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E164 Ian Simm: Nature Is The Next Big Trade · Second Nature

• 0:06
  SPEAKER_00: Ian, thank you for coming in.
• 0:08
  SPEAKER_00: We should probably start by telling people who you are and what you do.
• 0:11
  SPEAKER_01: So I'm Ian Sim.
• 0:12
  SPEAKER_01: I'm the founder and chief executive of Impact's Asset Management.
• 0:16
  SPEAKER_00: Wonderful.
• 0:16
  SPEAKER_00: Can you um bring the business to life or is give us an idea of what you do, the scale of the business, help people understand it?
• 0:23
  SPEAKER_01: Sure.
• 0:23
  SPEAKER_01: Yeah.
• 0:23
  SPEAKER_01: So we manage money for institutional investors like pension funds or sovereign wealth funds.
• 0:28
  SPEAKER_01: And we also manage money for retail investors who come through intermediaries like wealth management platforms.
• 0:34
  SPEAKER_01: And what we're trying to do is invest in a particular area of the economy, which we call the transition to a more sustainable economy.
• 0:42
  SPEAKER_01: So I can explain about that if that's helpful.
• 0:44
  SPEAKER_01: What we're doing at the moment is we employ about 270 people all around the world.
• 0:49
  SPEAKER_01: So United States, Denmark, Ireland, Japan, Hong Kong, and most in London.
• 0:54
  SPEAKER_01: And we're managing something like 25 billion pounds of money for other people.
• 1:01
  SPEAKER_00: How on earth did you get there?
• 1:03
  SPEAKER_00: Can you give us your almost your content page of the book that is your story of from where you grew up to how you sit here today?
• 1:11
  SPEAKER_00: Oh gosh, how long have you got?
• 1:13
  SPEAKER_00: As long as you need the main chapters, what are the big defining chapters as you see them?
• 1:17
  SPEAKER_01: Yeah, sure.
• 1:18
  SPEAKER_01: Well, I grew up in in Yorkshire and I was always quite adventurous as a kid.
• 1:22
  SPEAKER_01: So I'm slightly um embarrassed to admit this, but when I was 12, I took a train um to the next station, and which was York, and I was a train spotter.
• 1:32
  SPEAKER_01: And what that did was it gave me the confidence that I could do something by myself at the age of 12.
• 1:37
  SPEAKER_01: And then my my teenage years, and actually into my early 20s, I was always up for a bit of adventure.
• 1:41
  SPEAKER_01: So I was in the scouts.
• 1:43
  SPEAKER_01: Um, I went went on a uh one-way ticket to China when I was 18.
• 1:49
  SPEAKER_01: Wow.
• 1:49
  SPEAKER_01: Um, and came back through Russia on the Trans-Siberian Express.
• 1:52
  SPEAKER_01: And then when I finished my degree, I set up and ran an expedition to cross the Sahara on a tandem bicycle with some other people.
• 1:59
  SPEAKER_01: So that was the starting point.
• 2:01
  SPEAKER_00: Where did that idea come from?
• 2:03
  SPEAKER_01: Oh gosh, that's another long story.
• 2:04
  SPEAKER_01: Um, I'd been running the University Expedition Society, but I'd never really been on a property.
• 2:08
  SPEAKER_01: Where did you go to Uni?
• 2:09
  SPEAKER_01: I went to Cambridge University.
• 2:11
  SPEAKER_01: Um, I'd never been on a proper expedition, so I was a little bit embarrassed.
• 2:15
  SPEAKER_01: Um, and when I finished my degree, I thought, oh well, not quite sure what I'm gonna do.
• 2:18
  SPEAKER_01: So I decided I would try and set up an expedition.
• 2:21
  SPEAKER_01: So that was where the the origin came from.
• 2:23
  SPEAKER_01: And I think I'd been reading a novel, maybe a Camus novel about North Africa.
• 2:27
  SPEAKER_01: So I just was excited about this.
• 2:28
  SPEAKER_00: When you think about now, what's the most important lesson you learn on that expedition?
• 2:33
  SPEAKER_01: Well, I think what what I was saying before, all the way from train spotting to that expedition, I learnt about um adventure, but also learnt about the environment.
• 2:41
  SPEAKER_01: And that's been a real theme through my life, realizing the environment's quite fragile and wanting to do something about it.
• 2:47
  SPEAKER_01: Um, but also this idea of sort of self-reliance and confidence to go and do what you like rather than fit into someone else's uh frame of reference.
• 2:56
  SPEAKER_01: I think a bit of leadership as well.
• 2:57
  SPEAKER_01: So um these sort of experiences, not China where I was really by myself, but certainly across the Sahara, that was about making sure that the team was the right people, made sure that they were okay fitting together, and when things got tough, that we all kind of pulled through.
• 3:12
  SPEAKER_00: Love it.
• 3:13
  SPEAKER_01: Bring us out chapter one.
• 3:15
  SPEAKER_01: Bring us out of uni.
• 3:16
  SPEAKER_01: Yeah.
• 3:16
  SPEAKER_01: So out of uni, I went across the Sahara.
• 3:18
  SPEAKER_01: Yeah.
• 3:18
  SPEAKER_01: And then I spent, what would that be?
• 3:20
  SPEAKER_01: Um, probably about eight or nine years just trying to find my feet with a career before I started Impact's asset management.
• 3:27
  SPEAKER_01: And the brief history of that was I did a bit of environmental consulting, um, which was about putting together specialist teams of experts in various environmental science and business type disciplines and sending them off for World Bank projects in places like Southeast Asia.
• 3:43
  SPEAKER_01: Then decided I wanted to get a master's degree.
• 3:46
  SPEAKER_01: So I did a couple of years of what was called public administration, but it was really about how government policy works with a specialist area in environmental policy and then a little bit of management consulting after that.
• 3:57
  SPEAKER_01: And then I thought, goodness, I really have fed up working as a consultant.
• 4:01
  SPEAKER_01: Um, and I had this real passion for solar energy.
• 4:04
  SPEAKER_01: So I decided I'd quit my job as a consultant.
• 4:06
  SPEAKER_01: And I took myself off to South Africa and tried to set up a solar energy business, marketing solar panels.
• 4:13
  SPEAKER_01: Um, it this was in the mid-90s, and frankly, it was a disaster because it was just way too early.
• 4:18
  SPEAKER_01: And um there's a big utility in in South Africa called ESCOM, which was just completely dominant.
• 4:23
  SPEAKER_01: Um, and so me by myself was not going to get anywhere.
• 4:26
  SPEAKER_01: So I learned quite a lot there about okay, private sector, um, what it takes to try and set up a business.
• 4:31
  SPEAKER_01: Actually, a critical point, I think, in that period was I realized that the private sector was where the solution to environmental problems lay to a significant degree.
• 4:40
  SPEAKER_01: Not entirely, but that's where the money is.
• 4:42
  SPEAKER_01: And if you want to change things, you need money, and that the money is more in the private sector than the public sector.
• 4:46
  SPEAKER_01: So I'd gone from, if you like being interested in environment and science and adventure and bolting on um, okay, I need some money, and initially thought, well, government's where the money is, but then realized that actually I'd much rather work in the private sector, which was much more suited to my personality, if you like, of you know, um really not wanting to work in someone else's framework, dare I say.
• 5:06
  SPEAKER_00: This just got exciting.
• 5:07
  SPEAKER_00: Um, that's quite a counterintuitive perspective to hold when you held it.
• 5:13
  SPEAKER_00: So when you started to describe the the private sector could have the solutions to environmental challenges, how did that land with contemporaries and peers and people who did have the capital in place?
• 5:23
  SPEAKER_01: Well, I wasn't by myself.
• 5:24
  SPEAKER_01: I mean, at that time, there was a solar energy industry that had started in the mid-70s, uh, particularly in the US.
• 5:30
  SPEAKER_01: Wind turbines were starting to be installed around Europe, still very expensive, needed a subsidy, but but there was lots of enthusiasm for for those.
• 5:39
  SPEAKER_01: And of course, we'd had water treatment and air pollution control for decades beforehand.
• 5:44
  SPEAKER_01: So this was not a new idea.
• 5:46
  SPEAKER_01: Um, but I think what what I did when I started Impact Assassin Management was over a bit of time realized that there was an opportunity to persuade the big pots of capital that there was money to be made from investing in companies that were providing solutions to environmental problems.
• 5:59
  SPEAKER_01: And that's probably something that there weren't that many people doing that at the same time, maybe you know, half a dozen that I remember anyway.
• 6:06
  SPEAKER_00: And was entrepreneurship and having your own business, was that something you had a family history of and you'd been around entrepreneurs, or was you the first to take that step?
• 6:15
  SPEAKER_01: No, it's very much the latter.
• 6:16
  SPEAKER_01: I mean, my family originally came from North Manchester, and grandparents worked in the cotton mills.
