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Speaker 1: Hey, this is Tim. Happy New Year. We're on vacation

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Speaker 1: this week, but the Crash Course team wanted to re

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Speaker 1: air an episode we had fun making with a colleague

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Speaker 1: of ours here at Bloomberg. Sagel Kishan is a stellar

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Speaker 1: Bloomberg reporter, and she wrote a really great article about

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Speaker 1: the backlash to ESG, which is an investing practice that

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Speaker 1: takes environmental, social, and governance concerns into account. We worked

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Speaker 1: with her to turn the interview for that story into

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Speaker 1: the episode that you're about to hear. Thanks for listening.

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Speaker 1: Now here's the show. Have you ever looked at the

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Speaker 1: stock market and thought, Dear Lord, my portfolio needs some help,

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Speaker 1: or thank God, it's not that bad today. Well, for

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Speaker 1: one investor in Idaho, that prayer happens every day, though

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Speaker 1: with a little less exasperation.

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Speaker 2: Heavenly Father, as we head into our week full of work,

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Speaker 2: we pray that you would go with us, that you'd

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Speaker 2: be with us, Lord, go before us.

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Speaker 3: Thank you.

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Speaker 1: That's Robert Netsley, the president and CEO of in Investing.

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Speaker 1: His company does something he.

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Speaker 2: Calls bysically responsible investing.

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Speaker 1: Biblically responsible investing for the uninitiated.

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Speaker 2: What doesn't mean to invest the Word of God means

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Speaker 2: certainly to do what you can to earn a good

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Speaker 2: return and use the returns for redemptive purposes, but also means,

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Speaker 2: like Proverbs chapter sixteen says, better is a little with righteousness,

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Speaker 2: and great gains with injustice. If there has to be

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Speaker 2: a trade off between making a ton of money or

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Speaker 2: being moral, like we should choose righteousness, morality, ethics. And

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Speaker 2: there's very few people that I think wouldn't disagree with that.

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Speaker 1: So Robert invests depending on what he thinks the Bible

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Speaker 1: might support or not support. He used to label his

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Speaker 1: offerings as faith based ESG in twenty.

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Speaker 2: Nineteen, like when the latched WWJD. It's the first fund

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Speaker 2: that had ESG in the name. What would you Do WWD?

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Speaker 1: But now it's just like.

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Speaker 2: All of a sudden, I'm talking to people who don't

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Speaker 2: even know a sock or an equity or mutual funds

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Speaker 2: and they're.

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Speaker 3: Like, oh, he is G said that.

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Speaker 4: Yeah, exactly what.

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Speaker 5: Does it means?

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Speaker 3: I don't know, but it's evil wait bad.

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Speaker 1: Welcome to Crash Course, a podcast about business, political, and

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Speaker 1: social disruption and what we can learn from it. I'm

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Speaker 1: Tim O'Brien, Robert Netsley personifies a bigger war going on

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Speaker 1: in the investment world and American politics over a little

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Speaker 1: acronym called ESG. In the last year, there's been a

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Speaker 1: Republican backlash to the trillions of dollars committed to investing

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Speaker 1: practices that take environmental, social, and governance concerns into account.

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Speaker 1: And then there's Robert. He's an evangelical Christian trying to

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Speaker 1: realize his values and stay true to his own beliefs

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Speaker 1: in the investing world. That's sometimes intersex with Wall Street's

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Speaker 1: ESG strategy, but it also lays bare some contradictions. My

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Speaker 1: colleague Sagel Kishan reports on ESG and staying for Bloomberg News,

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Speaker 1: and she flew to Idaho to meet with Robert. She

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Speaker 1: wrote a fascinating piece last fall called what would Jesus buy?

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Speaker 1: Investor charts course for two billion dollar fund and she's

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Speaker 1: going to share more of that story with us for

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Speaker 1: today's crash course Conservatives versus ESG. It's a tale of

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Speaker 1: two conflicts in a way, should there be biases in

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Speaker 1: the investing world, be it faith based or social activism?

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Speaker 1: And should ESG exist at all? Welcome to the show, Stagel,

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Speaker 1: Thanks for having me. So before we dive back into

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Speaker 1: Robert's story, I want listeners to get to know you

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Speaker 1: a little bit more. You've been at Bloomberg about twenty

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Speaker 1: years now. And how long have you been on the

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Speaker 1: ESG beat.

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Speaker 4: It's just over three years, just before the pandemic. We

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Speaker 4: start to the beat, and why ESG?

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Speaker 1: Why do you love this little corner of the market.

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Speaker 4: It's complex, it's undefined, it's everywhere but nowhere. Just trying

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Speaker 4: to figure out the complexities is what draw me to

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Speaker 4: the beat.

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Speaker 1: And you're good at solving complexities. I wish Oh, I

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Speaker 1: bet you are. I think you are. That's why you're here. Now.

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Speaker 1: How did you find out about Robert Netsley? What attracted

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Speaker 1: you to him as a story?

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Speaker 6: Well?

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Speaker 4: I first heard about him after the shooting in Yavaldi,

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Speaker 4: Texas last year, and I was looking at whether esh

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Speaker 4: funds held gunstocks and I thought, obviously no. But then

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Speaker 4: I found his funds and we found that he held

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Speaker 4: shares in the firearms company called stm Rugger, one of

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Speaker 4: the big ones, and a shooting sports company called Vista Outdoor.

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Speaker 4: So I called him. He said that gun violence is deplorable,

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Speaker 4: but guns themselves aren't unethical or immoral by themselves. I

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Speaker 4: remember thinking it was a little weird, but to me

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Speaker 4: it was new to hear about a conservative version of ESHI.

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Speaker 4: I knew I had to learn more, so I helped

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Speaker 4: on a plane and feutre boise last year.

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Speaker 1: Okay, well, so why don't you take over the story

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Speaker 1: from there, and then we'll meet back here later in

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Speaker 1: the eppisode to talk more about ESG and.

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Speaker 4: What you've learned sounds great, Robert Nesle is a small

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Speaker 4: part of a bigger clash that's going on in America.

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Speaker 4: Red versus blue, and the worlds of financing investing haven't

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Speaker 4: been immune. EESG, which stands for Environmental, Social and Governance Investing,

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Speaker 4: has become a pinata and dragged into the cultural wars.

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Speaker 4: On the one hand, proponents of ESG say it's important

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Speaker 4: to take into account things like climate change and workers'

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Speaker 4: rights when making financing and investing decisions, especially amid societal changes,

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Speaker 4: regulation and pressing problems like global warming, when opponents on

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Speaker 4: the political right say ESG has become a way for

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Speaker 4: progressives to impose their views and their goals on financial markets,

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Speaker 4: essentially a threat to the American way of doing business.

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Speaker 4: Robert Nesley is somewhere in the middle of those two.

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Speaker 4: He's a bit of an anomaly. He straddles both sides.

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Speaker 4: In one sense, he is a faith based investor who

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Speaker 4: excludes things like tobacco and alcohol from his portfolio. On

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Speaker 4: the other he invests in gun makers and pushes back

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Speaker 4: on things like LGBTQ issues. We'll get into more of

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Speaker 4: that later, but first I want you to hear where

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Speaker 4: Robert came from. He grew up in California, in the

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Speaker 4: Monterey Bay area. His parents married right out of high

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Speaker 4: school and had Roberts and his younger brother not long

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Speaker 4: after that. His mom stopped using drugs, but his dad didn't.

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Speaker 3: So they got the worst one.

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Speaker 2: I was about three, reading by my mom, my younger

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Speaker 2: brother's artistic in on food stamps for a little bit,

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Speaker 2: and all that kind of thing, going through life, and

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Speaker 2: just really seeing the faithlesser going.

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Speaker 3: Through all of that.

