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BlackRock's Winshel: Millenials Driving Impact Investing(Audio) · Bloomberg Intelligence

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  Speaker 1: one point seven seven And that's a Bloomberg business flash.
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  Speaker 1: This is taking stock with Gadleen Hayes and Pim Fox
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  Speaker 1: on Bloomberg Radio. Impact investing, investing that does more than
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  Speaker 1: just look at the bottom line of dollars and cents.
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  Speaker 1: It looks also at the bottom line when it comes
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  Speaker 1: to the Earth and the Earth's resources. Sustainable investing. Well,
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  Speaker 1: here to tell us more is Debrah Winchell, Managing director,
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  Speaker 1: Global head of Impact Investing for black Rock. They have
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  Speaker 1: over two hundred and twenty five billion dollars of assets
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  Speaker 1: under management and they've got a new Impact e t F. Debra,
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  Speaker 1: thank you very much for coming into the studio. Appreciate
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  Speaker 1: it having me what tell us about what is how
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  Speaker 1: do you define impact investing and then maybe you can
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  Speaker 1: use that as a lead into the new e t
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  Speaker 1: F and how that expresses what you're trying to accomplish.
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  Speaker 1: Sure impact investing or sustainable investing, there are lots of
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  Speaker 1: names is looking for investment opportunities that have more than
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  Speaker 1: just a financial return. They also generate an environmental or
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  Speaker 1: a social outcome at the same time. Now, this generation
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  Speaker 1: of both the financial outcome and let's just call it
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  Speaker 1: well being in general, how do you define that well being?
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  Speaker 1: Part of it the goodwill that the company will generate
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  Speaker 1: by providing these kinds of sustainable investments well as specifically
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  Speaker 1: as possible. And I think that's really the goal of
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  Speaker 1: the investments that you see out there, and that we
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  Speaker 1: offer very specific definition around a climate outcome, perhaps companies
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  Speaker 1: that have lower carbon outcomes or more carbon efficient or
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  Speaker 1: other outcomes along social or environmental dimensions. It could be
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  Speaker 1: around diversity, or how employees are treated, or the products
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  Speaker 1: that they create, health products perhaps that address certain issues
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  Speaker 1: that are particularly complicated or that are you know, very
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  Speaker 1: serious in the world. Tell us about some research that
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  Speaker 1: you've done at black Rock that indicates that the potential investor,
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  Speaker 1: who is now let's say a millennial, is very interested
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  Speaker 1: and that this is an important factor when they're considering
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  Speaker 1: an investment. Right. Well, it's interesting, there are a lot
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  Speaker 1: of demographic changes that we're seeing that are really driving
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  Speaker 1: this interest in impact investing or sustainable investing. First of all,
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  Speaker 1: certainly with millennials. I think you see it in the
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  Speaker 1: companies where we work as well as what we see
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  Speaker 1: with investors. There's an increasing interest by millennials to make
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  Speaker 1: sure that their investments have both a financial return and
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  Speaker 1: a social or environmental return, in the same way we
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  Speaker 1: see with women who are increasingly inheriting or generating more
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  Speaker 1: of the financial assets, and that trend is continuing significantly
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  Speaker 1: over the next twenty years. Women also are looking for
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  Speaker 1: their dollars to accomplish more than just generate a return.
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  Speaker 1: So those are two very significant demographics that are driving
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  Speaker 1: this interest and sustainable investing. And I would say that
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  Speaker 1: you see it both on the investing front and you
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  Speaker 1: see it on the consumer front. You see it really
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  Speaker 1: the way that I think millennials and women look at
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  Speaker 1: the world today. Your own personal background has both of
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  Speaker 1: those components as well, because previously you were at JP Morgan,
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  Speaker 1: but also you were the head of the Robin Hood Foundation,
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  Speaker 1: and you were also the chief financial officer and high
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  Speaker 1: level executive at the Metropolitan Museum of Art. How did
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  Speaker 1: those two career paths come together with this impact and
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  Speaker 1: sustainable investing. Well, I think first, growing up in finance
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  Speaker 1: allowed me to take a very rigorous approach to thinking
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  Speaker 1: about problem solving or creating products, both at the met
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  Speaker 1: and where I was the CFO, but in a very
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  Speaker 1: mission driven organization where we had to think about both
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  Speaker 1: um outcomes that were entirely related to the mission of
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  Speaker 1: the organization, but also the bottom line so it could
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  Speaker 1: be run in a very effective way. At Robin Hood,
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  Speaker 1: I had the opportunity to really learn about poverty fighting
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  Speaker 1: from just one of the best poverty fighting organizations I
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  Speaker 1: think in the in the world, and the what Robin
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  Speaker 1: Hood brought was a lens of metrics. How do you
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  Speaker 1: measure and compare one intervention to another? And I think
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  Speaker 1: putting metrics around something as difficult to measure as poverty
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  Speaker 1: fighting was very instrumental in what I could bring to
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  Speaker 1: Black Rock. Putting metrics around environmental or social outcomes or
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  Speaker 1: impacts give us an idea of the conversation that someone
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  Speaker 1: might have with the chief executive of a company that
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  Speaker 1: is debating the value of sustainable investing in whether that
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  Speaker 1: ought to be part of their corporate message or whether
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  Speaker 1: they perceived that to be just a kind of the
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  Speaker 1: flavor of the month. How did you have that conversation
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  Speaker 1: with the head of the company. Well, companies who are
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  Speaker 1: actually the ones who are being invested in UM, I think,
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  Speaker 1: are increasingly focused on what their impact is on the world.