• 6:22
  SPEAKER_01: Um, my father was uh he got a chemistry degree and he worked in the CGB, which was the National Power Company, uh, retired in his mid-50s.
• 6:30
  SPEAKER_01: And so very much not an entrepreneurial family.
• 6:33
  SPEAKER_01: But I think this idea of sort of going out being a bit self-reliant and not fitting in with anyone else's framework just made me think, well, okay, well, I can I can do my own thing.
• 6:44
  SPEAKER_01: I wasn't setting out to make money particularly.
• 6:46
  SPEAKER_01: I just wanted to kind of not be bossed around.
• 6:49
  SPEAKER_00: So we've got the idea of impact.
• 6:51
  SPEAKER_00: How did we begin to make that a business from a concept?
• 6:56
  SPEAKER_01: Well, when I came back from South Africa, I I joined four guys who'd set up a little corporate finance business called Impact's Capital.
• 7:03
  SPEAKER_01: And the idea there, their idea really was to um help as an advisor to companies that were trying to raise money, uh, sort of mini investment banking, if you like.
• 7:12
  SPEAKER_01: And so I thought I'll just spend a little bit of time there and I'll then I'll go and find something else to do in the same space.
• 7:19
  SPEAKER_01: Uh, what happened when I was in my two years at Impact's Capital was I picked up an opportunity with the World Bank to help them design one of the world's first solar energy investment funds.
• 7:30
  SPEAKER_01: And uh because of my South Africa experience, I probably knew a little bit more than the other people that were pitching uh to do that service work.
• 7:38
  SPEAKER_01: And so that's how Impact Asset Management got started, which was with a um a big pot of money, the World Bank, helping them to design.
• 7:46
  SPEAKER_01: And subsequently, they asked us to be their main fund manager or technique fund advisor for um for this fund.
• 7:53
  SPEAKER_01: Um so I distanced myself from Impact's Capital, who's still co-located, but set up Impact's Asset Management, um, hired my first um colleague, Bruce Jenkin Jones, the end of uh 1998, this is, and and so we got started.
• 8:07
  SPEAKER_01: But then within, I think, a couple of weeks of Bruce joining, uh completely unconnected, but I got a phone call from a um a guy I've never met before out of Denmark, and uh he was a fund manager with a Danish um investment group, and he had this vision that environmental technology, or ET, as he called it, was going to be bigger than the internet.
• 8:29
  SPEAKER_01: I'm sure you remember at the time.
• 8:30
  SPEAKER_01: Maybe you're too young, but the the um so-called technology, media, and telecoms or TMT um phase had really just kicked off in in early 1999.
• 8:40
  SPEAKER_01: Uh so ET was going to be bigger than IT or TMT.
• 8:43
  SPEAKER_01: This was the vision.
• 8:44
  SPEAKER_01: But he didn't really know what ET was.
• 8:46
  SPEAKER_01: And so I and Bruce, Bruce and me, whatever the grammar is, Bruce and I helped him to uh to design an environmental fund.
• 8:54
  SPEAKER_01: We persuaded him it should be called environmental markets rather than environmental technology.
• 8:59
  SPEAKER_01: And the fund was basically investing in companies that had the majority of their business in solving environmental problems.
• 9:06
  SPEAKER_01: Um, and so that's how our listed equity business got started.
• 9:10
  SPEAKER_01: And and so, yeah, that's that's how we got got going.
• 9:13
  SPEAKER_00: That's an incredible story.
• 9:15
  SPEAKER_00: So at that time, you're picking up a wide range of skills that you'd maybe dabbled in before in various adventures and education, but you're you are learning leadership and financial reporting and marketing to a degree because you're changing the terminology on things.
• 9:30
  SPEAKER_00: Where did you learn those those processes?
• 9:32
  SPEAKER_00: Are you is it are you purely trial and error?
• 9:34
  SPEAKER_00: Do you revert back to the books and pick things up in that way?
• 9:37
  SPEAKER_00: How were you learning the skills you needed throughout that period?
• 9:40
  SPEAKER_01: Well, I think a lot of the the technical skills, if you like, came from a combination of my degree and and then my my master's degree and then my uh work as a management consultant with McKinsey.
• 9:49
  SPEAKER_01: And I joined their graduate track after university.
• 9:53
  SPEAKER_01: Um, and that was a bit of a boot camp and some great experience, quite quite high pressure for um, you know, six, seven days a week.
• 10:01
  SPEAKER_01: And that gave me lots of um skills in terms of business analysis and um management and appraising management teams, and also um bolting on to my uh some of the finance courses I did in my degree, some skills about okay, well, how do you analyze a company's balance sheet and uh how do you structure investment uh contracts and that kind of thing?
• 10:24
  SPEAKER_01: But frankly, I Bruce and I, if we're honest, um learned on the job.
• 10:29
  SPEAKER_01: So, how do you run a portfolio effectively?
• 10:33
  SPEAKER_01: Um, and uh how do you assess whether you want to invest in company A or company B?
• 10:38
  SPEAKER_01: Uh what we did to start with was we created uh uh an index of the universes that we of stocks that we'd identified.
• 10:45
  SPEAKER_01: So let me just back up.
• 10:46
  SPEAKER_01: So we don't we got this idea of environmental technology or environmental markets.
• 10:50
  SPEAKER_01: We then created a universe of of eligible companies that had at least half of their revenue coming from from this environmental markets area.
• 10:58
  SPEAKER_01: And then that universe of companies became the the fishing ground, if you like, for the fund for the Danish client.
• 11:05
  SPEAKER_00: So give people an idea of the work that was involved in creating that universe.
• 11:09
  SPEAKER_00: Because now you'd be straight into AI, you'd you'd hit a really good prompt and you'd have your list in minutes.
• 11:14
  SPEAKER_00: That wasn't at your disposal, right?
• 11:16
  SPEAKER_01: No, that's right.
• 11:17
  SPEAKER_01: But because I and Bruce had a background in environmental science um and quite a lot of experience, Bruce was an environmental consultant as well for quite a long time.
• 11:26
  SPEAKER_01: We knew what the components should be, which in simple terms was a framework around energy, water, and waste and materials.
• 11:32
  SPEAKER_01: So those were the three buckets.
• 11:34
  SPEAKER_01: And um we created some sub-buckets as well.
• 11:37
  SPEAKER_01: So in energy, for example, we had uh renewable energy, uh, energy efficiency, consumer electronics, I think, and then water was um water technology and utilities, I think water engineering as well.
• 11:48
  SPEAKER_01: So uh I can't quite remember, but something like uh 11 or 12 subsectors, and then that was quite easy once you've got that to then go and look for companies that were doing work in that area.
• 12:00
  SPEAKER_01: And obviously, this is before there was uh really sophisticated search engines, so it took quite a long time to to find that universe of companies.
• 12:08
  SPEAKER_00: I sometimes think now how many years I would like back from the processing activities we did pre-AI and pre-Google and things.
• 12:14
  SPEAKER_00: It'd be like, I could do it that decade again that I spent processing data and numbers around.
• 12:20
  SPEAKER_01: Um, next chapter.
• 12:23
  SPEAKER_01: So um, so this is like the start of 1999 and um running up to 2005, there was a bit of organic growth of that listed equity business.
• 12:34
  SPEAKER_01: So we got a Dutch client very similar to the Danish client.
• 12:37
  SPEAKER_01: We raised our investment trust in 2002.
• 12:40
  SPEAKER_01: So we raised 50 million pounds from UK institutional investors.
• 12:45
  SPEAKER_01: Um, and then we got a bit of money from from France.
• 12:49
  SPEAKER_01: But in parallel, we what I tried to do was to take the impact capital idea of helping developers of renewable energy projects and turn it into an investment management business.
• 12:59
  SPEAKER_01: So the the original impacts capital staff left.
• 13:04
  SPEAKER_01: Um, and um, what I tried to do was to raise some money from UK institutional investors with a new colleague who joined with a private equity background to try and raise a private equity fund, which we successfully did in 2005.
• 13:18
  SPEAKER_00: So are you structured as separate business units at this point or almost a group of companies that are working together across these different activities?
• 13:27
  SPEAKER_01: Well, it from the start, it's been one company, but with different divisions.
• 13:31
  SPEAKER_01: So up until 2018, we simply had a a listed equity division and a private equity division.
• 13:37
  SPEAKER_01: We still have those two divisions today, but in 2018 we picked up a fixed income.
• 13:41
  SPEAKER_00: And will people work across activities and divisions or are they relatively constrained into the parts of the business they're in?
• 13:48
  SPEAKER_01: Um generally they they stay in their lane.
• 13:51
  SPEAKER_01: So the listed equity people don't work in the private equity area and vice versa.
• 13:56
  SPEAKER_01: I think I'm probably the one who maybe keeps an eye on both.
• 13:59
  SPEAKER_01: So I chair the investment committee for the private equity funds, and I'm very close to the CIO in the listed investments area.
• 14:06
  unknown: Interesting.