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Speaker 4: As evangelical Christians, they went to church. The community there

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Speaker 4: gave Robert sability and he had a sense that God

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Speaker 4: was providing for his family. But he really found God

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Speaker 4: one day when he was seven years old and on

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Speaker 4: time out.

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Speaker 2: I remember this really feeling like sorry for myself whatever, whatever,

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Speaker 2: nobody loves me, YadA, yah YadA, And you know, writing

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Speaker 2: in my ciddy and it's remembering what the pastor said

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Speaker 2: that you know, Jesus loves you actually and he will

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Speaker 2: forgive you of your sin. And as a seven year

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Speaker 2: old does, I remember praying and asking Jesus to come

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Speaker 2: into my heart, you know, and I give him mind

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Speaker 2: to him there and then that's when personally I made

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Speaker 2: a decision to really follow Christ in a very childlike way.

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Speaker 4: Robert went to community college then later got his college

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Speaker 4: degree online. In between that, he met his wife at

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Speaker 4: a tiny church in his hometown. They lived a life

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Speaker 4: of what he called intentional ministry, doing work in the

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Speaker 4: community in the name of God. He worked with high

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Speaker 4: schoolers with disabilities and at a pro life pregnancy center.

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Speaker 4: When he and his wife started having kids and needed

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Speaker 4: more money, he got a job at a Volkswagen dealership

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Speaker 4: until it closed during the two thousand and eight financial crisis.

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Speaker 2: On my way home from getting let go, when they

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Speaker 2: told everybody, you know what was going on, like ahead

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Speaker 2: was kind of spending respecting our second baby, and like,

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Speaker 2: I don't know what I'm going to do, So we

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Speaker 2: just kind of pulled over and spraying and really felt

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Speaker 2: the piece of God to say, like, you know what,

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Speaker 2: you've never liked that job anyway, this is your opportunity

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Speaker 2: to do whatever you want to do and.

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Speaker 3: I'll take care of it.

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Speaker 4: So he thought about what jobs could have family friendly hours,

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Speaker 4: and he decided to look for a job at a bank.

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Speaker 4: He applied to everything he could, and then he got

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Speaker 4: a gig with Wells Fargo in their investment department. Even

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Speaker 4: though math was his worst subject in school, he picked

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Speaker 4: it up really quickly, got license and moved into a

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Speaker 4: role advising clients on their investments. He says he was

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Speaker 4: happy as clam until decided to lead a Bible study

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Speaker 4: on finances at his church. He wanted to talk about

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Speaker 4: what the Bible teaches people about money. So he starts

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Speaker 4: for searching and then.

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Speaker 2: Some article came up about the response investing like investing

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Speaker 2: interesting click and introduced this concept of Hayrid thought about

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Speaker 2: what the companies you own, like you're an owner, what

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Speaker 2: they're actually doing to make money? Right? And so if

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Speaker 2: you own Netflix or whatever videos like would you have

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Speaker 2: a video store that sold pornography videos in the back?

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Speaker 2: Like no, I wouldn't, and yet that's exactly what we

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Speaker 2: do as shareholders.

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Speaker 4: Robert says, there are lots of scriptures in the Bible

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Speaker 4: that say it's bad to make money off of things

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Speaker 4: that are.

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Speaker 3: Immoral, that is attestable to the Lord.

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Speaker 4: So he turned to his own investments, and he quickly

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Speaker 4: found what he considers to be a major red flag.

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Speaker 4: He had been investing in companies that manufacture aborta fashions

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Speaker 4: or drugs that help end a pregnancy. His heart sank.

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Speaker 4: Remember he was the president of a pro life pregnancy center,

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Speaker 4: and his reading of the Bible concluded that abortion is bad,

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Speaker 4: So that investment was a complete no no for him.

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Speaker 2: I remember sitting in my desk sort of slack job

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Speaker 2: like this son, that this was something that I had missed,

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Speaker 2: that the church is obviously missing, and that I couldn't

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Speaker 2: do my job like somebody came to mist right now

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Speaker 2: and asked me to play the trade.

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Speaker 3: Like I couldn't do it with a queen conscience. And

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Speaker 3: then I go craps because what else was I going

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Speaker 3: to do? And so it's incredibly frightening.

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Speaker 4: So he quit the bank, and he said he felt

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Speaker 4: God was calling him to do something else, he dabbled

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Speaker 4: with what he called biblically responsible investing, and then in

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Speaker 4: twenty fifteen he started his own firm called Inspire Investing. Essentially,

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Speaker 4: Inspire invests in companies it seems worthy, engages with those

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Speaker 4: that it hopes to convert, and excludes or divest from

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Speaker 4: ones that it finds immoral.

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Speaker 2: In the Apostle Paul, in one of his letters to churches,

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Speaker 2: it talks about how he's like he's compelled to preach

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Speaker 2: the gospel and there's there's nothing else that he can do.

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Speaker 3: He's just he's compelled to preach the gospel.

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Speaker 2: And I really felt like that, like I'm compelled, like

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Speaker 2: there's nothing else I can do other than then this,

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Speaker 2: you know, goes share this story with people, and I

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Speaker 2: don't know how it's going to end up, you.

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Speaker 3: Know, maybe terribly financially, but this is what I have

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Speaker 3: to do.

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Speaker 2: So of course of my eye step out of the mote,

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Speaker 2: and you know, trusted God, and he's been he's been faithful.

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Speaker 4: The market was exceptionally bad last year because of inflation,

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Speaker 4: the war in the Ukraine, and fears of a global overcession.

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Speaker 4: So maybe it doesn't mean a lot that his biggest

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Speaker 4: fund slumped about twenty four percent last year. If we

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Speaker 4: look back to a good year twenty nineteen, his fund

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Speaker 4: was up twenty eight percent, but it was still slightly

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Speaker 4: below the overall startle markets. But remember what Robert said

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Speaker 4: at the beginning of this episode. For him, it's not

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Speaker 4: all about making money.

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Speaker 2: I'm not an investor who's a Christian, like I'm a

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Speaker 2: Christian who has to work and investment industry.

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Speaker 4: Many of the biggest and most profitable companies are excluded

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Speaker 4: from his portfolio, which is almost a guarantee that his

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Speaker 4: investments will underperform.

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Speaker 2: We exclude companies that you know, support legislation that is

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Speaker 2: anpathetical to a biblical viewpoint, like pushes a certagy or

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Speaker 2: doing money to an activist organization that's explicitly pushing an

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Speaker 2: unbiblable viewpoint on those areas.

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Speaker 4: So Robert's reading of the Bible says abortion is bad.

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Speaker 4: We'll think of all the companies that announce that they

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Speaker 4: would pay for employees to travel for an abortion after

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Speaker 4: the Supreme Court overturn rov Wade last summer, They're out

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Speaker 4: of his portfolio. Also excluded all of the companies that

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Speaker 4: support or finance floats during the Pride Parade. His reading

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Speaker 4: of the Bible isn't supportive of LGBTQ rights either. I'll

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Speaker 4: just note here that while Netley says that he loves

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Speaker 4: his LGBTQ neighbors, he doesn't want what he describes as

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Speaker 4: their lifestyles promoted in society and by companies. Nor does

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Speaker 4: he want companies to discriminate against people like Kim in

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Speaker 4: the workplace who hold more traditional views on marriage. So

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Speaker 4: abortion access and LGBTQ rights are only two issues, but

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Speaker 4: they put a lot of companies on the exclude list.

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Speaker 4: Other companies are shunned for reasons such as distributing pornography,

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Speaker 4: selling tobacco and alcohol products, funding stem cell research, and

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Speaker 4: promoting in vitro fertilization. All in all, Robert says Inspire

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Speaker 4: excludes about half of this in P. Five hundred, companies

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Speaker 4: like Amazon, Walmart's Apple, and Google's parent company alphabets. In

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Speaker 4: an effort to limit the number of companies on the

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Speaker 4: exclude list, Robert will often press executives, encouraging them to

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Speaker 4: avoid what he says is politicization. Here's one examples.

