're both also great readers, and I do think of books as actual like living friends sometimes, like a little bit over the top. A friend of mine, when I was moving and starting my job at Putnam and had a bunch of other changes in life, made me the most amazing gift. It's a big jar. And in the jar are quotes from all my favorite books in the world so that every day I can open up a quote and start the day with a friend.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, that's such a neat question. Can I give you two? All right, I have a strategic one and a tactical one. I was so lucky to be born into my own family. So my parents gave me these.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Go outside. Like whatever it is, just go outside. And if you do that with this mindset of curiosity and observation, instead of thinking of nature as like a storehouse where we get stuff, you know, to think of nature as like the biggest, greatest library we've ever could possibly want. I mean, you can't help but find wisdom there, not just data, not just information, but true deep wisdom.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's funny if you ask people what their favorite place is, pretty close to 100%. We'll name a place that's outside. And if you look at how we spend our time, it's over 90% now in the US is indoors. So there's an interesting backdrop there just to think about. And so one thought would be just”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you've identified my own bias pretty clearly. I always, both as a person and as an investor, want to be betting on things that don't rely on regulation or really any kind of top-down action to work. Having said that, there are some really clear priorities for the world that I don't think are that controversial. Who doesn't want human flourishing? It's sort of hard to be against that. And there are a lot of ways that thoughtful policy can advocate for that. So many investors put policy first in terms of their own advocacy agenda, and that is not the case for me. But if and when it comes, I'm glad to use it.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“We mentioned a few of the organizations that are really helpful from an investment standpoint. I really can't say enough about this Asby framework. You can always critique a big framework like that, but it is a great roadmap that hundreds and thousands of people have worked on for a long time. Whether you're a quant or a fundamental investor, there's a lot there to work with in terms of just thinking about what some of the more important questions are. And then if you're an individual investor or an institution who's working with any form of intermediary, I would just encourage you to keep asking the questions if you're interested in this area. There is a pretty big gap about 70 to 80 percent of end investors of wealth owners are interested in at least learning more and taking some form of action in this arena and only about 15% of intermediaries are feeling equipped to take that action on their behalf. And so there's a gap there that we can continue to fill up.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the most memorable was a meeting where it was exactly the kind of skepticism we were talking about earlier. We asked the CFO a couple of very open-ended sustainability oriented questions and he just went, and he leaned back. He's like, those ESG people, if I see one more survey, I'm going to go crazy. And this was after two hours of talking about nothing but internal development, their new product line that had these huge environmental and efficiency benefits. And so we gently kind of pointed out actually the whole meeting has been a sustainability meeting. I'm not sure. You noticed. And you could just see this switch. He's like, oh, that's what you're doing. Awesome. Then we can talk. So that really stands out.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's so much to be done. I'm super excited. There's in some ways even more to be done on the quant side than on the fundamental side because it's a new set of explorations and links. So you've talked a lot in different settings about linking data in a different way than it's been linked before. And sometimes the insight or the value is in the combination of different factors that you're looking at. This field is just wide, wide open for that. Even the thoughtful work that's being done now is pretty narrow and it's pretty much determined by this small set of metrics that we have right now. So you're already looking at a much wider set of”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“I do think there's a happy medium. I mean, if I had to choose, I'd choose the principles myself. They're inherently, you know, back to biomimagree. They're inherently more adaptable. They're inherently better designed to begin with, right? Simple, elegant principles. But there is a real power in marrying those principles with relevant metrics and letting the metrics evolve over time as well. I find that the danger with metrics is a lot of folks skip the principles, go right to a few key metrics, and then they clamp onto those metrics, even though they're just telling a small, small piece of the story and they might not tell you anything at all you care about five years from now. And that's where, I mean, the whole field actually is stuck in a little bit of tension there. We want to solidify our metrics as soon as possible. We want to be able to have these great longitudinal empirical studies. But I want a whole different set of metrics five years from now than what we have at the moment. And so there's a push and pull there.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“So they can see, like, okay, every time we change sales incentives, there's a big disruption in our satisfaction, but this is normal and we need to do it and onward we go. So sometimes that surveys, sometimes it's retention rates, sometimes it's data on recruiting who's coming to them without being asked to come to them. I think recruiting is one of the easiest things to monitor because you're getting that sort of front end who's attracted to your company from the outside.