• 14:07
  SPEAKER_00: Um and at this point in the in the story, that maybe third chapter up to now, how many people are we talking about across the business?
• 14:14
  SPEAKER_01: Uh so 2005, we were probably a dozen people.
• 14:20
  SPEAKER_00: Okay.
• 14:21
  SPEAKER_00: And um, you mentioned uh 98 and the emergence of everything IT, ET, tech.
• 14:28
  SPEAKER_00: Did you manage to relatively avoid the impacts of the tech bubble because of where you were investing, or was the sort of dot-com bubble bursting a problem for you guys as well?
• 14:38
  SPEAKER_01: Well, I think everybody suffered in the stock market in 2002.
• 14:44
  SPEAKER_01: Um, and we were we were no different.
• 14:46
  SPEAKER_01: So I think our our investment trusts were shrunk by half in terms of value within about nine months of us raising it.
• 14:54
  SPEAKER_01: Um, but frankly, the investors had bigger problems, and so they just let us be.
• 15:00
  SPEAKER_01: And that that loss was recovered pretty quickly, probably within about a year.
• 15:04
  SPEAKER_01: So yeah, things went backwards before they they recovered and went forwards.
• 15:08
  SPEAKER_00: When you have um bumps in the road like that, especially the macroeconomics one that are completely out of your hands, how things move.
• 15:16
  SPEAKER_00: How do you process those type of challenges?
• 15:18
  SPEAKER_00: Do you automatically see them as opportunities, or do you give yourself some time to almost reflect on it and pause before?
• 15:25
  SPEAKER_00: How do you think about challenges like that?
• 15:27
  SPEAKER_01: Well, it depends on the exact nature of the challenge and particularly how it affects our clients.
• 15:32
  SPEAKER_01: So um, going back to what I said at the start, I've got sort of got two types of clients.
• 15:36
  SPEAKER_01: We've got institutional investors like pension funds, then we've got retail investors coming in through their banks, private banks or um platforms.
• 15:43
  SPEAKER_01: Um, on the other hand.
• 15:44
  SPEAKER_01: And so with the institutional investors, they're generally asking us to do a particular job, meaning that they've decided that environmental markets or the transition to a more sustainable economy is an area they want exposure to, and they know that that's quite different to the main market.
• 15:59
  SPEAKER_01: And so they just want us to stay within that area and not be influenced by what's going on in, say, the AI space.
• 16:06
  SPEAKER_01: And so if if our area is out of fashion, that's okay for them.
• 16:10
  SPEAKER_01: They're happy to some mostly happy to see that there's an underperformance if money's going elsewhere.
• 16:16
  SPEAKER_01: On the other hand, the the retail investors generally just want you to beat the market in all conditions.
• 16:22
  SPEAKER_01: And so if money's going into AI, which it has been doing the last couple of years, and the environmental markets or TSE transition to a more sustainable economy space is is lagging, then that's a bit more of a problem for them.
• 16:34
  SPEAKER_01: So what that means for us is that we generally need to sort of stick to the stick to our guns, um, do what we've told our clients we're going to do.
• 16:42
  SPEAKER_01: And if they don't like it and they want to leave, well, it's too bad for us.
• 16:46
  SPEAKER_00: So you went from you and Bruce to then at this point in the story, there's 12 people.
• 16:52
  SPEAKER_00: Was it feeling like a distinctively different business at that point?
• 16:55
  SPEAKER_00: Um, had you started to feel like you were leading more and there were more people aspects for you to deal with, or that was still relatively okay at 12 people?
• 17:04
  SPEAKER_01: Um, well, I I had to decide early on whether I was going to be a fund manager or the the leader of the business, because you can't really do both and scale the business.
• 17:14
  SPEAKER_01: And so Bruce was a great fund manager, and so I realized that I could actually delegate to him the responsibility for running the listed equity funds and then spend time recruiting the private equity team and and um structuring and sort of coordinating the lead, the the raising of the private equity fund.
• 17:30
  SPEAKER_01: And when we had this private equity fund up and running, I was two leaders and and I was therefore the like the manager looking for the next thing to do.
• 17:39
  SPEAKER_01: So yeah, I was quite conscious from the start that um I had to be a a manager, if you like, or a director, as much as an investor or a or as a marketer.
• 17:49
  SPEAKER_01: And over the, I mean, we've gone from 12 people or you know, me and Bruce to 270 people over 25 years.
• 17:56
  SPEAKER_01: So there's been quite a few iterations of you know management style, which I've kind of tried to learn by doing.
• 18:02
  SPEAKER_00: Let's dive into that a little bit.
• 18:03
  SPEAKER_00: How um how do you think about recruitment now in terms of talent and how has that changed from the days of two and twelve?
• 18:11
  SPEAKER_01: Well, I think the absolute critical thing about recruitment is you've got to find people and attract people who are gonna fit in and enjoy working with everyone else who's there.
• 18:19
  SPEAKER_01: So this idea of culture or or the sort of personality of the business is absolutely critical because it's quite easy to or tempting to recruit somebody who's an absolute whiz or genius in their particular area.
• 18:30
  SPEAKER_01: But if they're gonna clash in the corridor or around the table with with everybody else, it's gonna be a disaster.
• 18:36
  SPEAKER_01: And so this idea of somebody who's who looks good in terms of their background and skill set, but then also through interview and conversation um is seemingly gonna fit in.
• 18:46
  SPEAKER_01: That's an absolutely critical point.
• 18:48
  SPEAKER_01: Um, and then I think also this this idea of of resilience, so and and and dynamism.
• 18:54
  SPEAKER_01: So we're not a big company, we don't have all the things that big companies have, like um detailed career development with with courses you can go on that are sort of already fixed.
• 19:05
  SPEAKER_01: Um, we don't have an office canteen, we don't have an office gym, I mean, all that sort of big company stuff we don't have.
• 19:10
  SPEAKER_01: And therefore we need we need people who are willing to to kind of roll up their sleeves, um, help us with things that they may be not hired to do, you know, for doing a new project.
• 19:21
  SPEAKER_01: Um and I've frankly, anyone who's got ideas for what we can do next is always very welcome as well.
• 19:26
  SPEAKER_01: That's exciting.
• 19:27
  SPEAKER_00: Did you um did you consciously have a view of what culture and personality you wanted the business to have from the start, or has that continued to evolve over time?
• 19:37
  SPEAKER_01: Well, I think what I realized pretty early on was that the the real nightmare was to recruit people with big egos who wanted the world to revolve around them.
• 19:46
  SPEAKER_01: And I think there's quite a lot of that in financial services and derivatives.
• 19:49
  SPEAKER_00: Entitlement's a problem, isn't it?
• 19:51
  SPEAKER_01: Yeah, it's sort of an investment management issue with what are called star managers.
• 19:55
  SPEAKER_01: And star managers are quite often fantastic and bring lots of value, but they also um change the nature of an organization.
• 20:02
  SPEAKER_01: So I was very keen that that I wasn't going to have to manage star managers.
• 20:07
  SPEAKER_01: Um, and so I suppose that's been uh a real metric from the start, where a collegial culture, um, we are one business plan, we don't have sort of separate um PL or kind of profit centers which are run by by you know big named individuals.
• 20:23
  SPEAKER_01: So that that's probably the most important thing.
• 20:25
  SPEAKER_01: And then maybe secondly, always be I've always been keen on on international opportunities.
• 20:31
  SPEAKER_01: So today, a majority of our revenue comes from outside the UK.
• 20:35
  SPEAKER_01: And that's I think that was probably started by me with my you know trip to China and I did my master's degree in the US, just being comfortable going to um different parts of the world and looking for opportunities.
• 20:45
  SPEAKER_01: An adventure.
• 20:46
  SPEAKER_01: Yeah, exactly.
• 20:47
  SPEAKER_01: Yeah.
• 20:48
  SPEAKER_01: I haven't been doing train spotting though for for a while.
• 20:52
  SPEAKER_01: Do you still meet every new hire before they start?
• 20:56
  SPEAKER_01: Um, I don't.
• 20:57
  SPEAKER_01: I don't actually.
• 20:58
  SPEAKER_01: That's a good question.
• 20:59
  SPEAKER_01: It's just not possible.
• 21:00
  SPEAKER_01: When did it stop?
• 21:01
  SPEAKER_01: Yeah, gosh, that's also a good question.
• 21:04
  SPEAKER_01: Um I think probably when we were about 40 or 50 people, I just realized that that, well, partly that it wasn't gonna fit my diary, but also that I was probably um not delegating enough to to my team to take responsibility for the hires.
• 21:20
  SPEAKER_01: So yeah, probably 40, 50 people, which we probably got to in something like 2012.
• 21:28
  SPEAKER_00: Do you still meet any recruits now?
• 21:30
  SPEAKER_00: Like if they're senior level hires, will you still be involved in that process?
• 21:33
  SPEAKER_01: Oh, absolutely.