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Speaker 7: So, who likes costco wholesale fans of free samples in

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Speaker 7: the room.

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Speaker 4: He's on the stage at a conservative conference in twenty eighteen.

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Speaker 7: Last summer, we were alerted to the fact that they

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Speaker 7: had begun sponsoring certain gay pride parades throughout the country,

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Speaker 7: a handful of different cities. Obviously, this is concerning to us.

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Speaker 7: So I picked up the phone and I just called

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Speaker 7: Investor Relations, he said.

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Speaker 4: The CFO called him back and they had several conversations.

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Speaker 7: About six weeks after that initial phone call, got another

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Speaker 7: call from this gentleman telling us that Costco had made

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Speaker 7: the executive decision not to support divisive issues his word,

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Speaker 7: divisive issues such as gay pride parades.

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Speaker 4: Costco wouldn't respond to requests for comment, but these sorts

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Speaker 4: of campaigns show that his work is about more than

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Speaker 4: just investing in this faith. He's having an influence. It

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Speaker 4: doesn't always go his way, though, He says he's tried

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Speaker 4: to persuade Smuckers against supporting lgbth wrights and other quality issues.

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Speaker 4: He's also tried to press six Sporting Goods against paying

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Speaker 4: for employee travel for abortions, but so far he's been unsuccessful. Yet,

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Speaker 4: Robert says he avoids the shame game.

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Speaker 2: One of the big criticisms of physically responsible investing generally

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Speaker 2: is that it can be easily perceived or assumed that

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Speaker 2: it's a guilt trip game, right, like, hey, did you

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Speaker 2: know that you're invested in this thing?

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Speaker 6: Shame?

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Speaker 2: And unfortunately, I think historically there have been those that

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Speaker 2: have taken that approach. Good intentions maybe, but you know,

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Speaker 2: run approach. And you know, we've heard a lot of people,

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Speaker 2: especially from the early days and like before we got

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Speaker 2: involved in like the decades, you know, nineties and eighties

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Speaker 2: and whatnot, that that really was the perception that it

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Speaker 2: was like a guilt and shame sort of legalistic approach,

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Speaker 2: which is, you know, distasteful and not really difficult. We're

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Speaker 2: supposed to be compelled by love and grace, not guilt

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Speaker 2: and shame.

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Speaker 4: So take that as you will. But one thing that

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Speaker 4: really struck me was that he decided to label his

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Speaker 4: funders e SG. When I thought about it, it made

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Speaker 4: sense in some ways. I mean, Inspire certainly screens companies

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Speaker 4: by a variety of categories that fall under E S

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Speaker 4: and G topics, which is environmental, social and governance issues.

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Speaker 4: Inspire will screen for human rights violations, forced labor and

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Speaker 4: other worker issues like minimum wage policies. It'll look at

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Speaker 4: whether companies are cognizant of their environmental impacts such as

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Speaker 4: water consumption and air pollution, and INSPIRE will screen for

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Speaker 4: discriminatory or prejectory lending, whether companies are aggressively marketing products

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Speaker 4: in low income communities. All of those are considered issue factors.

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Speaker 4: But the day I visited him last August, that was

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Speaker 4: all about to change. Right before our interview, he was

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Speaker 4: in a meeting with his board and they decided to

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Speaker 4: remove the E issue label from their funds.

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Speaker 2: I don't know if there was some meeting that they

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Speaker 2: had in conservative radio land or something, right, but like, hey,

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Speaker 2: this year, let's talk about USU every.

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Speaker 3: Single time we go on here. So the you know,

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Speaker 3: just we noticed the rhetoric is like increasing. Hmm. Watching this,

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Speaker 3: I don't know how that's going to go.

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Speaker 2: We're committed to like trying to be alive, trying to

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Speaker 2: be redemptant influence on ESG, and meanwhile we're getting like

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Speaker 2: lambassad from the left for like staying reesg.

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Speaker 4: Roberts says he got blowback from liberal corners for claiming

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Speaker 4: the ESG label while investing in socks that might contradict

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Speaker 4: a more traditional understanding of what ESG means. Meanwhile, his

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Speaker 4: more conservative clients were also getting confused by the label.

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Speaker 4: Conservative talking heads like Glenn Beck and Tucker Carson had

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Speaker 4: been attacking ESG on air, describing it as what they

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Speaker 4: call a leftist agenda. So have high profile politicians such

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Speaker 4: as Florida Governor Ron de Santis and former Vice President

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Speaker 4: Mike Pence. Beck has said ESG poses a danger to

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Speaker 4: soul of America. DeSantis has gone as far as directing

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Speaker 4: his state to pull billions of dollars from black Rock,

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Speaker 4: the Wall Street money manager that's been the most vocal

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Speaker 4: about pressing companies on issues like climate change, and more

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Speaker 4: than a dozen states have pushed anti ESG laws. So,

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Speaker 4: if all these guys are calling ESG woke capitalism, what

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Speaker 4: was inspired doing? Robert says he wishes es SHE could

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Speaker 4: be seen as more neutral, But it is what it is.

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Speaker 2: It's a narrative that we are powerless to counteract. If

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Speaker 2: we had a bigger microphone than maybe we would try.

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Speaker 2: But the amount, Yeah, like when every conservative pundit is

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Speaker 2: calling an evil, like, we just cannot.

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Speaker 3: Counteract that narrative.

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Speaker 4: Not that Robert necessary wants to counteract conservative talking points.

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Speaker 4: He is on the conservative end of the spectrum, after all,

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Speaker 4: and he shared the stage at conservative conferences with big

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Speaker 4: names from the Republican Party. He says he won't endorse candidates,

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Speaker 4: but his work naturally leads him to back or speak

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Speaker 4: as against companies based on whether they're handling of socially

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Speaker 4: shoes conforms to his reading of the Bible.

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Speaker 2: We believe that a healthy business respects all viewpoints, right,

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Speaker 2: and they certainly they claim to be tolerant and inclusive,

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Speaker 2: then they should actually be so in practice.

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Speaker 3: So do you want them neutral or do you want

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Speaker 3: them to keep kends what you mean by neutral? Right,

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Speaker 3: So it means neutral by allowing all points.

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Speaker 4: Just making shoes, just sit to making cheese.

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Speaker 6: If it's Nike, yes I would like him Betral, not

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Speaker 6: if it's Bobby Lobby or just like what I'd like

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Speaker 6: them to keep not being neutral, you know.

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Speaker 2: But even those companies they respect new point, diversity and

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Speaker 2: all sorts of people working there, so they're not It's

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Speaker 2: neutrality in you know, not imposing your beliefs, you know

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Speaker 2: upon people working there in a way that is you know,

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Speaker 2: heavy handed or whatever else like it's respecting all viewpoints.

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Speaker 1: Wow. Wow, I'm sorry to interrupt Segel, but this is

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Speaker 1: just so interesting to me. Robert sounds like such a

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Speaker 1: likable man, and he has goals of realizing his values

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Speaker 1: as an investor and through his portfolio. But I also

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Speaker 1: think there's some hypocrisy and contradictions going on here that

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Speaker 1: are worth exploring. He's asking companies like Nike, for example,

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Speaker 1: to be neutral and to not put values ahead of

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Speaker 1: their product line for example, or do not put values

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Speaker 1: ahead of their sponsorships. And yet then he's turning around

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Speaker 1: and saying Chick fil A or a hobby lobby is

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Speaker 1: doing the right thing by restricting certain people from its

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Speaker 1: premises or from its product line. And that just feels

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Speaker 1: to me like a deep contradiction, especially from someone who

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Speaker 1: says they're a Christian if you accept that sort of

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Speaker 1: a basic tenet of Christianity is love and forgiveness. Who

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Speaker 1: is he really forgiving? Who does he really love when

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Speaker 1: he's working through where he's going to invest? And then

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Speaker 1: the criticisms he has of other people for making exactly

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Speaker 1: the same choice as he does.

