Over the past 5 years I’ve watched with interest as TruValue Labs has grown from startup to well known ESG data provider. Their approach to gathering data is unique and has always interested me, so I was thrilled when they asked if I would help them with their 2019 US Conference.
I had a dual role of emcee and an unusual role of being an extra pair of eyes and ears for attendees. I watched each presentation and panel closely, then at the end of the event, summed up all of the themes, key takeaways, and action items I saw for attendees. Below is a recap of those themes and takeaways along with some photos. If you want more photos and highlights, there’s a Twitter moment here; if you prefer a short video wrap up, you can see that here. Many of the presentations included a focus on new academic research and findings about ESG data. The event was held in the beautiful Hearst Building in NYC. The views of the city and central park were spectacular.
Top Three Themes
1. Increasing Interest & Adoption of ESG and sustainable investing by all types of investors
Investors from retail to high net worth, to ultra high net worth, to Institutional are taking ESG investing seriously, and overwhelmingly want to consider ESG factors and/or invest in ESG integrated or sustainable investing. Millennials and women are key drivers, but broad interest spans across ages and genders.
Challenge: Executives and boards at many corporations are not knowledgeable about the benefits of or investor demand for ESG reporting and sustainable business practices.
Opportunity: In our role as investment professionals, we need to bring this conversation to the c-suites and board rooms we visit, to let them know that investors, including active shareholders, are interested in ESG factors and how they play out in companies. We should be the leaders sharing new ESG research with our contacts on the corporate side. Share the latest academic research. Be the person to bring up the topic, educate and bring awareness.
2. Climate Change a Top Concern from Investors
Climate change is no longer a long term theoretical risk but that has evolved into a short term physical risk, a long term economic liability, a driver of global economic tensions, a primary cause of hardship for many people worldwide, and is exacerbating income inequality. More and more investors of all stripes are troubled by climate change.
Challenge: Going beyond negative exposure and looking for companies working on solutions and leading the way in best practices for stewardship.
Focusing on the people effects of climate change mitigation can enhance long term outcomes for investors and our world.
Take a leadership role at the product and investment level. Help investors see that they can do something by moving their assets towards investments in forward thinking companies that are driving solutions instead of funding a legacy economy.
3. Timely ESG Data as a Valuable Investment Tool
Of course an ESG data conference wouldn’t be complete without a deep dive into how the data itself can be valuable. TruValue Labs employees, as well as academic researchers demonstrated various ways that using ESG data can help investors stay ahead of business trends. One of the points I found most interesting was one from Stephen Malinack that showed that the more positive ESG data you have, the better the outperformance has been but instances where there are significant but low amounts of bad news stories are some of the most dangerous. Self disclosed information from corporations is necessary insufficient to see the whole picture of a company. Investors need to know if companies walk their talk, which is what TruValue labs seeks to illuminate with their data and AI driven insights. Emerging research shows that this same type of ESG data can reveal credit risks as well.
Challenge: There is no agreed upon standard for ESG measurement or impact performance. Brian Svendahl from RBC said, “impact measurement is like boiling the ocean but we have to start somewhere.” The industry would benefit from measurement frameworks for analyzing ESG data in choosing investments and for measuring actual impact from an investment or in a portfolio.
Opportunity: The last few years have seen much movement towards frameworks for measurement. The SDGs are transformative in their ability to point to a framework for impact investing. The Impact Management Project is new, has many large firm signatories and looks promising as well. Looking at ESG data is proper risk management. And as the field continues to evolve I expect we’ll see more cohesion around analytics and measurement.