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a neat set of questions. I find that a lot of folks who are running businesses are a little bit stuck in the report card mentality that we mentioned before, so they get a bunch of surveys, they have to fill them out. It's almost always unpleasant doesn't seem that relevant. Again, to switch from that mindset into tell me what's important to your business is thing number one. And what I find is a lot of folks, even if they understand the importance of this S set of issues to their businesses, they don't have such great indicators either, most of the time. And so I've been trying to ask gently, but firmly a little more detail like you said employee morale is high, how do you know? What are your indicators? And sometimes they're really soft indicators, like, you know, parking lots full Friday at 6, or maybe that's a contraindicator. I don't know. Sometimes it's tone of inbound questions. They're getting, but more and more you're seeing companies even at a smaller size institute some ongoing really simple indicators so they have more of a longitudinal view of that.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“We talked a lot about the whole range of S being kind of this wide open space. And one reason I'm spending so much time on that is I think in the end S actually is what ends up determining the E and the G as well, right? If you have people who are taking this more systemic, more holistic, truly long-term look at their own business endeavors and the implications that they have across everything that they touch, you can't help but see the whole thing come together.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Usually, the other side has to get at the root that we've been talking about so much here, which is this bridge from thinking about them only as value judgments to ongoing business issues. Once that bridge is crossed, it's usually semantics, you know, but you can kind of get together on that. I think that's usually where there's a fork in the road, and if someone's gone way down the fork of thinking this is only ethics and values and has no link back to the world, it's a difficult conversation, but I would just argue them with my divinity school hat on, like, when in the history of time have values and judgments not ended up affecting our world. It's all the same.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's unbelievable. And again, most analysts like ho-hum, you know, so our unit grows slowing in China or what? Like, okay, I know unit growth in China matters, but this is like a world changing and chains everything about their whole process, right? So if you listen to that, you might have been less surprised that they started offering more and more recycling incentives. You might have been a little less surprised that they started talking so much more about their services business. You're getting these clues that are linked to environmental challenges and benefits that ripple out in some surprising ways in different businesses.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Everyone's happy. Win, win, win. So, in almost every sub issue under ESG, there's something like that where you could get behind a few specific solutions or a few specific activities that had this gigantic impact and also positive economics associated with it. So we're always looking for that. So methane would be one example of that in the environmental arena. Another element in environmental that is behind overall air quality, but I think just as important over the next 10 plus years is just basic raw materials and especially like rare earth materials. Here you've had some really ambitious things announced by companies that have mostly been met with a big yawn. So Apple two years ago now announced that they not only wanted to make all their products recycle a bull but that they want to only use recycled materials. No new materials within a shockingly aggressive timeframe I think is 2030.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“On the e front, there's a lot of work that's done on emissions, which is valid and terrific. One other theme that we look for across all sorts of issues is this idea of leverage points. So there are a lot of things that are small proportions of a total system that they have huge outsized impacts. So in emissions, for example, methane is somewhere around 80 times as damaging to the environment as CO2 emissions. And it's also from a very identifiable small subset of sources. So you could actually eliminate methane if you wanted to in a way that's not nearly as overwhelming as thinking about eliminating CO2. And it's also trackable. You can see it with infrared imaging. There's all kinds of attributes to getting at methane. And there's an economic incentive.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly, exactly. And if it's not, that's okay, but then you should admit this is just a compliance function and it's over here, you know, or it's complementary, but it's not actually part of the process.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“They had this terrific loan growth, and when they describe how they got that loan growth, almost all of it is coming from people who have been with them more than 10 years. And so if they didn't have this great culture, that was also keeping people in their seats, they wouldn't have had this loan growth. And so the analysts are all happy about the loan growth, but they're not asking about how it actually occurred. They're just thinking it's luck and it's not luck at all.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, this was our goal, this was our process. We met every six weeks. Here was our data. Here's how we processed it. Here's how we did the outreach. Like it was a very, very fitting way to approach it, given the way that they run the whole rest of their business. So we look for that kind of alignment in a great way. Another element that is often overlooked is the S in businesses where you think it might not matter as much. So we spent a lot of time with a bank out in the West Coast last year. They've always talked a lot about internal culture. Everyone kind of yawns when they mention it on the conference call. Like they know they have high expense rates and they assume they must spend it on something worthwhile. But that's it. Nobody ever asks. So we spent a few hours with them doing nothing but talking about like what does this actually mean in practice like walk us through examples and was a CEO and the OOO and the CFO and they were so happy we weren't asking about that interest margins. They're jumping up. They're pulling other people into the meeting. They're telling us stories. And sure enough, you know, the six months after that.