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Speaker 4: Well, that's where it gets all murky. A lot of

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Speaker 4: conservatives feel that corporate America has been co opted by

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Speaker 4: liberals who are pushing goals like climate change, for instance.

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Speaker 4: These conservatives want businesses to focus on business and to

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Speaker 4: be more neutral and not following liberal goals.

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Speaker 1: Yeah, but neutrality is in the eye of the beholder,

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Speaker 1: too right, right, too right, and at least classically with investment,

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Speaker 1: if you're saying you're being neutral, you're trying to look

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Speaker 1: just at the numbers. And now you have these conflicts

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Speaker 1: between people who say, we have the numbers, but we

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Speaker 1: also have values. But then you have Robert Ntsley who's saying,

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Speaker 1: my values are good for me, but your values aren't

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Speaker 1: good for you.

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Speaker 4: Maybe this is a good place to pause on the story.

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Speaker 1: I agree. Let's take a break, and then where are

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Speaker 1: we going When we get back.

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Speaker 4: I want to step back and talk to some of

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Speaker 4: the experts I've been speaking to about what's going on

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Speaker 4: in the issue space, and then we'll go back to

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Speaker 4: roberts and here's some of his sorts.

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Speaker 1: Great, we'll be right back with all of that. Okay,

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Speaker 1: we're back with Bloomberg's ESG reporter Segel Kishan.

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Speaker 4: Thanks for having me.

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Speaker 1: So we've just heard the story of Robert Netsley, a

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Speaker 1: faith based investor in Idaho. But he's not the first

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Speaker 1: person obviously who's invested this way. So Sagel, why don't

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Speaker 1: you take over the story again and give our listeners

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Speaker 1: some of that history.

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Speaker 4: Faith based investing is the oldest full of sag Old capitalism.

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Speaker 3: Sure, I mean going back to you know, slave trade

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Speaker 3: in the UK.

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Speaker 4: This is Robert Netsley again.

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Speaker 2: Yeah, you had the Quakers and others who just refused

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Speaker 2: to invest in the slave trade. And we're outspoken about

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Speaker 2: slave trade. So it was people of faith, specifically Christian

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Speaker 2: faith in that context, and scripturally, like even thousands of

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Speaker 2: years before that, you've got proverbs and rules surrounding commerce

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Speaker 2: that prohibit immorality, like including the slave trade. You know,

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Speaker 2: kidnop exhilivating in Moses. This is an a moral business.

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Speaker 3: You don't steal people and sol THEO.

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Speaker 4: I called Nikita Singal to learn more about this. She's

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Speaker 4: the co head of Sustainable Investment and ESG at Lizard

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Speaker 4: Asset Management in New York.

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Speaker 8: Esg's birthplace was kind of from the Sri movement.

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Speaker 4: SRI that's socially responsible investing. She pointed to religious groups

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Speaker 4: like the Methodists as well. As sharer law in the

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Speaker 4: Muslim faith.

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Speaker 8: And many other religions have some form of influence over

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Speaker 8: how the followers of that faith should invest in line

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Speaker 8: with the principles of that religion.

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Speaker 4: When hot butts in is shoes later arose around the

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Speaker 4: Vietnam War and Apartheis in South Africa, a lot of

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Speaker 4: consumers started using their purchasing power to boycott companies turning

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Speaker 4: a profit there.

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Speaker 8: All of that time period was about investing in companies

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Speaker 8: that were we believed they were engaging in activities that

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Speaker 8: were not positive for society, and the tool that was

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Speaker 8: used was to just simply exclude investing in those companies

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Speaker 8: because it was signaling a specific value or a virtue.

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Speaker 8: I think ESG is very different from all of that.

437
00:24:10,200 --> 00:24:12,960
Speaker 4: In the Keysa's eyes as a person who does this

438
00:24:13,080 --> 00:24:14,280
Speaker 4: kind of investing every day.

439
00:24:15,320 --> 00:24:20,600
Speaker 8: ESG is not virtue signaling. It's not a product, it's

440
00:24:20,640 --> 00:24:23,920
Speaker 8: a process. It's actually part and parcel and a very

441
00:24:24,040 --> 00:24:27,240
Speaker 8: essential part of good investing. And what it is about

442
00:24:27,400 --> 00:24:30,480
Speaker 8: is thinking on behalf of our clients as their fiduciaries.

443
00:24:30,960 --> 00:24:34,159
Speaker 8: What are these emerging risks and opportunities related to the

444
00:24:34,280 --> 00:24:38,320
Speaker 8: environment and society that are increasingly becoming market issues.

445
00:24:39,000 --> 00:24:43,000
Speaker 4: When I told Nikisa about Robert's fund, she was unequivocal.

446
00:24:43,280 --> 00:24:45,120
Speaker 8: I would not consider that ESG.

447
00:24:46,000 --> 00:24:48,760
Speaker 4: She highlights it for me, the difference between ESG and

448
00:24:48,840 --> 00:24:53,200
Speaker 4: what she calls impacts investing. That's where an investor might

449
00:24:53,240 --> 00:24:56,600
Speaker 4: try to use their investments to affect change or influence

450
00:24:56,640 --> 00:24:57,840
Speaker 4: a company's policies.

451
00:24:58,359 --> 00:25:00,600
Speaker 8: There is a healthy and growing subst set of our

452
00:25:00,640 --> 00:25:02,639
Speaker 8: clients who are interested in that, and we need to

453
00:25:02,640 --> 00:25:05,000
Speaker 8: make sure that we can do it while keeping in

454
00:25:05,040 --> 00:25:08,280
Speaker 8: mind their risk return objectives. But it's not the place

455
00:25:08,320 --> 00:25:10,680
Speaker 8: of a global asset manager like us to be able

456
00:25:10,720 --> 00:25:11,920
Speaker 8: to have an opinion on that.

457
00:25:12,680 --> 00:25:16,280
Speaker 4: To learn more about what makes EESG ESG, I called

458
00:25:16,280 --> 00:25:18,840
Speaker 4: an expert who I've spoken to you while on the beat.

459
00:25:19,160 --> 00:25:22,240
Speaker 5: VET told Hennish and I'm Weistein and faculty director of

460
00:25:22,280 --> 00:25:24,720
Speaker 5: the ESG Initiative at the Wharton School, and I'm also

461
00:25:24,760 --> 00:25:26,680
Speaker 5: the Deloitte and Tusche Professor of Management.

462
00:25:27,119 --> 00:25:30,320
Speaker 4: Viz has a similaritate to Nikisa when it comes to

463
00:25:30,359 --> 00:25:33,000
Speaker 4: what factors go into an ESG investment plan.

464
00:25:33,520 --> 00:25:36,760
Speaker 5: ESG is about doing hard financial analysis and it's not

465
00:25:36,880 --> 00:25:41,800
Speaker 5: at all driven by ideology. It's driven by economics.

466
00:25:44,119 --> 00:25:47,720
Speaker 4: He'll study data to try to understand how companies are

467
00:25:47,720 --> 00:25:53,120
Speaker 4: analyzing environmental, social, and governance factors. Then he'll look into

468
00:25:53,160 --> 00:25:57,720
Speaker 4: how those factors might affect a company's bottom line. Here's

469
00:25:57,760 --> 00:26:02,440
Speaker 4: an example. Palmle is a common ingredient found in cosmetic

470
00:26:02,480 --> 00:26:05,960
Speaker 4: products like lipsticks, but it's also leading to a lot

471
00:26:05,960 --> 00:26:07,760
Speaker 4: of deforestation around the world.