• 21:33
  SPEAKER_01: Yeah, yeah, yeah.
• 21:34
  SPEAKER_01: No, I still have probably I don't know, probably two or three interviews a week.
• 21:40
  SPEAKER_01: I I do, um, because obviously there's people being hired all the time.
• 21:44
  SPEAKER_01: So yeah, it's not it's not um dominating my diary, but I I definitely try and do it.
• 21:49
  SPEAKER_01: And clearly, yeah, for the for the more important people, I think it's important not just that we're getting eyes and ears on the new person, but also the new person sees me um and knows that.
• 22:00
  SPEAKER_01: Committed to the role and they've got an opportunity to ask me questions.
• 22:03
  SPEAKER_00: Yeah, they need to believe you and your vision, right?
• 22:05
  SPEAKER_01: Yeah.
• 22:05
  SPEAKER_01: Well, yeah, I mean it's it's the company's vision, but I'm the CEO, so I think probably making sure that my vision is what they're hearing from everyone else is also important.
• 22:13
  SPEAKER_00: It's fascinating.
• 22:14
  SPEAKER_00: Do you um do you have um a a favored questionnaire area that you explore when you do meet those people?
• 22:22
  SPEAKER_00: You know, almost the perspective that only you can have with that candidate.
• 22:26
  SPEAKER_01: Um I think what I'm most interested in is this idea of what where people have come from in their careers and where are they going.
• 22:34
  SPEAKER_01: And I'm always inspired by people who have done things a bit differently for obvious reasons.
• 22:39
  SPEAKER_01: Um, but I'm probably more interested in in people who've got um a vision for the future or um things they want to achieve in their business life.
• 22:48
  SPEAKER_01: And what's less appealing is is someone who's just sort of plodded through the various steps in a traditional career and is just looking for the next next sort of hole in the jigsaw that they can fill.
• 22:59
  SPEAKER_00: I think we have similar approaches to recruitment.
• 23:02
  SPEAKER_00: I um I don't know if it's because I don't see uh so I still meet everyone that comes in.
• 23:09
  SPEAKER_00: So we're uh 40 people in our central team, 70 across all the estates around the country as well.
• 23:15
  SPEAKER_00: And we've done that uh we're five years old this summer.
• 23:18
  SPEAKER_00: Um so I do still meet everybody, but only at the final stage of the process.
• 23:23
  SPEAKER_00: So when I'm looking, the technical bits, the qualification, everything has already been dealt with by the team.
• 23:28
  SPEAKER_00: So I like to see CVs bottom up and I look for what's the thing they've achieved, what's the thing that was difficult, required resilience and determination.
• 23:37
  SPEAKER_00: Because I think, well, if this person's achieved something exceptional and they want to be here, they can achieve something exceptional again.
• 23:44
  SPEAKER_00: They know what it takes to be able to do that, right?
• 23:46
  SPEAKER_00: I think um recruitment is still one of my favorite things we get to do because it gives you a view of what your business will be like in future because you're putting that talent pipeline in there.
• 23:56
  SPEAKER_00: Um, so we go from um 12 people, your move is on to 2012.
• 24:02
  SPEAKER_00: So at 2012, how big are we at that point?
• 24:04
  SPEAKER_00: About 50 people.
• 24:05
  SPEAKER_00: Okay.
• 24:05
  SPEAKER_00: Yeah.
• 24:06
  SPEAKER_00: Cool.
• 24:07
  SPEAKER_00: Um, and then how does your job start changing at 50?
• 24:10
  SPEAKER_00: Or perhaps 50 wasn't the number.
• 24:11
  SPEAKER_00: When was the number where your job started to change dramatically?
• 24:15
  SPEAKER_01: Well, probably 2018 was the real pivotal point because um up until then we'd been using a company called Pax World Management in um New Hampshire in the US as our main US distribution partner, meaning sales uh outlet.
• 24:29
  SPEAKER_01: Uh, they were a fund management business.
• 24:31
  SPEAKER_01: They they decided that they needed that they were kind of in ethical investing and they were really interested in having an environmental markets partner who they could promote to their clients.
• 24:41
  SPEAKER_01: And so 2008, we teamed up with them, we became the manager of one of their funds.
• 24:46
  SPEAKER_01: But then in 20, actually 2016, it became apparent that their owners, which was a New England-based family, wanted to sell the business.
• 24:54
  SPEAKER_01: Slightly long story, but at the start of 2018, we actually completed the purchase of Pax World Management and it became Impax's US.
• 25:01
  SPEAKER_00: Was that your first acquisition of that type?
• 25:03
  SPEAKER_01: Yeah, it was first acquisition of anything, really.
• 25:06
  SPEAKER_00: Interesting process?
• 25:07
  SPEAKER_01: Yeah, it was interesting because it was cross-border.
• 25:09
  SPEAKER_01: It was um we managed to raise some debt to help fund it.
• 25:14
  SPEAKER_01: Um critically, it was about putting together a 70-person team, which is what we were then at Impact's, and with a 50-person team, which was PAX.
• 25:22
  SPEAKER_01: And so to create a 120 people team.
• 25:25
  SPEAKER_01: It was people that that we knew because we worked with them, but we didn't know them well enough to be really sort of clear about who was gonna do what.
• 25:33
  SPEAKER_01: So probably probably one of the biggest challenges was working out, okay, well, we are gonna put these two teams together, who's gonna do what, and uh, what's the structure gonna be, and how do we create the right incentives?
• 25:42
  SPEAKER_01: And so at that point, I think my job did change.
• 25:45
  SPEAKER_00: How did so?
• 25:46
  SPEAKER_00: Um I'm gonna go out on a limb and assume the team you had in place at 70, you were still really involved in that process.
• 25:55
  SPEAKER_00: Presumably you knew most, if not all, of the people in that 70, and you were proud of that team and who you'd hired.
• 26:01
  SPEAKER_00: And then you're looking at 50 people who, as you say, you know, but not you haven't selected them.
• 26:06
  SPEAKER_00: How did you get comfortable that you were buying assets there and not 50 people that you might have to exit 40 of them because they weren't of the calibre of your original team?
• 26:15
  SPEAKER_01: Well, I think critically we knew that they were a good caliber because we we'd had almost eight, nine, ten years of working with alongside them.
• 26:24
  SPEAKER_01: Um, the the um guy who was the head of the team, Joe Keith, somebody I'd knew I'd known for that length of time as well, and I was confident in his ability to hire and manage um the right people.
• 26:35
  SPEAKER_01: And so the starting point was well, they've got their own business, they've just been put up for sale by their family owners.
• 26:43
  SPEAKER_01: We've got our own business, the two businesses don't really overlap.
• 26:46
  SPEAKER_01: So we'll just sort of um we'll see how they get on alongside each other, but then there's commonalities around you know, the support services and to some degree the marketing where we can bring people together.
• 26:56
  SPEAKER_01: So it what it didn't require uh an immediate jamming of two teams together.
• 27:01
  SPEAKER_01: Obviously, we had the US culture, the UK culture, we need to be quite careful, but we didn't uh get that integration wrong.
• 27:07
  SPEAKER_01: And we didn't, we weren't under any pressure to to do it by a certain date.
• 27:11
  SPEAKER_01: So it probably took about three years to to really knit things together.
• 27:14
  SPEAKER_01: But I think it's been a fantastic result because now we've got a I think a global team.
• 27:20
  SPEAKER_01: Um, you can almost not tell the difference apart from a bit of accent between whether someone's on screen in say Microsoft Teams if they're in the US or in UK.
• 27:28
  SPEAKER_01: So um, yeah, I think we we're all proud of doing that one.
• 27:31
  SPEAKER_00: Prior to um that acquisition, were you traveling a lot internationally throughout this period, or did that only come after 2018?
• 27:38
  SPEAKER_01: No, no, very much um the the former.
• 27:41
  SPEAKER_01: So I would probably go to the US five times a year for for a week at a time.
• 27:45
  SPEAKER_01: Um, I'd always be in Asia because we set up a Hong Kong office in 2007.
• 27:49
  SPEAKER_01: I'd be out there once a year, and then I'd be always on the road round European capitals.
• 27:55
  SPEAKER_01: Um, that's actually been dialed back quite a bit in the last six or seven years because I've we've hired more and more people doing sales and marketing, and and more of my senior managers have maybe gone out to Asia instead of me.
• 28:07
  SPEAKER_01: So, yeah, less travel now than it was.
• 28:09
  SPEAKER_00: So this section is unabashedly me asking for some life mentoring here.
• 28:13
  SPEAKER_00: So as you as you moved into that period where international travel became more of a factor for you personally, what are the ways you learn to make that work as best as possible for the business, for you, for family?
• 28:26
  SPEAKER_00: What were the keys to balancing those challenges of different time zones and different geographies?
• 28:31
  SPEAKER_01: I think probably the starting point was was not to go away for long periods of time.