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“And ongoing employee well being. It's super cool. So the thing that excites me there is one question we always have is the question you ask. Like, are you checking the box because you think this is just a necessary thing or do you actually think this is a valuable thing? The fact that they're taking all of their internal S issues, all of their human issues, and using the exact same framework that everyone is already completely devoted to for the rest of the business for these issues shows you they think this is a real business issue, they're managing it things exact same way people are getting paid for training in this regard just like everywhere else. We had a similar conversation on board composition with a big defense contractor and they have a shockingly diverse board and I ask them you know how'd you do this every other company that has the technical expertise says they can't find the right people and you know woe was me there's only three female generals ever in the history of the world and they had none of those complaints and the way they described it was completely as an engineering project”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“One thing we look for in the fundamental process, and again, the question is investor specific too, like what can we add at Putnam to this whole process? The thing we can add the most on is fundamental insight and that kind of granular work that complements the bigger data set-oriented analysis. One thing we always look for, therefore, is their alignment between the data we see and the way people are describing how the businesses actually run. So for example, we had a company in a couple weeks ago and they're known for having a really strong internal management system, so legendary. It's 40 plus years in the making now. Everyone internally knows all the acronyms, all their investors know the acronyms too, slightly cult-like, but very, very effective. And they've used it to manage first their manufacturing processes and then their sales and growth opportunities and what is the newest for them just the last two years or so is they're using the exact same system to look at internal talent development.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Split, I'd say, in terms of where that mindset has taken hold. The institutional setting is pretty split, not just by type of institution, but also geographically. The Department of Labor has given some advice in the U.S. that is easy to interpret as highly cautionary, although I think it's a very matter of fact advice, and that has kept a lot of institutions in the U.S. leaning back in these conversations. Whereas in Europe, it's almost the opposite. It's kind of a requirement.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm a little worried about one dimension, which is, and a lot of firms are wrestling with it right now, the question of whether this should be treated as a separate asset class or a separate allocation decision. Is it like a tiny slice of a much bigger pie? And for ease of functioning, a lot of folks have set it up that way, right? So here's your main pie. And if you're really lucky and you find something really great, we'll allocate this as an exception to your main pie. And that's true across individuals, institutions really across the whole. That makes sense if you think this is purely an opt-in values-based decision only. It doesn't square it all with the idea that this might have terrific return potential if you actually think this has good return potential over time. You should be considering it across every decision that you make as one of many factors. You're starting to see some of that with some advisors very geographically.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's going from a very zero sum mindset to a little bit more of a systems thinking mindset. And that's a fuzzy thing to mention, but I think it's actually the most powerful thing that's shifting under the surface. Because once you start thinking of this all as a very matter of fact, like I want to understand the whole puzzle and this is an important piece of the puzzle, then a lot of other things become possible.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's been a pretty big shift that is more visible just this last, I'd say, five years or so. If you look at the aggregate numbers on anyone's surveys or polls, there's a nice step up and to the right, almost every demographic group, especially pronounced for women and millennials, which is a key strategic focus for a lot of investment firms. So there's a handy alignment there. But what I'm seeing underneath that kind of high-level statistical summary is a little bit of a difference in how folks are even considering the question. Until pretty recently, the question came with a very strong supposed cost that went along with it. So do you want to do this thing enough? Because it's riskier and it might hurt you. And even if that wasn't said, it”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Deeply uncomfortable and kind of threatening thing to pause. And so I'm really into it. Like, that fills me with joy, that statement, but I've noticed for a lot of people that is not okay.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, there's a couple reasons, I think. One, it is really hard and an awful lot of the work is still in that it depends category, which for an awful lot of investors these days is either something they can't do given their own process and resource base or don't want to do because they want to have something that is completely consistent and explainable and that goes against it depends kind of approach. The other element runs a little deeper, but I think it's almost as powerful, maybe even more powerful and that is there are so many folks who have come up in the industry through a very rigorous Chicago school style training, all of which is hugely valuable, but they've taken it to be a religion instead of a set of tools, and it's really hard to free your mind and think that there's something you might not be able to measure so precisely today that's actually going to constitute the majority of your long-term return.