472
00:26:08,240 --> 00:26:11,200
Speaker 5: That's just one of many examples. Or an agricultural company

473
00:26:11,400 --> 00:26:15,119
Speaker 5: by changing its mix of supplies, by changing where and

474
00:26:15,160 --> 00:26:18,840
Speaker 5: how it's sourcing, can have an impact on deforestation and

475
00:26:18,960 --> 00:26:22,920
Speaker 5: an impact on clear cutting and other environmentally damaging practices.

476
00:26:23,520 --> 00:26:27,520
Speaker 5: Companies are going to be increasingly pressured to undertake those actions.

477
00:26:27,880 --> 00:26:31,200
Speaker 5: Some companies are head in that transition. Some companies are behind.

478
00:26:31,600 --> 00:26:35,800
Speaker 5: That should be reflected in their valuation. Otherwise, government policy

479
00:26:36,119 --> 00:26:40,240
Speaker 5: or consumer changes in preferences will lead them to be

480
00:26:40,359 --> 00:26:42,800
Speaker 5: forced to make these changes later on when they're more

481
00:26:42,840 --> 00:26:43,640
Speaker 5: expensive to make.

482
00:26:44,200 --> 00:26:47,080
Speaker 4: It's not a short term gain. He's really trying to

483
00:26:47,080 --> 00:26:50,760
Speaker 4: map out how a company's decisions today will affect its

484
00:26:50,800 --> 00:26:51,800
Speaker 4: profits in the future.

485
00:26:52,160 --> 00:26:54,679
Speaker 5: There may be periods of time like twenty twenty two,

486
00:26:54,840 --> 00:26:57,960
Speaker 5: where you outperform the market, but you will underperform over

487
00:26:57,960 --> 00:26:59,840
Speaker 5: the medium to long term.

488
00:27:00,200 --> 00:27:03,680
Speaker 4: Of industry groups report that trillions of dollars are already

489
00:27:03,760 --> 00:27:08,240
Speaker 4: weighing ESG issues to some degree. That's a massive pool

490
00:27:08,240 --> 00:27:11,840
Speaker 4: of capital, and Fitz says it's only going to get bigger.

491
00:27:12,359 --> 00:27:16,720
Speaker 4: But the southern political polarization of ESG worries him. Sure,

492
00:27:17,160 --> 00:27:20,480
Speaker 4: ESU models need work, but he doesn't think that's a

493
00:27:20,560 --> 00:27:23,720
Speaker 4: reason to give up on the strategy or ignore how

494
00:27:23,800 --> 00:27:25,800
Speaker 4: these factors affect the market.

495
00:27:26,200 --> 00:27:29,320
Speaker 5: What I'd point to is the unfair standard they're holding

496
00:27:29,320 --> 00:27:33,240
Speaker 5: the ESG movement to. They say, we haven't built the

497
00:27:33,320 --> 00:27:36,520
Speaker 5: data set yet that can predict future stock market returns,

498
00:27:36,680 --> 00:27:39,480
Speaker 5: that we haven't built the financial model that can predict

499
00:27:39,760 --> 00:27:42,800
Speaker 5: which stock will outperform the others over the next ten years.

500
00:27:43,440 --> 00:27:46,879
Speaker 5: Show me anyone in the financial service space who has

501
00:27:46,920 --> 00:27:49,800
Speaker 5: a data set that can predict which stocks are going

502
00:27:49,840 --> 00:27:54,119
Speaker 5: to outperform the others over the next ten years. Anyone

503
00:27:54,119 --> 00:27:56,560
Speaker 5: who had such a data set would be a billionaire.

504
00:27:57,119 --> 00:28:00,760
Speaker 5: There's a struggle to always, in each market cycle, in

505
00:28:00,800 --> 00:28:03,439
Speaker 5: each month, try to figure out which stocks are going

506
00:28:03,480 --> 00:28:06,000
Speaker 5: to outperform and which art There's.

507
00:28:05,800 --> 00:28:09,000
Speaker 4: So much confusion about what ESG is. It means different

508
00:28:09,000 --> 00:28:13,080
Speaker 4: things to different people. The data is incomplete, it's difficult

509
00:28:13,160 --> 00:28:16,000
Speaker 4: to compare, and overall the field is still a work

510
00:28:16,000 --> 00:28:20,199
Speaker 4: in progress, and even experts acknowledge that ESG analysis is

511
00:28:20,200 --> 00:28:23,560
Speaker 4: still in its infancy. Nikisa says people just have to

512
00:28:23,600 --> 00:28:25,239
Speaker 4: appreciate where the industry is.

513
00:28:25,840 --> 00:28:28,080
Speaker 8: That's the wild wild West that we're still in.

514
00:28:28,840 --> 00:28:32,000
Speaker 4: Nikita also says she doesn't see bias at work in

515
00:28:32,240 --> 00:28:36,040
Speaker 4: ESG analysis. Regardless of how the models are built.

516
00:28:36,080 --> 00:28:39,080
Speaker 8: There is no such thing as a good ESG company

517
00:28:39,440 --> 00:28:42,600
Speaker 8: or a bad ESG company, because you're throwing in three

518
00:28:42,760 --> 00:28:45,920
Speaker 8: very different variables and you're somehow assuming that that is

519
00:28:46,000 --> 00:28:48,640
Speaker 8: going to make some sense. Our job as an investor

520
00:28:48,680 --> 00:28:51,560
Speaker 8: is not to say whether that's good or bad for society.

521
00:28:51,680 --> 00:28:54,800
Speaker 8: It's about saying how does that impact the financial markets.

522
00:28:55,440 --> 00:28:59,880
Speaker 4: Roberts agrees with Nikisa and fits that ESH shouldn't be prescriptive,

523
00:29:00,480 --> 00:29:02,920
Speaker 4: but he thinks that's actually what's happening.

524
00:29:03,480 --> 00:29:06,720
Speaker 2: The Pollyanna and me probably wishes that there could be

525
00:29:06,760 --> 00:29:08,920
Speaker 2: a two part of UHG system.

526
00:29:08,440 --> 00:29:11,800
Speaker 4: And how would that work. We'll take the E for example.

527
00:29:12,360 --> 00:29:15,360
Speaker 2: There are those who just think mining is bad and

528
00:29:15,960 --> 00:29:19,720
Speaker 2: oil production is literally evil and it's killing mother Earth

529
00:29:19,920 --> 00:29:23,440
Speaker 2: and we should stop all drilling period, no matter what

530
00:29:23,480 --> 00:29:27,840
Speaker 2: the costs. The Bible says that we're here. God has

531
00:29:27,880 --> 00:29:32,360
Speaker 2: put us in his earth to exercise his dominion over

532
00:29:32,400 --> 00:29:37,080
Speaker 2: this world. We have a right to extract things from

533
00:29:37,120 --> 00:29:38,920
Speaker 2: the earth. Right we have a right to use the

534
00:29:39,000 --> 00:29:41,280
Speaker 2: resources to benefit mankind.

535
00:29:41,720 --> 00:29:44,520
Speaker 4: Robert's biblical view of mining lines up with a more

536
00:29:44,600 --> 00:29:49,360
Speaker 4: conservative way of thinking. So the conservative ESG system miight

537
00:29:49,440 --> 00:29:52,640
Speaker 4: grade mining companies highly and invest in more of them,

538
00:29:53,160 --> 00:29:56,560
Speaker 4: whereas a liberal EESG system miight grade them poorly and

539
00:29:56,600 --> 00:30:02,240
Speaker 4: not invest one issue cheaper, and two very different approaches.