• 28:35
  SPEAKER_01: So uh never more than two weeks, which was the Asia trip.
• 28:39
  SPEAKER_01: And in the US, I would get into a habit of going out on a Sunday afternoon and coming back on a Friday night or sun or Friday or Saturday during the day, um, which meant that the the family side was that the departure was was kind of manageable rather than going away for a long period of time.
• 28:54
  SPEAKER_01: Um, I think learning to cope with jet lag was a bit of a challenge, particularly going out to Asia.
• 29:00
  SPEAKER_00: Um, but you know, going to the gym, going for a swim, standard stuff was just trying to jump on the exercise as soon as you can at the other end to get through it.
• 29:08
  SPEAKER_01: Uh yeah, I mean we really like going for a swim and having a sauna if I can, frankly, just to get over like going to Japan is usually pretty pretty bad for Australia, which I don't do very often, maybe once every 15, 18 months.
• 29:20
  SPEAKER_01: So yeah, I think the and then obviously making it making it successful, so um setting near-term targets for well, how much progress do you want to make with this particular client group or uh companies to visit, um, so that when I came back, it was not perceived by the staff as well, there he goes again on another jolly, but actually we're making some tangible progress.
• 29:41
  SPEAKER_01: And as I say, the results being that now more than half our business comes from overseas.
• 29:44
  SPEAKER_00: I think the only people who think international travels are jolly haven't done it.
• 29:48
  SPEAKER_00: Once you start doing it, it's um it's a challenge.
• 29:51
  SPEAKER_00: So when you were operating in those different geographies and you were based at home still, how would you think about managing your own time throughout the day?
• 29:58
  SPEAKER_00: Because you're working on different time zones.
• 29:59
  SPEAKER_00: How did you make yourself accessible to clients in the right way?
• 30:04
  SPEAKER_01: Um well, I think the main thing fairly early on was to employ people whose job was to look after clients day to day um and to advise when I needed to come in.
• 30:16
  SPEAKER_01: So that meant that I wasn't getting a bigger and bigger like international communications workload.
• 30:22
  SPEAKER_01: I think we probably forget, but it's only, I think, in the last five or six years that we've had this.
• 30:26
  SPEAKER_01: That's probably COVID, wasn't it, that we've had this sort of Microsoft Teams, Zoom, yeah, literally 21, 22, right?
• 30:32
  SPEAKER_01: So it's five five years where it's all incredibly easy.
• 30:35
  SPEAKER_01: And before that, it was mainly phone calls.
• 30:38
  SPEAKER_01: Um, so yeah, that that's not been a problem.
• 30:41
  SPEAKER_01: Um, I think the other point is that we've a lot of our international businesses is um through these intermediaries, these sort of private banks that um are a one one point of contact for us, um, even though the underlying client base that they may have might be hundreds, if not thousands, of people.
• 30:57
  SPEAKER_00: Love it.
• 30:58
  SPEAKER_00: Um so we're in 2018.
• 31:00
  SPEAKER_00: Can you take us from 2018 through to today?
• 31:03
  SPEAKER_01: Yeah, so 2018 through 2022, we had a phenomenal growth period.
• 31:08
  SPEAKER_01: So we grew from um 120 people after the PAX transaction to about 300 people at the peak.
• 31:16
  SPEAKER_01: So just an enormous amount of hiring.
• 31:18
  SPEAKER_01: And our business went from something like um$11 billion under management, which is the two businesses combined, to over$50 billion under management at the peak.
• 31:29
  SPEAKER_01: So it was a 5x growth in um if you like money to manage, and then a what's that, like nearly 3x, like two and a half X on staff.
• 31:39
  SPEAKER_01: So frankly, by 2020, 2022, early 2022, um, we were all exhausted and but had an amazing period of growth.
• 31:47
  SPEAKER_01: And then since then, it's sort of been the the back of the of the wave because the markets have changed completely.
• 31:53
  SPEAKER_01: This type of investing we've been doing has been out of favor.
• 31:57
  SPEAKER_01: Um, and um we've we've gone backwards in terms of clients and asset center management to a to a new plateau, hopefully, at you know, roughly 25 billion pounds, 35 billion dollars.
• 32:09
  SPEAKER_00: Which is again an astonishing number to be responsible for and and investing for for people.
• 32:16
  SPEAKER_00: Um but that that period, as you said, you were all exhausted.
• 32:20
  SPEAKER_00: That level of growth is is is staggering.
• 32:23
  SPEAKER_00: When you look back now, what are the bits that you're most proud of throughout that period, and which were the most challenging bits of the growth element?
• 32:32
  SPEAKER_01: Um well, I think the most proud of the fact that the team managed to keep the wheels on because um the money just doesn't just come through the door into a single part or a single fund.
• 32:42
  SPEAKER_01: We were launching new funds, we were setting up new contracts with different counterparties, and each one of those contracts requires a particular level of of plumbing, if you like.
• 32:53
  SPEAKER_01: So the trading and the the reporting and and all the kind of uh communication with the custody banks, and then lots of client service as well.
• 33:02
  SPEAKER_01: So I think it was a fabulous achievement by the team to make sure that we didn't stumble and and make a mess of that of that growth.
• 33:10
  SPEAKER_01: I think the biggest challenge was was probably this issue of trying to recruit the right people fast enough, um, and then getting them to work together.
• 33:20
  SPEAKER_01: So yeah, that that worked pretty well.
• 33:23
  SPEAKER_01: There's a few examples where it wasn't as good as it could have been, but generally it was pretty okay.
• 33:27
  SPEAKER_00: On the um, I I've only had to block one recruitment so far that's got to me and I've gone.
• 33:33
  SPEAKER_00: I just there isn't a culture fit there, which I think is because as you start as you clearly did throughout the growth periods, you start releasing your role in it, and others are leading that recruitment forward and things.
• 33:46
  SPEAKER_00: Um I think it's it's really getting the talent part of it right is so fundamental because otherwise, a wrong decision in recruitment isn't an immediate fix, however, quick you want to deal with it, and that that stone in the pond has ripples, and you know, when you've got a really high-performing culture, someone who doesn't align with it can cause damage that takes a long time to put back together.
• 34:07
  SPEAKER_01: Yeah, completely.
• 34:08
  SPEAKER_01: Yeah.
• 34:09
  SPEAKER_01: No, I don't think there's anyone that I've I've vetoed personally, but I've certainly well, we, the senior team, have definitely um turned away people who've got quite a way through the process.
• 34:19
  SPEAKER_01: But it's not can't think of an example where it's just been me saying, right, I'm not I'm gonna have the casting vote and that person's not gonna join.
• 34:27
  SPEAKER_00: Yeah, I've only done it once.
• 34:28
  SPEAKER_00: I should have done it twice, but I've only done it once.
• 34:30
  SPEAKER_00: Okay, yeah.
• 34:31
  SPEAKER_00: That's what it wasn't you, it was it wasn't you.
• 34:36
  SPEAKER_00: Um what did you do personally to keep your level of performance and skill where it needed to be during because you you've managed you you gave us lots of different chapters, but you've managed a business that was almost changing by the day throughout that period.
• 34:54
  SPEAKER_00: It was so rapid.
• 34:55
  SPEAKER_00: So, what you need to do as a leader in the skills and things uh have changed dramastically for that period as well.
• 35:00
  SPEAKER_00: So, I guess my questions are what are the fundamentals that are really important to you doing your job at a high level?
• 35:05
  SPEAKER_00: And how have you changed as a leader on that journey?
• 35:09
  SPEAKER_01: I think probably the most critical thing in that, in that sort of two and a half to five X growth was just having the right senior team.
• 35:16
  SPEAKER_01: Because what what I couldn't do was everyone else's job.
• 35:20
  SPEAKER_01: But if I recruited and was able to form a team of of excellent people, then they would recruit hopefully excellent people below them.
• 35:27
  SPEAKER_01: And so that was probably the most important thing was A's higher A's, don't they?
• 35:32
  SPEAKER_00: B's higher C's.
• 35:33
  SPEAKER_01: Well, in theory, yeah, that's right.
• 35:34
  SPEAKER_01: But you just working out what the right structure was, working out who within the team of 120 was going to be able to rise with with the with the sort of size of the business and grow into the role.
• 35:47
  SPEAKER_01: Um, and then who was doing a you know good job but wasn't going to grow and trying to find another role for them.
• 35:53
  SPEAKER_01: So that was probably the most important thing.
• 35:55
  SPEAKER_01: Um, and then I think also probably making sure that that everybody felt that um we we needed to be a little bit careful about growing too fast because this idea of wheels getting shaky and coming off is is a real issue in any company, but certainly in financial services, you can't afford to get it wrong.
• 36:13
  SPEAKER_01: So maybe maybe being able to say no to a few things along that way was was important.
• 36:19
  SPEAKER_01: And then probably thirdly, just you know, keeping keeping myself um sane and healthy, um, which involved lots of you know, lots of exercise and I meditate.