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  Speaker 1: You see it with consumer companies as they look at
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  Speaker 1: their supply chains. You see it with lots of companies
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  Speaker 1: around environmental impact. We certainly saw with COP twenty one
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  Speaker 1: and the focus on climate that lots of companies are
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  Speaker 1: starting to think about both their products and their operations
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  Speaker 1: in terms of how they impact the world. And I
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  Speaker 1: think companies are becoming very sophisticated about appreciating how consumers, investors,
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  Speaker 1: many stakeholders are focused on responsible operations. Do you believe
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  Speaker 1: that the companies will be less reticent about supporting sustainable
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  Speaker 1: issues that not necessarily have anything directly to do with
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  Speaker 1: their company, but just because they are, let's say, a
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  Speaker 1: public face, will they be supporting more of these climate
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  Speaker 1: change and sustainable investing initiatives. I think companies globally are
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  Speaker 1: becoming more sensitive to and most and more supportive of
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  Speaker 1: initiatives of this type. I think a lot of companies
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  Speaker 1: are actually facing the an impact of environmental or climate impact.
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  Speaker 1: It actually affects their bottom line, So I think there's
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  Speaker 1: both the operating risks and opportunities the companies see. I
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  Speaker 1: think there's the consumer awareness and now increasingly there's the
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  Speaker 1: investor focus on these outcomes. I think looking at all
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  Speaker 1: these different factors all impacting companies is definitely elevating this
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  Speaker 1: as a focus for leadership across the globe. The exchange
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  Speaker 1: traded fund give us the details. Well, the most recent
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  Speaker 1: fund that we launched is an e t F and
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  Speaker 1: exchange traded fund that is tied to the sustained the
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  Speaker 1: u N Sustainable Development Goals. So it's an index that
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  Speaker 1: constructed around companies derive a large percent of their revenues
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  Speaker 1: from activities related to those goals. So it's one of
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  Speaker 1: the first times that there's been an investment opportunity where
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  Speaker 1: you can invest in companies that are specifically focused on
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  Speaker 1: those outcomes. Looking at the u N s TOW Sustainable
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  Speaker 1: Development Goals was a very clear way of selecting a
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  Speaker 1: set of criteria that already has a large sort of
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  Speaker 1: support and following well, just looking at some of the
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  Speaker 1: holdings of the Eye Shares Sustainable m s c I
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  Speaker 1: Global e t F, taking a look at the lead
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  Speaker 1: company value in France, looking at water and treatment facilities,
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  Speaker 1: Schneider Electric, big engineering firm A b B, as well
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  Speaker 1: as Pierson PLC. I think a pierconis and education company.
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  Speaker 1: How does that fit into this sustainability look. Education is
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  Speaker 1: a leading issue globally UM advancing education in terms of
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  Speaker 1: RYE in elevating UM the level of income around the globe.
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  Speaker 1: I think all of these companies derive revenues from something
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  Speaker 1: that's specifically related to improving the circumstances of the world
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  Speaker 1: or the population of the world. One of the most complicated,
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  Speaker 1: I would say elements of all of this is getting
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  Speaker 1: good data and measurement, and that's something that black Rock
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  Speaker 1: is extremely focused on. Can we create opportunities that have
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  Speaker 1: a specific outcome that we can measure that investors can
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  Speaker 1: say yes, that's something that would be very appealing to me.
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  Speaker 1: And I just want to correct myself. I was wrong.
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  Speaker 1: I was thinking of Suez, which is also in the
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  Speaker 1: e t F that is the uh forerunner of the
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  Speaker 1: water company. But value of making automobile parts. Does this mean,
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  Speaker 1: for example, that coal companies or those that are companies
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  Speaker 1: that are focused on fossil fuel, would they ever have
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  Speaker 1: an opportunity to become part of this sustainable investing. It's
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  Speaker 1: unlikely that a company that derives the majority of its
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  Speaker 1: income from fossil fuels would be a leading part of
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  Speaker 1: of an index like that. On the other hand, you
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  Speaker 1: sometimes see the companies that are most entrenched in some
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  Speaker 1: of the traditional forms of energy are also the ones
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  Speaker 1: that are leading some of the most innovative work around renewables.
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  Speaker 1: So one of the things that I think is a
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  Speaker 1: challenge is finding investments that are just pure plays. A
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  Speaker 1: lot of time, companies that are doing some of the
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  Speaker 1: most innovative and exciting work can also have some traditional
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  Speaker 1: businesses that you might not associate with those outcomes. And
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  Speaker 1: and just the last point to you this e t F.
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  Speaker 1: This is something that Black Rock is gonna put its own,
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  Speaker 1: uh sort of muscle behind to popularize. Yeah, we had
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  Speaker 1: a launch a couple of weeks ago on Earth Day.
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  Speaker 1: We partnered with the United Nations and had a launch
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  Speaker 1: and rang the bell and you know again, we're creating
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  Speaker 1: a platform of products across all asset classes. That is
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  Speaker 1: an effort to provide opportunities for lots of different investors
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  Speaker 1: across the globe to have the opportunity to make impact investments.
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  Speaker 1: Thanks very much for sharing your thoughts and educating us.
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  Speaker 1: Debra Winchell, Managing director, Global Head of Impact Investing for
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  Speaker 1: black Rock