540
00:30:02,720 --> 00:30:04,560
Speaker 1: Okay, hang on a second, I'm going to butt in

541
00:30:04,600 --> 00:30:08,680
Speaker 1: here again to clarify. Nikita and Vitt are saying that

542
00:30:09,040 --> 00:30:13,520
Speaker 1: ESG is not political and it's not partisan. They say

543
00:30:13,520 --> 00:30:15,560
Speaker 1: they're just looking at data that shows how a company

544
00:30:15,560 --> 00:30:19,680
Speaker 1: will perform in the future depending on how they handle environmental, social,

545
00:30:20,000 --> 00:30:23,760
Speaker 1: and governance factors. But some conservatives think that issues like

546
00:30:23,840 --> 00:30:28,160
Speaker 1: climate change, for instance, are inherently political, even if the

547
00:30:28,240 --> 00:30:31,960
Speaker 1: vast majority of scientists agree that climate change is real.

548
00:30:32,640 --> 00:30:35,680
Speaker 4: Yeah, that's a pretty good summary, tim, And actually there

549
00:30:35,680 --> 00:30:38,360
Speaker 4: may be even more approaches to issue than what I've

550
00:30:38,440 --> 00:30:41,840
Speaker 4: laid out. I spoke to another faith based investor Mark

551
00:30:41,880 --> 00:30:45,360
Speaker 4: Regier who works in Wisconsin, and he has a different

552
00:30:45,400 --> 00:30:47,000
Speaker 4: reading of the Bible than Robert does.

553
00:30:47,560 --> 00:30:50,000
Speaker 5: I make it a rule not to tell anybody what

554
00:30:50,160 --> 00:30:52,400
Speaker 5: Jesus would do, because I don't know.

555
00:30:52,840 --> 00:30:55,520
Speaker 2: That's what makes the difference between somebody who's the son

556
00:30:55,560 --> 00:30:57,240
Speaker 2: of God and somebody who's definitely not.

557
00:30:59,160 --> 00:31:02,040
Speaker 4: Like I said, there's no clear definition of ESG. There's

558
00:31:02,080 --> 00:31:04,560
Speaker 4: lots of different takes on it. It depends on who

559
00:31:04,560 --> 00:31:05,120
Speaker 4: you speak with.

560
00:31:06,080 --> 00:31:08,840
Speaker 1: What a minefield. I want to talk more about this,

561
00:31:08,960 --> 00:31:11,400
Speaker 1: but we have to take an ad break first. We'll

562
00:31:11,400 --> 00:31:21,120
Speaker 1: be right back. Okay, we're back with Sagel Kishan, the

563
00:31:21,480 --> 00:31:25,120
Speaker 1: ESG wizard of Bloomberg News. I've found this whole story

564
00:31:25,160 --> 00:31:29,600
Speaker 1: so fascinating, Sagel, and a lot's gone on since you

565
00:31:29,760 --> 00:31:32,680
Speaker 1: interviewed Robert the last time. Tell me about some of

566
00:31:32,680 --> 00:31:35,320
Speaker 1: the most significant things that have happened within the ESG

567
00:31:35,480 --> 00:31:36,600
Speaker 1: movement during that period.

568
00:31:37,200 --> 00:31:41,080
Speaker 4: Gosh, so much has happens. We've had Ronda Santis Pylon

569
00:31:41,440 --> 00:31:45,520
Speaker 4: An attack EESG. We've had attorney generals across different states

570
00:31:45,920 --> 00:31:50,680
Speaker 4: launch investigations into ESG. We've had billions of dollars pulled

571
00:31:50,720 --> 00:31:53,880
Speaker 4: out of black Rock, Wall Street's biggest champion of ESG

572
00:31:54,840 --> 00:31:58,000
Speaker 4: and plenty of anti ESCH bills being pushed through states.

573
00:31:58,720 --> 00:32:01,040
Speaker 1: You know, it's very interesting to me when these things

574
00:32:01,120 --> 00:32:04,880
Speaker 1: happen in the US, where a momentum comes behind a movement,

575
00:32:04,920 --> 00:32:07,280
Speaker 1: whatever the movement might be. We saw this happening with

576
00:32:07,360 --> 00:32:12,680
Speaker 1: another acronym CRT or critical race theory that invaded the

577
00:32:12,800 --> 00:32:16,120
Speaker 1: discussion of education and what's appropriate for the classroom and

578
00:32:16,160 --> 00:32:19,560
Speaker 1: what isn't it's rare that you get that same phenomenon

579
00:32:19,600 --> 00:32:23,200
Speaker 1: on Wall Street and that it becomes so clearly politicized

580
00:32:23,600 --> 00:32:25,600
Speaker 1: so quickly, And what do you think gave it this

581
00:32:25,680 --> 00:32:28,640
Speaker 1: kind of energy? Like why now? And why has it

582
00:32:28,680 --> 00:32:29,560
Speaker 1: gotten such traction?

583
00:32:30,440 --> 00:32:33,080
Speaker 4: Why now? I mean, the E issue movement, if you

584
00:32:33,120 --> 00:32:37,080
Speaker 4: can call it a movement, has overtaken in some ways

585
00:32:37,240 --> 00:32:40,520
Speaker 4: asset managers and banks. Everybody's been pushing to look at

586
00:32:40,520 --> 00:32:46,040
Speaker 4: things like climate change, c suite diversity, inequalities.

587
00:32:45,360 --> 00:32:47,960
Speaker 1: The composition of boards exactly exactly.

588
00:32:48,400 --> 00:32:51,200
Speaker 4: And so that's why we've had this big pushback because

589
00:32:51,280 --> 00:32:53,320
Speaker 4: Wall Street has gone big on this in the last

590
00:32:53,360 --> 00:32:54,240
Speaker 4: three years.

591
00:32:54,080 --> 00:32:57,480
Speaker 1: And is that pure lunacy. Has Wall Street gone off

592
00:32:57,480 --> 00:33:01,160
Speaker 1: its rocker that it's now actually trying to embrace things

593
00:33:01,280 --> 00:33:07,000
Speaker 1: like climate change, or corporate diversity or boardroom diversity. I mean,

594
00:33:07,040 --> 00:33:10,760
Speaker 1: clearly its critics think it has and they're painting it

595
00:33:10,800 --> 00:33:13,920
Speaker 1: as dangerous, but just trying to step back for our

596
00:33:13,960 --> 00:33:16,920
Speaker 1: listeners a little bit. As someone who watches Wall Street

597
00:33:17,000 --> 00:33:21,520
Speaker 1: as a sophisticated observer, as a very numerous, sophisticated observer,

598
00:33:22,320 --> 00:33:25,520
Speaker 1: do you think this is a threat to the foundations

599
00:33:25,720 --> 00:33:28,400
Speaker 1: of American finance and the roots of Wall Street.

600
00:33:28,920 --> 00:33:33,320
Speaker 4: It's funny that you say that, because progressives who are

601
00:33:33,800 --> 00:33:36,400
Speaker 4: trying to push and act on things like climate change

602
00:33:36,440 --> 00:33:40,800
Speaker 4: and inequalities in society, they don't feel that capital markets

603
00:33:41,280 --> 00:33:44,920
Speaker 4: corporations are doing enough. In fact, they think it's something

604
00:33:44,920 --> 00:33:48,840
Speaker 4: called greenwashing, where a company saying they're doing good things,

605
00:33:49,080 --> 00:33:52,719
Speaker 4: but really they're not. So it's been pushed and pulled

606
00:33:52,760 --> 00:33:54,440
Speaker 4: from both sides at the moment.