• 36:29
  SPEAKER_01: Um have you always done that?
• 36:32
  SPEAKER_01: Last sort of seven, eight, nine years, can't quite remember.
• 36:35
  SPEAKER_01: I'm I wouldn't say I'm a very good meditator, but I try to do it every day.
• 36:39
  SPEAKER_01: Um, and so you know, mental health, um, physical health, I think it's been been pretty critical as well.
• 36:45
  SPEAKER_00: I think whatever the variety of that mental and physical exercise and resilience people can draw upon as being a feature.
• 36:54
  SPEAKER_00: So we've done 160 episodes of the podcast, and the the highest performers and the people who've achieved wonderful things can all point to those pillars of their being.
• 37:04
  SPEAKER_00: So often they're runners or they're athletes of some kind or swimmers, or if I'm at home, I'm lifting weights every morning.
• 37:12
  SPEAKER_00: That's my physical and mental happy spot.
• 37:15
  SPEAKER_00: And I think people where they've raised their hand and said, Oh, that fell away, they've seen a loss of performance in a business sense as well with that.
• 37:23
  SPEAKER_01: Yeah.
• 37:23
  SPEAKER_00: So I I can see how in such a period of growth keeping those pillars in place were really important.
• 37:27
  SPEAKER_00: Yeah, absolutely.
• 37:28
  SPEAKER_00: How do you how do you and how have you thought about holidays and annual leave and boundaries and things like that?
• 37:34
  SPEAKER_00: And has that changed over time?
• 37:37
  SPEAKER_01: I'm I'm definitely in favor of ideally five days a week, not seven days a week.
• 37:42
  SPEAKER_01: I I will work at weekends, but I've I've tried to minimize that.
• 37:46
  SPEAKER_00: Always, or as you've matured in your career?
• 37:49
  SPEAKER_01: Um well, certainly when I was working for someone else, I was working six to seven days, six and a half days a week, and I didn't really like that.
• 37:56
  SPEAKER_01: Um, yeah, I mean, there've been definitely times that at impacts when there's been weekend work, probably, yeah, and going back 10 or more years, probably doing something every weekend, but not like all day.
• 38:09
  SPEAKER_01: Um, so yeah, trying to limit it to five days a week.
• 38:12
  SPEAKER_01: And I probably work 50 hours a week, so 10 hours a day times five.
• 38:16
  SPEAKER_01: Holidays, absolutely.
• 38:18
  SPEAKER_01: Yeah, I mean, I definitely need two weeks in the summer, just or usually in the summer.
• 38:23
  SPEAKER_00: And are you now able to pretty much fully detach for those two weeks?
• 38:26
  SPEAKER_01: Uh depends.
• 38:27
  SPEAKER_01: Yeah.
• 38:28
  SPEAKER_01: I mean, it depends what's going on.
• 38:29
  SPEAKER_01: That that's the idea.
• 38:30
  SPEAKER_01: Um, and actually with a team of you know nearly 300 people, generally speaking, unless there's some sort of major issue, then then I can tend not to detach, but but I what I do is I kind of clear emails once a day, just make sure there's nothing that that I need to get involved with.
• 38:48
  SPEAKER_01: But I'm quite good, I think, in blocking or creating a boundary between that email curation and then you know kicking kicking back.
• 38:57
  SPEAKER_00: Um so uh Zach Brown, the chap that runs the um McLaren F1 team, um, I learned that model from him.
• 39:04
  SPEAKER_00: So he agreed with his wife, I'm allowed 90 minutes of an evening to clear the inbox on holiday, then I can actually have a holiday.
• 39:12
  SPEAKER_00: Right.
• 39:12
  SPEAKER_00: Because he used to say they they would always fall out because he'd be checking email.
• 39:16
  SPEAKER_00: She'd be like, You're not on holiday, but I can't be.
• 39:18
  SPEAKER_00: Right.
• 39:18
  SPEAKER_00: What's the way of managing that in a way that works for everyone?
• 39:20
  SPEAKER_00: Right.
• 39:21
  SPEAKER_00: So I've adopted that and think it does work quite well in a way.
• 39:24
  SPEAKER_01: Yeah, nine times out of ten, but there's quite often things where you need you need to speak to somebody or and then try not to during the holiday, but sometimes it can't be avoided.
• 39:32
  SPEAKER_00: Agreed.
• 39:33
  SPEAKER_00: Agreed.
• 39:34
  SPEAKER_00: So um, as we sit here today, um what do you think about the space you're operating in in terms of how that's changed over the years and what it looks like for investing in the sort of areas you're targeting now?
• 39:47
  SPEAKER_01: Well, I think the the fundamental idea of the transition to a more sustainable economy hasn't has never been better in the sense that we're now um accelerated quite uh strongly the direction of a clean energy economy.
• 40:00
  SPEAKER_01: So renewable energy is is a global um phenomenon.
• 40:04
  SPEAKER_01: It's got lots of pockets of mispricing so you can make money if you're you know what you're doing.
• 40:09
  SPEAKER_01: And the same can be said for um for infrastructure around, say, the water sector, global demand for water is inexorable, and uh human beings all require the same quality of water above a above a threshold.
• 40:22
  SPEAKER_01: So the opportunities for scale businesses in the water sector is fantastic.
• 40:26
  SPEAKER_01: The whole smart materials, circular economy areas really just continuing to throw off great investment opportunities.
• 40:33
  SPEAKER_01: It's just a way to save money as well as get get new functionality.
• 40:37
  SPEAKER_01: So the the broad area of this transition is is um never been more appealing.
• 40:42
  SPEAKER_01: And where I think particularly in particular interesting time in the market where there's been such a flood of capital going into the AI sector, maker cap, so-called maker cap technology stocks, that the rest of the market's been lagged lagged behind.
• 40:56
  SPEAKER_01: And now I think the the tide is is hopefully about to turn.
• 41:00
  SPEAKER_01: I mean, it's been about to turn for probably a year or so, but there are signs that that that's coming back, in which case I think now's a fantastic time to be investing in in areas outside AI, including what what we do.
• 41:14
  SPEAKER_00: I I couldn't agree more.
• 41:16
  SPEAKER_00: I think the the more attention that has flooded onto AI, the more opportunities will be peripheral to that as well, because people love a fashionable trend, right?
• 41:26
  SPEAKER_00: Um we've we've covered lots of different terminology that's changed throughout our journey of the last 30 years.
• 41:32
  SPEAKER_00: One of the labels that you've been critical of has been the term ESG.
• 41:37
  SPEAKER_00: Um, what do you think about that um and whether it was helpful in our journey throughout this and whether it's had its time?
• 41:44
  SPEAKER_01: Well, the term ESG was literally created by some consultants in 2004 for a uh discussion at a conference.
• 41:51
  SPEAKER_01: And they had this idea that um there was an overlap or connection between environmental and social issues, which had been obviously prominent in in some number of corporate disasters and also governance, which at the time in 2004 we were just still recovering from the Enron and Worldcom governance uh problems.
• 42:10
  SPEAKER_01: So they they put the the G and E and S letters together, and ESG was the combination they preferred.
• 42:16
  SPEAKER_01: Um, and it was a genuine attempt to um have a debate about whether there was a connection between these three things.
• 42:22
  SPEAKER_01: The the problems being that it's become politicized and it's been um adopted by um, let's call it the the left part of the political spectrum as a way to persuade or or a kind of door-opening language to try and persuade those with money, particularly pension funds and sovereign wealth funds, to um to take money away from making returns in order to try and improve um society, which is a fantastically laudable concept.
• 42:53
  SPEAKER_01: But I think it's got two problems.
• 42:55
  SPEAKER_01: One is that it's never been possible to articulate how to manage the trade-off between making money or or improving the planet in a non-financial way.
• 43:04
  SPEAKER_01: And secondly, as I said, it's been co-opted by um, let's call it the right-hand part of the political spectrum as something which is inappropriate and um shouldn't shouldn't be allowed.
• 43:14
  SPEAKER_01: And so we're at risk, or we have been experiencing the throwing the baby out with the bathwater.
• 43:20
  SPEAKER_01: So anything to do, for example, with investing in businesses that are helping to solve climate change is being labeled by the political right as inappropriate.
• 43:30
  SPEAKER_01: Whereas what it should be is um a challenge to see how you can make money in areas like renewable energy, energy efficiency, uh, electric vehicles, which are fabulous investment opportunities, whatever your political views.
• 43:43
  SPEAKER_00: That is the most eloquent um summary of a very bad article I wrote a few months ago making the exact same point.
• 43:50
  SPEAKER_00: Um, I've never met anyone who thinks an investment should damage the environment, be unsustainable, and have terrible governance.
• 43:57
  SPEAKER_00: I don't know how it's complicated.
• 43:58
  SPEAKER_00: Like, who's arguing that things shouldn't embrace ESG principles, yet it has been politicized to the point whereby it is largely a farce.
