WEBVTT - An Examination of Impact Investing

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic on Bloomberg Radio. Well, well, Chile

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<v Speaker 1>on Wall Street, certainly in the first half of Chile

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<v Speaker 1>in my studio as well, and Chili when it comes

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<v Speaker 1>to E s G, because in May, investors made the

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<v Speaker 1>biggest ever monthly redemptions from US exchange traded e s

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<v Speaker 1>G funds based on Bloomberg Intelligence estimates. So let's get

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<v Speaker 1>to our guests see what she and her team are

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<v Speaker 1>seeing when it comes to impact investing in E s G.

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<v Speaker 1>Sarah Bratton hughes his head of E s G and

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<v Speaker 1>Sustainable Investing in America's Century Investments. She joins us phone

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<v Speaker 1>on the phone from New York City. American Century. By

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<v Speaker 1>the way, they're controlling owner is the biomedical research organizations

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<v Speaker 1>Stower's Institute for Medical Research. The firm directs its profits

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<v Speaker 1>to their efforts to defeat life threatening diseases. So uh,

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<v Speaker 1>they're not only investing for others. They really are kind

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<v Speaker 1>of walking the talk. Sarah, nice to have you here

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<v Speaker 1>with Mike and myself. What interest are you seeing an

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<v Speaker 1>E s G right now amid all the market volatility

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<v Speaker 1>thank you for having me, Carroll. We are still seeing

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<v Speaker 1>UM increased interest and E s G and sustainable investing.

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<v Speaker 1>Although those headlines about redemptions, although the redemptions have gathered headlines,

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<v Speaker 1>you can't really look at them in a vacuum. You

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<v Speaker 1>have to look at them versus the broader market as well.

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<v Speaker 1>So UH, this year we conducted the fifth edition of

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<v Speaker 1>our Impact Investing survey, and there were some really interesting

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<v Speaker 1>UH findings and there are all just talk about these

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<v Speaker 1>three things that really surprised me. UM Here in the

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<v Speaker 1>US we've seen increased appeal of impact investing. But interestingly,

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<v Speaker 1>it was probably the first or only survey I've ever

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<v Speaker 1>seen that men had preferred impact investing over a woman.

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<v Speaker 1>And when you really killed back the onion and looked

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<v Speaker 1>at the numbers, what you saw was actually, there's a

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<v Speaker 1>delta around what the education and impact investing is for

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<v Speaker 1>a woman, UH, particularly in the baby boomer generation. So

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<v Speaker 1>as we think about the transfer of wealth, UM, people

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<v Speaker 1>often talk about the intergenerational transfer of wealth, but I

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<v Speaker 1>like to think of it first as an intergender transformation

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<v Speaker 1>of wealth. What we've also noticed is the dominance dominance

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<v Speaker 1>of the S factors in the U S so UM consistently.

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<v Speaker 1>UM U S investors, when they're looking at the factors

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<v Speaker 1>that they want to impact consistently have had more appeal

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<v Speaker 1>in S factors than our global counterparts. So what we

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<v Speaker 1>have observed this year again, healthcare is the most important

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<v Speaker 1>factor from a US perspective. Climate is up there second,

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<v Speaker 1>but there isn't another E factor from a U S perspective,

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<v Speaker 1>UM whereas that is dominating, Climate dominates the UK, Germany

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<v Speaker 1>and Australia. And then the third and final that is

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<v Speaker 1>on greenwashing, where over fifty of the investors were concerned

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<v Speaker 1>about greenwashing. I would actually, Carol, think that number was

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<v Speaker 1>higher Vay within marketing. I would agree. I would agree

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<v Speaker 1>because I really do feel like anything with the s

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<v Speaker 1>G and impact, people are like, Okay, enough of it.

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<v Speaker 1>We've seen a ton of money go into it. Now

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<v Speaker 1>show me that you're really doing it. Mike, do you

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<v Speaker 1>feel the same way. Yeah, well, you know, Carol, it's

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<v Speaker 1>sitting again, Sarah. There's certainly been a bit of a

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<v Speaker 1>backlash from the right side of the political aisle towards

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<v Speaker 1>the notion of the SG in general. Sarah. I'm wondering

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<v Speaker 1>if you view that as any sort of legitimate risk

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<v Speaker 1>going forward, especially no as these mid term elections come

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<v Speaker 1>up and a lot of people expecting the Republicans to

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<v Speaker 1>gain House and gained seats in Congress. Is there is

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<v Speaker 1>this backlash sort of in the early phases. But I

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<v Speaker 1>wonder if is it a real risk to do you think?

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<v Speaker 1>How are you thinking about it? So I look at

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<v Speaker 1>what has really resulted in the rise of the SG investing,

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<v Speaker 1>and it's UM the continued UM demand we've seen from

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<v Speaker 1>a BOLT in a retail client perspective, but also institutional clients. UM.

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<v Speaker 1>It is the economic argument for it when you've seen

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<v Speaker 1>this massive rise of intangibles on balance sheets. You look

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<v Speaker 1>at the amount of intangibles on balance sheets in thenteen

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<v Speaker 1>seventy five which just seventa the last figures and were

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<v Speaker 1>over twenty UM or over N. But I think the

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<v Speaker 1>biggest thing is the policy environment. So according to the

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<v Speaker 1>u N Principles for Responsible Investing, the top fifty out

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<v Speaker 1>of the top fifty economy have some form of policy

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<v Speaker 1>designed to help investors consider sustainability, risks, opportunities and outcomes UM.

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<v Speaker 1>And for the long longest time, the US was the

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<v Speaker 1>outlier UM in terms of policies that we're providing kail

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<v Speaker 1>winds were sustainable investing UM and and now we we

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<v Speaker 1>may become the outlier again. However, what we're seeing happening

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<v Speaker 1>in the rest of the world, particularly Europe, is going

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<v Speaker 1>to continue to provide kail winds UM. Interestingly this week

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<v Speaker 1>and there's a lot of conversation about the SEC and

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<v Speaker 1>their climate disclosures that the EU UH has actually vary quietly.

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<v Speaker 1>UM reached a provisional agreement that we require UH non

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<v Speaker 1>EU they companies with later million euros of a u

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<v Speaker 1>M to have provide report on their E s G

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<v Speaker 1>impacts UM and it's it's defined and it's going to

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<v Speaker 1>be legally mandated for US company persons over there. Yeah,

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<v Speaker 1>especially on this, I do feel like we're looking largely

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<v Speaker 1>to Europe in terms of what they're doing. It does

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<v Speaker 1>feel like though a moment of reckoning when it comes

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<v Speaker 1>to UH impact investing, and I think investors are increasingly

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<v Speaker 1>demanding it. Sara, we scratched the surface. Hopefully we can

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<v Speaker 1>continue this conversation in the future. I know it's something

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<v Speaker 1>we talked about a lot here at Bloomberg. Sarah Bratton Hughes,

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<v Speaker 1>She's head of E, s G and Sustainable Investing at

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<v Speaker 1>America American Century Investments, joining us on the phone from

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<v Speaker 1>New York City. I mean, like the amount of money.

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<v Speaker 1>I think Bloomberg Intelligence expects something like fifty trillion by

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<v Speaker 1>so yeah, I mean it just keeps coming