607
00:33:54,520 --> 00:33:56,200
Speaker 1: And that critique from the left is you actually are

608
00:33:56,200 --> 00:33:58,440
Speaker 1: not putting your money where your mouth is, exactly, and

609
00:33:58,480 --> 00:34:00,840
Speaker 1: now you have Wall Street step being up or at

610
00:34:00,880 --> 00:34:03,080
Speaker 1: least attempting to to put its money where its mouth is.

611
00:34:03,520 --> 00:34:06,000
Speaker 1: The left says it's not enough money, and the right

612
00:34:06,040 --> 00:34:10,680
Speaker 1: saying watch your mouth. And caught in the middle are

613
00:34:10,800 --> 00:34:15,360
Speaker 1: essentially money managers trying to figure out both profitable ways

614
00:34:15,400 --> 00:34:19,839
Speaker 1: to invest and socially responsible ways to invest in hence

615
00:34:19,880 --> 00:34:21,000
Speaker 1: a firestorm.

616
00:34:21,520 --> 00:34:23,640
Speaker 4: Absolutely, by the end of the day, Wall Street is

617
00:34:23,680 --> 00:34:27,120
Speaker 4: about making money. They're doing this to generate fees, to

618
00:34:27,200 --> 00:34:31,600
Speaker 4: generate revenue, but the antiesh backlash is actually now sent

619
00:34:31,719 --> 00:34:34,839
Speaker 4: a chill down Wall Street's spine. We've seen a lot

620
00:34:34,960 --> 00:34:38,479
Speaker 4: of banks, a lot of investors who two years ago

621
00:34:38,880 --> 00:34:42,759
Speaker 4: would wax lyrical about climate change and sea suit diversity.

622
00:34:43,520 --> 00:34:45,120
Speaker 4: Now they've gone on the down load.

623
00:34:45,480 --> 00:34:48,879
Speaker 1: And is that because they see reputational risk baked into

624
00:34:48,920 --> 00:34:50,600
Speaker 1: that that at the end of the day they're saying

625
00:34:50,600 --> 00:34:54,080
Speaker 1: to themselves it might be socially responsible, we even might

626
00:34:54,120 --> 00:34:58,640
Speaker 1: make money off of this, but this sort of firestorm

627
00:34:58,680 --> 00:35:01,399
Speaker 1: of criticism we're getting doesn't make it worth it, because

628
00:35:01,400 --> 00:35:02,960
Speaker 1: we might lose business in the long run.

629
00:35:03,239 --> 00:35:06,439
Speaker 4: Absolutely, I mean Larry Think, the chief of Black Rock,

630
00:35:06,920 --> 00:35:10,840
Speaker 4: he's really been attacked in many ways by the Republicans.

631
00:35:10,600 --> 00:35:12,120
Speaker 1: And deeply personally attacked.

632
00:35:12,200 --> 00:35:13,920
Speaker 4: Absolutely, they've really called him.

633
00:35:13,760 --> 00:35:16,919
Speaker 1: On billboards anti semitism.

634
00:35:16,520 --> 00:35:20,040
Speaker 4: And so he's had to then tone down his rhetoric

635
00:35:20,080 --> 00:35:22,719
Speaker 4: on climate change. And last year he went down to

636
00:35:22,760 --> 00:35:26,239
Speaker 4: Texas to even meet all executives who explain to them

637
00:35:26,400 --> 00:35:29,760
Speaker 4: the energy transition and they need to shift to cleaner fuels.

638
00:35:30,280 --> 00:35:33,000
Speaker 4: But the atacks on him and the company have been

639
00:35:33,200 --> 00:35:36,080
Speaker 4: pretty relentless, and that's why a lot of other companies

640
00:35:36,120 --> 00:35:38,680
Speaker 4: have kind of duck for cover and they're really toning

641
00:35:38,760 --> 00:35:42,880
Speaker 4: down what they're saying about climate change in particular. And

642
00:35:42,960 --> 00:35:46,440
Speaker 4: on top of that, we've had Attorney general's launch investigations

643
00:35:47,200 --> 00:35:49,760
Speaker 4: looking at the legal ease in many of the efforts

644
00:35:49,760 --> 00:35:51,360
Speaker 4: that Wall Street are doing when it comes to the

645
00:35:51,440 --> 00:35:56,080
Speaker 4: energy transition. So yeah, everybody's really looking at their marketing documents,

646
00:35:56,120 --> 00:35:58,520
Speaker 4: their pitch books, making sure that they have all their

647
00:35:58,600 --> 00:35:59,239
Speaker 4: ducks lined up.

648
00:35:59,800 --> 00:36:02,840
Speaker 1: I guess so as we both know, no one really

649
00:36:02,880 --> 00:36:04,960
Speaker 1: has all their ducks lined up, no matter what they're doing,

650
00:36:04,960 --> 00:36:09,800
Speaker 1: whether they're investor, a corporate manager, a parent, or a teacher.

651
00:36:10,239 --> 00:36:12,160
Speaker 1: I think one of the things I wonder about in

652
00:36:12,200 --> 00:36:15,279
Speaker 1: all this is if there is a consensus, a scientific

653
00:36:15,320 --> 00:36:18,759
Speaker 1: consensus that climate change might be a problem. I think

654
00:36:18,760 --> 00:36:22,520
Speaker 1: there's definitely a social consensus that people should not be

655
00:36:22,600 --> 00:36:27,080
Speaker 1: discriminated against for leadership positions in politics or in corporate

656
00:36:27,120 --> 00:36:30,279
Speaker 1: America simply because they're a woman, or because they're a

657
00:36:30,280 --> 00:36:34,000
Speaker 1: person of color or have a different ethnic background. If

658
00:36:34,040 --> 00:36:38,760
Speaker 1: we're forestalling putting money behind these kinds of efforts based

659
00:36:38,800 --> 00:36:43,120
Speaker 1: on bad information and it runs against both scientific information

660
00:36:43,520 --> 00:36:46,760
Speaker 1: and broadly held social values, we're getting into a pretty

661
00:36:46,760 --> 00:36:49,440
Speaker 1: problematic place, aren't we, in terms of being able to

662
00:36:49,880 --> 00:36:52,520
Speaker 1: take the necessary action we need to solve problems.

663
00:36:52,600 --> 00:36:52,680
Speaker 2: No.

664
00:36:52,800 --> 00:36:55,560
Speaker 4: Absolutely, But to people on the right, a lot of

665
00:36:55,600 --> 00:37:01,880
Speaker 4: diversity initiatives smacks of affirmative action of quote, and historically

666
00:37:01,920 --> 00:37:03,000
Speaker 4: they've hated all of that.

667
00:37:03,680 --> 00:37:05,040
Speaker 1: Yeah, I wonder how many of those people on the

668
00:37:05,080 --> 00:37:08,520
Speaker 1: right come from lots of different countries historically and have

669
00:37:08,640 --> 00:37:11,399
Speaker 1: lots of different backgrounds, and now they kind of want

670
00:37:11,480 --> 00:37:14,000
Speaker 1: just one thing. But that's probably for a different podcast.

671
00:37:14,280 --> 00:37:17,120
Speaker 1: I want to come back to money in ESG here.

672
00:37:17,320 --> 00:37:20,800
Speaker 1: I also think it's useful to frame exactly how vast

673
00:37:21,000 --> 00:37:25,319
Speaker 1: the ESG realm is, because most money invested in Wall

674
00:37:25,320 --> 00:37:28,919
Speaker 1: Street is still invested the old fashioned way. People try

675
00:37:28,960 --> 00:37:34,120
Speaker 1: to find either growth opportunities or undervalued companies and create

676
00:37:34,160 --> 00:37:37,760
Speaker 1: a calculus that will result in a profitable payoff somewhere

677
00:37:37,800 --> 00:37:42,360
Speaker 1: down the road. How big actually is the ESG universe

678
00:37:42,440 --> 00:37:45,360
Speaker 1: right now in terms of what percentage of assets on

679
00:37:45,400 --> 00:37:46,719
Speaker 1: Wall Street flow towards it.