• 44:07
  SPEAKER_00: So when um our friend Donald came out with his whole ESG is dead narrative, I was like, I'm kind of okay with that because I think uh I didn't actually check the origin of the term, which I'm embarrassed to say I should have done.
• 44:20
  SPEAKER_00: Um, but if I'd have known that as well, it would have helped my hypothesis that language and terms, some of them are just bridges for us to get to a better debate.
• 44:28
  SPEAKER_00: And I think on balance, it's probably helped have some discussions and move them forward quickly as a result, but I don't think we need it anymore.
• 44:35
  SPEAKER_00: Like no one uses their search engine of choice anymore.
• 44:39
  SPEAKER_00: You Google something.
• 44:40
  SPEAKER_00: You don't need the term search engine.
• 44:42
  SPEAKER_00: Um, what was the terminology, the three-letter acronym you gave me before for um IT and tech type stuff?
• 44:48
  SPEAKER_00: TMT.
• 44:49
  SPEAKER_00: TMT.
• 44:49
  SPEAKER_00: We don't need that anymore, right?
• 44:51
  SPEAKER_00: We've used that term and it's moved us forward.
• 44:53
  SPEAKER_00: So I think it's really interesting.
• 44:55
  SPEAKER_00: Um, we're now starting to have a more sophisticated discussion about that in terms of the role of nature and biodiversity and climate.
• 45:02
  SPEAKER_00: How much do those factors come into your thinking now about potential investments?
• 45:07
  SPEAKER_01: That's front and center of what we're doing, essentially.
• 45:09
  SPEAKER_01: So um, at its heart, the transition to a more sustainable economy is looking at the opportunities and risks that are being presented by medium to long-term factors, of which those three areas are sort of at the top of the list.
• 45:24
  SPEAKER_00: So if we take nature, for example, what's the sort of information or signal you would want how nature related to a business to inform your risk decision on that investment?
• 45:34
  SPEAKER_01: I think we need to break these terms down into uh constituents.
• 45:37
  SPEAKER_01: So nature's quite a sort of um amorphous label for someone who's an investor.
• 45:42
  SPEAKER_01: But if you start talking about pollution or um the value chain arriving arising from food and agriculture, which depends on on the biological health of uh different parts of the world, I think you can start to get something that's tangible that you can apply sort of science and economics to.
• 46:00
  SPEAKER_01: So I think from our perspective, um pollution is is the easy way to get into nature.
• 46:06
  SPEAKER_01: So water pollution, um, air pollution, and then also climate is a critical part, which you could say that you know damaging climate is a pollution issue.
• 46:15
  SPEAKER_01: So from that comes ideas around investing, for example, in water treatment technology, utilities that are uh running the water system, uh technology smart materials and technology around, say um equipment that's uh that's um sensing what air quality problems are arriving, more than the whole renewable energy sector as well.
• 46:37
  SPEAKER_01: Um, and then in in the biodiversity area, biodiversity is also one of those terms really quite hard to um to define.
• 46:44
  SPEAKER_01: But if you're if you're thinking about biodiversity in the context of the of the food system um and where we're gonna get our food from in the future, then there's some really interesting links between food sourcing and um the weather and you know the pollution area, but also food sourcing and health, and you know, what it's gonna take to improve health outcomes, the connection between what you eat um and and the health of people around the planet.
• 47:11
  SPEAKER_00: We've had some really interesting conversations on those recently.
• 47:14
  SPEAKER_00: So we had Tom Bradshaw, the president of the NFU on, talking about how biodiversity, nature, risk is informing their decisions set against the macroeconomics of farming in this country, which is that's a complicated one.
• 47:27
  SPEAKER_00: Uh, and then similarly, we had the head of viticulture for Knight Frank, a gentleman called Ed Mansell Lewis, who described to us how the wine-growing region, certainly of Europe, are accelerating northerly as a result of climate change.
• 47:40
  SPEAKER_00: And how we're um, I don't know if this just made the cut, but uh ultimately the growing conditions in champagne are going to get to a point whereby they're not gonna produce champagne anymore and pretty quickly.
• 47:50
  SPEAKER_00: So it's really interesting how you do um make those amorphous concepts like climate and nature immediately accessible and meaningful to businesses and investors.
• 48:01
  SPEAKER_01: I think it's really important to that people who are passionate about those three topics nature, biodiversity, and climate, start to talk about the components because I think this issue about the US policy is absolutely critical.
• 48:12
  SPEAKER_01: So uh Mr.
• 48:13
  SPEAKER_01: Trump would have us believe that climate change is a hoax, but but then the whole country is desperate, the United States is desperate for electricity, and the easiest way to produce electricity quickly is through renewable energy.
• 48:24
  SPEAKER_01: And in Texas, there's more jobs in solar energy than there is in oil and gas.
• 48:28
  SPEAKER_01: So unpacking climate into components that people can relate to, I think, is really important.
• 48:34
  SPEAKER_01: So it's it's a bit like the ESG issue.
• 48:36
  SPEAKER_01: We who together who who are passionate about these things need to talk in a language that that people who are not passionate about these things can understand.
• 48:46
  SPEAKER_00: You're absolutely right.
• 48:47
  SPEAKER_00: I guess this morning was an amazing lady called Dimple Patel who runs Nature Metrics.
• 48:51
  SPEAKER_00: Are you familiar with that business?
• 48:53
  SPEAKER_00: I'm not, no.
• 48:54
  SPEAKER_00: They developed the concept of e-DNA sampling.
• 48:57
  SPEAKER_00: So where you would take a water sample and use it to derive what species have interacted with that water body.
• 49:03
  SPEAKER_00: So brilliant.
• 49:04
  SPEAKER_00: However, her background is um Cambridge educated economist, set up and first into Goldman, set up and scaled her own coffee franchise to 40 outlets and sold that business, scaled and exited an online commerce business, and is now working at the cutting edge of environmental data science, principally because she's not a PhD ecologist, because she can communicate and share what that information and how it will impact businesses without bringing it back to the science that isn't accessible for everyone.
• 49:32
  SPEAKER_00: Right.
• 49:32
  SPEAKER_00: So we are seeing people lead those businesses who can converse in both languages, but make it meaningful and accessible to people.
• 49:39
  SPEAKER_01: Yeah.
• 49:39
  SPEAKER_01: And I've I think I learned or or realized from an early stage that if you can be what I call multilingual, that you can actually not only pull things together and try and create something that that is going to be impactful, but you can you can meet people where they are in terms of their own background and their own language.
• 49:57
  SPEAKER_01: So my background in in science, but also public policy and then and then business has given me an opportunity to sort of imagine what it's like to be the person on the other end of the other side of the table.
• 50:09
  SPEAKER_00: My cold read is there's something else creative that informs your ability to communicate because you listen wonderfully and can can speak really well.
• 50:17
  SPEAKER_00: Is there is there a creative endeavor on the back of that as well?
• 50:20
  SPEAKER_00: Is it just reading?
• 50:21
  SPEAKER_00: Uh is it art?
• 50:23
  SPEAKER_00: What are the things that you've enjoyed that help give you that roundedness?
• 50:27
  SPEAKER_01: Um, yeah, to some degree.
• 50:28
  SPEAKER_01: My father told me that was fantastic at art, and so twisted my arm to do uh um O-level as it then was GCSE these days in art, even though I was I didn't think I was very good and still don't think I'm very good.
• 50:38
  SPEAKER_01: But what what's definitely stayed with me is um playing the piano.
• 50:41
  SPEAKER_01: So um my my mother, my mum um encouraged me to go through the classical music thing, doing grades on the piano while I was a kid, which was uh it was okay, but I didn't really love it.
• 50:53
  SPEAKER_01: But now I'm I'm um trying to improve my jazz piano, which I'm finding really rewarding because it's it's a it's built on the skill that I've I've learnt in a different area, but it's incredibly creative, just you know, playing something that you're making up as you go along.
• 51:06
  SPEAKER_00: Love it.
• 51:07
  SPEAKER_00: Absolutely love it.
• 51:08
  SPEAKER_00: Um picking back up on the market side of things, where do you think we are most mispricing?
• 51:15
  SPEAKER_00: I was gonna say nature risk, but the components that represent nature risk.
• 51:19
  SPEAKER_00: Where is some of that mispricing most placed at the moment?
• 51:22
  SPEAKER_00: You mentioned the the water industry.
• 51:24
  SPEAKER_00: Is that one of the areas you think the best opportunities sit?
• 51:28
  SPEAKER_01: Yeah, I think um availability of water and extreme weather risk are just the the most obvious areas where where risk is mispriced.
• 51:36
  SPEAKER_01: I mean, we've seen in 2024, 2025 the hottest years, I think, that the planets had in certainly in human measurement history, if you like, or we haven't been able to measure um the prevalence of wildfires and um hurricanes of unprecedented severity.