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It could potentially be both. I mean, obviously, in the best scenario, you'd get all the above, right? You get paid twice. And I do think there's some rationale for that. So, for example, I lived in London for a few years, and I got my first water bill in London. It was as much as my mortgage had been back in Boston. And I was just one person taking an occasional shower. It was nuts. And then I went back to my Boston bills just to make sure I wasn't going crazy. It was like $6. And so this idea that here you have something in theory, it's a commodity. There's plenty of water in Britain. I mean, it rains every day. But the price for that was really different. And so the businesses that attach to that were increasingly valuable. You know, you save 10 gallons of water in London, you can actually see the difference much more clearly economically. So that would give you, in theory, some of each, right? So it's that same economic flywheel that would rerate your securities over time and also reaccelerate the underlying business.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's all the above. It is younger. It is harder. Pretty often the data for solutions oriented companies really is that granular, fundamental level analysis. Yeah, you got to roll up your sleeves and really understand how is this flow control valve different from the other one? And do I really think it's better? Is it actually improving water quality? You have to roll up your sleeves and understand the mechanics of HSA accounts and like, is it actually a good idea for most people to have them or not? So I like that the two kind of come together. Again, you've got some external data and protocols and themes that you know are important for the world and have outsized benefit in different dimensions. That's always been a great way to find investment candidates, but it's the really granular fundamental work that constitutes the impact for most of those companies.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the companies in which you invest. The Larry BlackRock Proclamations have gotten a lot of press along these lines for that same reason. The whole goal of the PRI is to promote a healthy, ongoing business and financial system, which is totally necessary. I'm 100% for it, has very little to do with actually generating incremental alpha. And so the two can happily coexist, but they're not the same endeavor. And so you can have a firm that completely wholeheartedly endorsing the PRI and doing everything that they can and should do under that framework. It may or may not have anything to do with their ongoing alpha generation. You can easily be aware of ESG issues as part of your process, but not actually incorporate them. If you didn't think they were valuable, I would argue maybe you shouldn't incorporate them.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“I am so glad you brought it up because this is at the heart of most of my day now. And again, I think an AND approach as opposed to either or is probably helpful here, but it's really important to keep them separate. So there's a long list of protocols and procedures and governance for our own industry that has to relate to the PRI and other fiduciary elements that occasionally appear to be in conflict, but mostly are congruent. That's very separate from the investment-oriented arguments that we just were making. And so they have the same terminology. Sometimes they use the same data, but it's towards very different ends. And again, it's not either or. I think there is a real benefit to institutions like the PRI, Putnam's a signatory, but when we're answering those questions on behalf of Putnam as a whole, we're answering along the lines of, tell us about your proxy process. Is it really responsible? Do you actually pay attention to it? Do you do your own voting? Do you have ongoing communications with companies? Do you promote ongoing good storage?”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Is some of those solutions oriented companies might not look very good on those third party metrics. You know, they're smaller companies. They don't have a whole team managing disclosures. Their goal is to get more of their product out in the world because it's actually got this gigantic positive ripple effect. So there's a little bit of tension there.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's the kind of activity we want to look for in leaders exactly what the name implies. There's a second vector, though, and it's one that is not only necessary for truly resilient and robust climate, it's also very appealing to a lot of investors, and I think might have even more return potential over time. And that's this idea of solutions-oriented companies. So companies where the essence of what they're doing is actually solving an issue related to our climate. And so they're not managing their own emissions down. They're actually helping everyone else manage their emissions down. And I mean, I'm a mid-cap growth investor at heart, and so this just sings to me. And it's also a very American point of view I've noticed. When I talk about this idea to investors in Europe, they're like, ah, interesting. When I talk about it to Americans, they're like, yeah, let's fix it. You know, it's a much more enthusiastic entrepreneurial kind of zeal that's behind it. So you need both of these things. What's interesting when it comes to kind of the bureaucracy of ESG and the data we were just discussing.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Here is where there are two schools of thought about they really are like theories of change if you want to go back to like the true roots. One set of ways to engage is to align yourself with global protocols that have all already been established and you want to map yourself to companies that are following those global protocols doing as much as they can to kind of hold up their end in the bar. So lower emissions or lower water use or improve clean water in their operations, et cetera. The nice thing about that is those global protocols are explicit and they're standardized and they're measured and many of our metrics match pretty well to them. So if you're looking at a big global company, it's a pretty legitimate and a pretty fruitful analysis to see what they're doing and to be able to compare it against peer. So it's analytically very satisfying, right? You feel like you're not making too many big leaps of judgment. So that is terrific and that is a big part of what's behind. We have two portfolios at Putnam. One's called Sustainable Leaders.