680
00:37:47,120 --> 00:37:49,759
Speaker 4: Well, it's certainly not a majority of the assets. It's

681
00:37:49,760 --> 00:37:52,719
Speaker 4: probably less than ten, if not five percent of the assets.

682
00:37:53,360 --> 00:37:57,480
Speaker 4: But ESG investors they have said, like trillions is involved

683
00:37:57,520 --> 00:38:00,839
Speaker 4: in ESG. But what's happening now because of concerns of

684
00:38:00,920 --> 00:38:05,440
Speaker 4: greenwashing when people exaggerate their environmental claims, we're seeing a

685
00:38:05,480 --> 00:38:09,080
Speaker 4: sort of shrinkage going on both in Europe and the US.

686
00:38:09,480 --> 00:38:11,400
Speaker 4: So the numbers are in flux at the moment.

687
00:38:12,239 --> 00:38:15,400
Speaker 1: So from where you sit, do you think this means

688
00:38:15,400 --> 00:38:17,880
Speaker 1: that the SG movement is going to run out of steam?

689
00:38:18,480 --> 00:38:21,799
Speaker 1: Does it die? Does it get repackaged with different initials

690
00:38:21,840 --> 00:38:23,960
Speaker 1: and sort of sneak past its critics? How does this

691
00:38:24,040 --> 00:38:25,000
Speaker 1: play out?

692
00:38:25,280 --> 00:38:27,400
Speaker 4: There are even people within the ESG who want to

693
00:38:27,440 --> 00:38:29,759
Speaker 4: get rid of the acronym altogether because of all the

694
00:38:29,760 --> 00:38:32,920
Speaker 4: bad press in the past year. They're thinking of more

695
00:38:33,000 --> 00:38:38,480
Speaker 4: mundane labels like sustainable investing or de risking or material

696
00:38:38,600 --> 00:38:41,879
Speaker 4: risk factors, which they don't really excite people, but that's

697
00:38:41,920 --> 00:38:43,080
Speaker 4: really what the issue is.

698
00:38:43,200 --> 00:38:45,279
Speaker 1: Maybe they could call it save the planet so your

699
00:38:45,280 --> 00:38:47,799
Speaker 1: grandchildren can still live on it, but that's too long

700
00:38:47,840 --> 00:38:49,520
Speaker 1: for an investment them, isn't it.

701
00:38:50,320 --> 00:38:54,920
Speaker 4: But despite the malaise, we're not really seeing companies or banks,

702
00:38:55,440 --> 00:38:57,480
Speaker 4: even though they're being less vocal about it, they're still

703
00:38:57,520 --> 00:39:01,600
Speaker 4: pushing on behind the scenes on man these initiatives, something

704
00:39:01,640 --> 00:39:04,920
Speaker 4: called green hushing, where you don't talk about your green

705
00:39:04,960 --> 00:39:08,759
Speaker 4: activities but you do it anyway, but you do it anyway. Yeah,

706
00:39:09,560 --> 00:39:12,160
Speaker 4: this backlash isn't going to go away. There's gonna be

707
00:39:12,160 --> 00:39:14,759
Speaker 4: ebbs and flows. But we've got the elections next year.

708
00:39:15,440 --> 00:39:18,600
Speaker 4: We've got some of the candidates riding on anti woke tickets,

709
00:39:18,840 --> 00:39:22,480
Speaker 4: Rando Sentis and another one, Vivek Ramaswami.

710
00:39:22,600 --> 00:39:23,360
Speaker 1: Uh huh yeah.

711
00:39:23,960 --> 00:39:26,520
Speaker 4: So yeah, it's going to continue to be bashed.

712
00:39:27,080 --> 00:39:29,840
Speaker 1: Okay, So Joe, I don't let anybody escape this show

713
00:39:30,200 --> 00:39:34,680
Speaker 1: without sharing with our listeners what they've learned, that little

714
00:39:34,719 --> 00:39:39,040
Speaker 1: aha that they've discovered by examining the subject we're talking about. So,

715
00:39:39,120 --> 00:39:43,520
Speaker 1: what have you learned about ESG and the anti ESG

716
00:39:43,760 --> 00:39:47,680
Speaker 1: movement that you didn't know before you began talking to

717
00:39:47,760 --> 00:39:49,680
Speaker 1: Robert Netsley and others.

718
00:39:50,920 --> 00:39:54,719
Speaker 4: I guess maybe this is naive of me. But in Europe,

719
00:39:55,000 --> 00:39:57,920
Speaker 4: in other parts of the world, there isn't this backlash.

720
00:39:58,040 --> 00:40:01,640
Speaker 4: It's only in America where this backlash. So I've been

721
00:40:01,680 --> 00:40:06,920
Speaker 4: surprised by the pushback by the rights on an investment

722
00:40:06,920 --> 00:40:09,200
Speaker 4: strategy that people on the left are saying is not

723
00:40:09,280 --> 00:40:13,719
Speaker 4: really doing much. What I've learned things aren't so black

724
00:40:13,719 --> 00:40:14,960
Speaker 4: and white.

725
00:40:15,000 --> 00:40:18,240
Speaker 1: They never are. Thank you for joining us today.

726
00:40:18,560 --> 00:40:19,800
Speaker 4: Thank you.

727
00:40:19,800 --> 00:40:23,800
Speaker 1: You can find Segel Kishan's reporting on Bloomberg dot com

728
00:40:23,840 --> 00:40:26,560
Speaker 1: and if you want to become a subscriber the Bloomberg

729
00:40:26,640 --> 00:40:30,319
Speaker 1: terminal here at crash Course. We believe the collisions can

730
00:40:30,360 --> 00:40:35,280
Speaker 1: be messy, impressive, challenging, surprising, and always instructive. In today's

731
00:40:35,280 --> 00:40:38,560
Speaker 1: Crash Course, I learned that there are many ways to

732
00:40:38,600 --> 00:40:41,480
Speaker 1: skin the cat when you're talking about what is and

733
00:40:41,760 --> 00:40:46,040
Speaker 1: isn't a value based investment strategy. What did you learn?

734
00:40:46,640 --> 00:40:48,640
Speaker 1: We'd love to hear from you. You can tweet at

735
00:40:48,640 --> 00:40:52,160
Speaker 1: the Bloomberg Opinion handle at Opinion or me at Tim

736
00:40:52,160 --> 00:40:56,279
Speaker 1: O'Brien using the hashtag Bloomberg Crash Course. You can also

737
00:40:56,320 --> 00:40:59,400
Speaker 1: subscribe to our show wherever you're listening right now and

738
00:40:59,480 --> 00:41:02,080
Speaker 1: leave us a room. It helps more people find the show.

739
00:41:03,040 --> 00:41:07,759
Speaker 1: This episode was produced by the indispensable Annamazarakis, Moses on

740
00:41:07,920 --> 00:41:11,880
Speaker 1: Dam and Me. Our supervising producer is Magnus Hendrickson, and

741
00:41:11,920 --> 00:41:15,799
Speaker 1: we had editing help from Sage Bauman, Katie Boyce, Jeff Grocott,

742
00:41:16,200 --> 00:41:20,400
Speaker 1: Mike Nitza and Christine Vanden Bilart. Blake Maples does our

743
00:41:20,440 --> 00:41:23,640
Speaker 1: sound engineering and our original theme song was composed by

744
00:41:23,719 --> 00:41:27,840
Speaker 1: Luis Gara. I'm Tim O'Brien. We'll be back next week

745
00:41:27,960 --> 00:41:29,080
Speaker 1: with another crash course