• 51:52
  SPEAKER_01: And so what companies are not doing very well is is um running scenarios around what could happen to the locations and the that they own and depend on the supply chains that they are are using and even their access to customers.
• 52:07
  SPEAKER_01: So that that in the extreme weather case is is obvious.
• 52:11
  SPEAKER_01: And I think the water supply issue is uh is um increasingly apparent as well.
• 52:16
  SPEAKER_01: I think Tehran now is in in Iran has got uh probably the one of the worst uh problems in sourcing water, fresh water for 10 plus million people.
• 52:25
  SPEAKER_01: So that's on the risk side, and then on the opportunity side, I think there's just an enormous range of um businesses that are that are not being um whose value is not being properly priced in, which is an opportunity for for our firm.
• 52:37
  SPEAKER_00: I I'm in awe of your international lens, you can view this with.
• 52:42
  SPEAKER_00: We we literally extended oxygen into Europe this week.
• 52:45
  SPEAKER_00: We launched on on Monday, we appointed a director for Europe and an amazing lady who's helping us lead things out there.
• 52:51
  SPEAKER_00: Part of the reason for doing that was to broaden my thinking on the topic of natural capital in in our context, because you're pulling in learnings, experiences, situations from across the globe, whereas our focus and deployment is purely in the UK at the moment.
• 53:05
  SPEAKER_00: Um, but coming back to the water side of things, the the challenge of water supply and quality, it's systematically breaking everywhere along the chain through to um, so for my sins, I used to work for the Environment Agency for a period.
• 53:19
  SPEAKER_00: Please don't hold that against me.
• 53:20
  SPEAKER_00: I did leave.
• 53:21
  SPEAKER_00: Um, to the point whereby I think we're five or six years away from there being no panel engineers left in the UK, which are the people who have to sign off the safety and security of reservoirs.
• 53:33
  SPEAKER_00: So when we come to try and build them, we won't have the UK-based expertise to even say they're safe to use because we haven't built any for so many decades.
• 53:42
  SPEAKER_00: There hasn't been a call for these jobs, and the qualifications you need require you to exhibit 10 years of experience in an industry that doesn't exist anymore.
• 53:49
  SPEAKER_00: So, even providing for these things, never mind getting the planning, the logistics of delivering the infrastructure we need, is going to be massive.
• 53:56
  SPEAKER_00: One of the areas I think is prone for natural capital is we're going to end up with more private reservoirs.
• 54:02
  SPEAKER_00: So these new towns people want to build, there will be no water supply.
• 54:06
  SPEAKER_00: We're going to have to have, and there will be opportunities for private water supplies beyond boreholes to facilitate these type of things.
• 54:12
  SPEAKER_01: Yeah, it's a bit like the nuclear power sector where we decided um 10 years ago we needed some new nuclear power stations, but we hadn't built one since the 1980s.
• 54:20
  SPEAKER_01: And so we weren't, we didn't have the cadre of nuclear engineers, so we had to import them from France.
• 54:26
  SPEAKER_01: I think that the same thing will happen in the water sector.
• 54:28
  SPEAKER_01: No panel engineers, we'll we'll just bring them in from overseas.
• 54:32
  SPEAKER_00: Good job.
• 54:32
  SPEAKER_00: We made it much harder for us to bring in overseas resources, isn't it?
• 54:36
  SPEAKER_01: Yes.
• 54:37
  SPEAKER_01: Yeah.
• 54:37
  SPEAKER_01: Well, I think I can probably go on the record and say that I was in a conversation um round the table with Richard Tice recently, um, who's the chairman of reform.
• 54:46
  SPEAKER_01: And I said to him explicitly, or asked him explicitly, would you allow um immigrants to come in with specific visas to do specific jobs?
• 54:55
  SPEAKER_01: Um, because if you don't, then we're not gonna be able to get things done.
• 54:57
  SPEAKER_01: He said, absolutely, no problem at all with that.
• 54:59
  SPEAKER_01: So, I mean, I'm not sure he was um communicating reform policy formally, but he's a he's a businessman by background, and he was quite happy to say that yes, reform will be open to immigrants coming in uh if they're gonna add something to the economy.
• 55:15
  SPEAKER_00: That gives me a beautiful opportunity to say on the record something that's pertinent this week.
• 55:19
  SPEAKER_00: So it was a story that released, I'm I'm not sure which paper it was, but that Ben Goldsmith was advising reform on their environmental policies.
• 55:26
  SPEAKER_00: So I messaged Ben and went, Are you doing this?
• 55:29
  SPEAKER_00: And he's like, No, but I'd like to try.
• 55:31
  SPEAKER_00: And I was like, Okay, great point.
• 55:33
  SPEAKER_00: Let's talk about this.
• 55:33
  SPEAKER_00: And his argument is the same as mine that um if we have information that we feel would benefit whoever the political parties are, we should be talking to all of them and sharing that information.
• 55:44
  SPEAKER_00: So um I've inadvertently found myself chairing a group of all the chief execs in the natural capital sector.
• 55:50
  SPEAKER_00: Um, not for long.
• 55:51
  SPEAKER_00: I'm gonna rotate the chair.
• 55:52
  SPEAKER_00: I don't, I don't want to do that forever.
• 55:54
  SPEAKER_00: Um, but we're gonna write to each of the major parties saying this is what we do.
• 55:58
  SPEAKER_00: Because as an industry now, it's the first time whereby previously governments and political parties would, if they wanted to talk to people about the environment sector, they would go to Wildlife Trust or the National Trust because they couldn't conceive that it was a business or a an asset class.
• 56:12
  SPEAKER_00: Whereas now we are managing hundreds of millions of pounds.
• 56:15
  SPEAKER_00: Um appreciate we're not a billions yet one day, hopefully.
• 56:18
  SPEAKER_00: Hundreds of millions of pounds, thousands and thousands of acres, employing hundreds of people, and can now provide a business view of what nature, climate, biodiversity can offer that wasn't there before.
• 56:29
  SPEAKER_00: So the bit I would say is um Ben shouldn't be criticized for speaking to reform, nor should you.
• 56:33
  SPEAKER_00: We need to be talking to everyone if we're going to solve some of these problems and by politicizing it too much.
• 56:38
  SPEAKER_00: We just hamper all our progress.
• 56:39
  SPEAKER_01: Well, this is my point about ESG is that it's been adopted by the left and therefore castigated by the right.
• 56:44
  SPEAKER_01: And therefore it's unhelpful and we need to get rid of it.
• 56:47
  SPEAKER_01: Because, as you're definitely saying, Rich, we need to talk to all politicians because they're looking for our votes to do good for society.
• 56:54
  SPEAKER_01: And doing good for society means making sure we've got clean water and clean air and we're not damaging the climate.
• 57:01
  SPEAKER_00: And the perfect question is what next for impacts?
• 57:04
  SPEAKER_01: Well, I think the opportunities around the transition to a more sustainable economy never been better.
• 57:09
  SPEAKER_01: And so I think we we see several decades of growth ahead around the world because the institutional investors around the world, those pension funds and sovereign wealth funds, are going to continue to want to invest in the in the businesses of the future, but also in the real assets around um water infrastructure or or clean power that are going to produce nice levels of income.
• 57:31
  SPEAKER_01: Um, and those areas are continue to grow and will continue to grow for the next couple of decades.
• 57:36
  SPEAKER_01: I think the other thing that we've proven through our acquisitions, and we've done three so far, is that we can be an attractive home for talented teams in different parts of the uh investment community.
• 57:47
  SPEAKER_01: And I think Impact, which has a globally recognized brand in our space now, will continue to be attractive to those sorts of groups.
• 57:54
  SPEAKER_01: So we'd be very interested in um expanding our team through bringing together maybe the group sort of done a fabulous job, but for whatever reason are struggling to scale.
• 58:04
  SPEAKER_01: Um and then I think the the final thing would be that we're continuing to be uh committed to reporting on the non-financial outcomes of our investment work.
• 58:12
  SPEAKER_01: So we're not just investing in these sort of companies, but we're also gathering the data about how they're improving the environment and um and social factors as well, producing an annual sustainability report that's really prized by many of our clients.
• 58:27
  SPEAKER_01: And so I think we're going to continue in the next 10, 20 years to improve on that.
• 58:33
  SPEAKER_00: I cannot imagine a better way to wrap up the podcast.
• 58:35
  SPEAKER_00: That was amazing.
• 58:36
  SPEAKER_00: Ian, thank you so much for being generous with your time and sharing the story.
• 58:40
  SPEAKER_00: Um, we want to follow in your footsteps and be the first like pure natural capital play to get to anywhere near the scale you've been managed to achieve.
• 58:50
  SPEAKER_00: So thank you for the education, the hints, the tips, and the coaching along the way.
• 58:54
  SPEAKER_00: Really appreciate it.
• 58:55
  SPEAKER_01: Great, thanks, Richard.
• 58:56
  SPEAKER_01: Really enjoyable.