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, yes. It was all change in performance versus their own peers. So the actual metrics would vary topic by topic, but that was the rubric behind it.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I can give you some pieces, and I know I won't do it justice. So everyone go seraphim, first evidence of materiality is the title of paper. So it was a couple decades of data. Admittedly, it was getting better and better along the way, so not a completely consistent data set temporally, but a long data set in terms of its availability in a few thousand companies altogether. So pretty robust, you know, taken as a whole, especially in this arena. I mean, way more robust than anything that had come before. And so, again, the plain vanilla version took all of the kind of sustainability menu, if you will, and equal weighted those factors. Performance along those factors for each company, each industry. And it showed that companies that did better in terms of their sustainability performance marginally better returns, but again, not enough to really hang your hat on over time. And then the second version took that same data set, weighted the issues that were more material, and what you found were companies that did the best job managing the”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“When you just simply weighted the issues that everyone had already agreed were more important, more heavily, in the model this huge potential alpha jumped out over seven hundred basis points in his initial study, which is like when's the last time you saw that? So even if you want to quibble with the data, even if you want to poke holes in different forms of analysis, like that is a lot to work with. And so that was the first time that we really took this relevant kind of business centric approach to thinking about sustainability disclosure, and that's what we're all working for.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so this is where the art and the science kind of meet. I didn't center too much on the empirical evidence so far, so let me spend a minute on that, and then I'll bridge to how we try to connect the dots now in our fundamental process. So on the empirical side, there are a number of studies now that have a similar construct, but the one big foundational study here was done by George Seraphim at Harvard Business School a few years ago. This is even before our current data had evolved. And so a very, very labor intensive process. He took the SASB framework that looked at material issues by industry, mapped all of the company disclosures to those material issues, and then weighted the material issues higher as opposed to just taking everything at the same average weight for performance. And he found that when you took all of the factors on a plain vanilla average equal weighted across every possible circumstance, you found like a little potential alpha, but it wasn't statistically significant. It wasn't something you'd want to hang your hat on as an investment process.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Reason I've given a couple examples in the social arena already is I think it's the biggest, most open white space for further exploration. If you meet with a CEO of almost any company in the world and you ask what's the first thing they think of when they get up in the morning, it's not what orders were overnight or if the factories are uppermost. It's people related almost 100% of the time it's people related. And yet you look at the amount of disclosure we have around people, around the number of questions that analysts ask on conference calls around people. There's almost nothing. It's the biggest gap by far between what determines long-term performance.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Tie to our other markers of diversity, which tend to be a little more demographically described. His newer work actually shows that there is indeed a link between demographic diversity and cognitive diversity. So differences in age, differences in income, differences in race, differences in religion, in academic training, all of that. You want to have a mix brought to bear. And so most boards at most times are dealing with that last set of issues where the company itself is changing, the circumstances it finds itself in are changing, and you're really trying to keep a steady course throughout all that change. So it's pretty good underlying theory that's baked into that. It's not coming from a place of niceness. It's coming from a place of performance, although I like to think the two can coexist.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, I would call on the work of Scott Page, who I got to know also through the Santa Fe Institute. The thing that is unique about the evolution of his work is he started out focused on cognitive diversity. And it's pretty well accepted and pretty well proven, at least in a theoretical construct, that if you're doing a repetitive task like a factory, you really don't need cognitive diversity. In fact, the less the better if you're doing the same thing over and over and over again. If you're doing something where the environment around you is shifting a little bit is probably helpful, but you still need a lot in common because you're navigating along one or two paths, but that's it at any given point in time. If you're in an environment that's kind of like the ocean where you're trying to chart a course and like the very ground beneath you is shifting as you go, then you really need like the maximum of skills put to bear to actually get where you're going to. So this is a well-developed theory and one thing that's got noted in his early work is that cognitive diversity may or may not”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“As many context examples as possible. Yeah, so some of the more interesting things in governance are incentive pay and whether incentive pay is aligned with the underlying structure of the business and what makes for a good business over time. There are a lot of more straightforward metrics like board composition as we just alluded to and things that are a little more structural in nature. To me the incentive question gets a little bit more forward-looking, a little more strategic. So that's one that we focus on a lot for governance.