Capacity development for the next chapter of sustainable investment
Ever since, I left employment within a mainstream investment institution, I have reflected that one thing that the sustainable investment value chain could really do with is an accessible and affordable training course that teaches sustainability professionals everything that they need to know about investment and capital markets but may be afraid to ask.
(What if asking this simple question makes me look stupid?)
Such a course, I thought, would be of value to:
- junior analysts entering the business,
- to ESG ratings agency analysts that may not have direct access to financial analysts and portfolio managers,
- to 'for impact' and 'grant-funded' research providers (with - perhaps - NGO backgrounds) looking to influence the flow of capital) and,
- frankly, to quite a lot of older analysts (such as myself) who spent a long time faking it until we made it … and then never quite had the time to go back and fill in the gaps.
(How exactly does the Fed 'set' interest rates and how does this interface with the market's role in determining interest rates and how important is this relative to other factors that need to be considered by sustainability-related bond investors?)
As I saw it, this course could differentiate itself - from the other courses available on the market - by:
- Being tailor-made, delivered in person and fully-focused on the immediate practical needs of the trainees (not on a syllabus that may suitable in general but unsuitable to the specifics)
- Putting fundamental, bottom-up, valuation, investment decision-making and capital allocation at its core. (Although this central focus would need to be supportive of entry points and application by people interested in engagement activity, passive or quants investment, regulation, client reporting etc.)
- Being grounded in reality by involving real people, their real-life needs and experiences … rather than in theoretical aspirations about what sustainable investment could be like if only ...
Spoiler: We did it! Yesterday!
As you will have guessed by now, we finished delivering - yesterday - an 8-session course (1.5 hours each) to the wholly-engaged and wholly-engaging Sustainable Finance team at the Environmental Defense Fund
The first thing to say is that this team at EDF have been an absolute joy to work with!
(As a trainer, you know you're onto a good thing when you have to cut off the incoming questions and practical discussion after 20 minutes at the beginning of (every) session because you need to cover at least some of the structured course material … and the actionable chat keeps going anyway on the session thread while you do this!)
More significantly, perhaps, were the existence of clear synergies between EDF's interests and ours:
- EDF employs a strong bench of deep sustainability expertise in areas of significant interest to investors (methane, hydrogen, transport, food, insurance etc) and also - through its Sustainable Finance team - a recognition that making this expertise accessible to investors requires it to be contextualised by an understanding of capital markets and investor priorities.
- At SRI-Connect, by contrast, we have no specific sustainability expertise but a strong interest in the processes and techniques that can be used to draw sustainability issues to the attention of investors.
So, first my thanks go to Andrew Howell for the original idea (and for remembering me from when we worked at Citi together over a decade ago), to Kristin Lorenzo , Bridget Killian and Jake Hiller for shaping it into reality and to all of the others from Leslie Labruto 's team who brought energy, enthusiasm and challenge to every single session.
Thanks also to them for the budget that finally pushed me from dreamer to deliverer thereby 'seed funding' material that can now be delivered more broadly across the sustainable investment value chain.
And also, thanks to the many industry participants that brought their expertise and real-world experience (sustainable investment is nothing if it doesn't work for real in capital markets) to the sessions:
- To Neil Brown for joining the session on how listed equity can support & encourage sustainable economic transitions
- To My-Linh Ngo for helping us to understand how 'Debt is Different'
- To Gayle Muers for telling us how sustainability really is within investment banks
- To Laurie Fitzjohn-Sykes , Chris Coggin and Sofía De La Parra for a hugely engaging discussion on What works (and what doesn't) in NGO <=> investor engagement on sustainability
- To Natasha Buckley for the laying the world of private equity and its influence out for us
The opportunity to hear directly from these practitioners (some of whom wrote the book on their particular areas of focus) was - self-evidently valuable and also a great pleasure. Thank you all.
The road travelled ... and the road to come
In my next post I will be discussing where this capacity development work might go next (I genuinely don’t know and am genuinely looking for input).
Before doing that, however, I must thank a number of other people who may or may realise how helpful and influential they were in building ideas and impetus towards this recent course - notably:
- To Camilla Seth and Sabine Miltner … at the Gordon and Betty Moore Foundation who funded our first training programmes on sustainability in valuation that were delivered to 'mainstream' sell-side and buy-side analysts and funded work (that five years is still current and relevant) on how NGOs can engage investors. Also, of course, thanks to Tanya Khotin for introducing me and encouraging me to believe that a big reach was possible with that 'Moulding Markets' programme.
- To Luke Blower , John Willis & Alexandra Russell Brown from WBCSD – World Business Council for Sustainable Development … for commissioning work and developing intellectual capital on topics such as Integrating Sustainability into the Equity Story, Integrating Sustainability into Valuation and Demystifying Investor Sustainability Needs that are foundational to the valuation and communication components of the training
- To my erstwhile colleagues, Aline Reichenberg Gustafsson, CFA and Willem Schramade from SITA for building out training programmes across sustainable investment fundamentals, valuation, integration communication and much more.
- To numerous Investor Relations Societies and stock exchanges for hosting training programmes on how IR managers don't have to believe the hype of ESG and can be much more effective if they focus on sustainability and investment fundamentals and communicate on those proactively to investors [ John Gollifer, Laura Hayter, Deborah Walter Vaz, CIRO, Katie Beith & Ian Matheson ]
- … and last - but not least - to the hundreds of people who have participated in these various courses over time and - through their engagement and feedback - shaped subsequent courses.
… and I am conscious (before you ask) that this might read a bit like an Oscar roll call … when all I've done is deliver a few training sessions …
On the other hand, the work of interpreting, contextualising and framing sustainable investment practice and connecting it to 'mainstream' investment practice as both of those two disciplines themselves have been evolving has taken a village… So, thank you, village.