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it actually fits on one page, which is terrific. And we've just got again each major sector a few of the key elements split out by governance, social, and environmental. As you might guess, most governance issues are fairly universal. So that's a pretty short list of topics.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's pretty common sense, but it took a long time just to develop this one standard map. So the first thing we did in our work at Putnam was to refine that map and actually simplify it even further, to streamline it into a few areas where we either had some insights from our fundamental research that there might be something even more interesting there, or we had a little leg up in one little piece of data that might actually lead us to some better questions. That wasn't so hard to do. And importantly, in doing that, we made sure that it really was an integrated approach. A lot of folks are running into walls with ESG practice because they have a team in the corner called the ESG team that often does really, really excellent work, but then the investment teams over in the other corner, and once in a while, they meet and try to talk to one another. And that is a very hard way to generate any kind of value. So it's terrific benefit to us that our investment team and the ESG team are one and the same. We're embedded in each other's meetings.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“There can be a little bit of a chicken and egg element, particularly if you're looking for that empirical evidence before you go any further. So there are a few different elements here. One is the first thing we did when we started this effort in a more formal way at Putnam is we just did a big map of all the major sectors, all the major potential issues, and we modeled it off of the SASBI framework. You've probably seen the Sustainability Accounting Standards Board has a gigantic set of maps took 10 years to develop. They included investors, corporate executives, accountants, you know, very collaborative long development period. And the whole point of SASB is to help investors focus on the relevant material issues for any given sector. So if you're looking at extractive companies like an energy company or a mining company, you really do want to spend a lot of time on safety or emissions numbers. If you're looking at a retail company, you probably want to spend time on supply chain or wage policy.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Just very high level, high low glass door rankings, do they tell us anything? Do they indicate any performance? And there's some evidence that particularly for companies that are earlier in their Analyzable. If you look at not just that data set, but that topic more broadly, and how might that inform you then if you're trying to think of having an advantage over three or five or ten years as opposed to three or five days?”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Pretty big mismatch. So say you're interested in whether companies you're investing in have truly functionally diverse and inclusive teams. You can count the number of women on a board, you can count the number of women in senior executive positions like I'm glad to know those things, but those aren't even close to answering the real question that I have over here. They're sort of the first step on a very long path. So there's a lot of potential to improve upon those, and this is where we maybe bridge more into your world, but there are a lot of other data sources in the world that can inform the kinds of questions that we have. So there's been some terrific analysis the last couple years on glassdoor data, for example, trying to figure out, is there something here? If there is something here, how can we characterize it? And sure enough, you see the progression there that I think you're going to see on a lot of different issues. So it might be worth spending a minute on that just to get a sense of how things evolve. So the first question was,”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“ESG is easier to say than most of the other terms we've invented, and so it has become a big catch-all for a lot of other things. Having said that, environment, social governance, there's very little that doesn't fit under one of those giant umbrellas somehow. So they're okay in terms of umbrella terms. What I don't think is settled yet at all, though, are the metrics that go underneath those terms. So when a lot of folks talk about ESG data, all that they're really referring to is bundled up third-party data that's available from vendors like MSCI or Sustain Analytics, Thomson Reuters has some, carbon disclosure project has some, Bloomberg has some. That's a pretty small piece of the total pie. So the good news is it's structured data. It is as consistent as we currently have when it comes to comparing across companies or industries or regions, but it's still incomplete. It's still very early days. And if you look at the mismatch between the metrics and the true questions, it's a...”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Life. I think the next 20, 30, 50 years are going to be determined by the value that we can create out of exploring these issues more fully.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source
“Clues about current performance gives you a better set of questions to follow up on. You have the chance in our case to talk with company management, figure out how what we're seeing matches with they're seeing how what we would think might be priorities for the long-term health of their business match with their own perceptions. You get that iterative loop going again in terms of analysis. So backing up from all that, if you're thinking, okay, as an investor, what is it you're always seeking? You're always seeking some kind of edge. You could have a time horizon edge if you're doing something that's longer or shorter duration than your peers. You could have some kind of edge in terms of insight or wisdom or understanding. And you could have an edge in terms of your own analytics, which kind of go hand in hand with those first two. I think this is the greatest white space of relevant long-term value generating issues that doesn't yet have a complete data set. And so if you're a researcher, I mean, I've never seen anything better in my home.”
2019-04-16 · Invest Like the Best · Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129] · IDENTIFIED FROM THE TRANSCRIPT · source