WEBVTT - BlackRock's Winshel: Millenials Driving Impact Investing(Audio)

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<v Speaker 1>This is taking stock with Gadleen Hayes and Pim Fox

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<v Speaker 1>on Bloomberg Radio. Impact investing, investing that does more than

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<v Speaker 1>just look at the bottom line of dollars and cents.

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<v Speaker 1>It looks also at the bottom line when it comes

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<v Speaker 1>to the Earth and the Earth's resources. Sustainable investing. Well,

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<v Speaker 1>here to tell us more is Debrah Winchell, Managing director,

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<v Speaker 1>Global head of Impact Investing for black Rock. They have

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<v Speaker 1>over two hundred and twenty five billion dollars of assets

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<v Speaker 1>under management and they've got a new Impact e t F. Debra,

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<v Speaker 1>thank you very much for coming into the studio. Appreciate

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<v Speaker 1>it having me what tell us about what is how

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<v Speaker 1>do you define impact investing and then maybe you can

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<v Speaker 1>use that as a lead into the new e t

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<v Speaker 1>F and how that expresses what you're trying to accomplish.

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<v Speaker 1>Sure impact investing or sustainable investing, there are lots of

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<v Speaker 1>names is looking for investment opportunities that have more than

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<v Speaker 1>just a financial return. They also generate an environmental or

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<v Speaker 1>a social outcome at the same time. Now, this generation

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<v Speaker 1>of both the financial outcome and let's just call it

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<v Speaker 1>well being in general, how do you define that well being?

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<v Speaker 1>Part of it the goodwill that the company will generate

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<v Speaker 1>by providing these kinds of sustainable investments well as specifically

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<v Speaker 1>as possible. And I think that's really the goal of

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<v Speaker 1>the investments that you see out there, and that we

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<v Speaker 1>offer very specific definition around a climate outcome, perhaps companies

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<v Speaker 1>that have lower carbon outcomes or more carbon efficient or

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<v Speaker 1>other outcomes along social or environmental dimensions. It could be

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<v Speaker 1>around diversity, or how employees are treated, or the products

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<v Speaker 1>that they create, health products perhaps that address certain issues

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<v Speaker 1>that are particularly complicated or that are you know, very

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<v Speaker 1>serious in the world. Tell us about some research that

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<v Speaker 1>you've done at black Rock that indicates that the potential investor,

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<v Speaker 1>who is now let's say a millennial, is very interested

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<v Speaker 1>and that this is an important factor when they're considering

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<v Speaker 1>an investment. Right. Well, it's interesting, there are a lot

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<v Speaker 1>of demographic changes that we're seeing that are really driving

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<v Speaker 1>this interest in impact investing or sustainable investing. First of all,

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<v Speaker 1>certainly with millennials. I think you see it in the

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<v Speaker 1>companies where we work as well as what we see

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<v Speaker 1>with investors. There's an increasing interest by millennials to make

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<v Speaker 1>sure that their investments have both a financial return and

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<v Speaker 1>a social or environmental return, in the same way we

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<v Speaker 1>see with women who are increasingly inheriting or generating more

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<v Speaker 1>of the financial assets, and that trend is continuing significantly

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<v Speaker 1>over the next twenty years. Women also are looking for

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<v Speaker 1>their dollars to accomplish more than just generate a return.

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<v Speaker 1>So those are two very significant demographics that are driving

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<v Speaker 1>this interest and sustainable investing. And I would say that

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<v Speaker 1>you see it both on the investing front and you

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<v Speaker 1>see it on the consumer front. You see it really

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<v Speaker 1>the way that I think millennials and women look at

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<v Speaker 1>the world today. Your own personal background has both of

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<v Speaker 1>those components as well, because previously you were at JP Morgan,

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<v Speaker 1>but also you were the head of the Robin Hood Foundation,

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<v Speaker 1>and you were also the chief financial officer and high

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<v Speaker 1>level executive at the Metropolitan Museum of Art. How did

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<v Speaker 1>those two career paths come together with this impact and

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<v Speaker 1>sustainable investing. Well, I think first, growing up in finance

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<v Speaker 1>allowed me to take a very rigorous approach to thinking

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<v Speaker 1>about problem solving or creating products, both at the met

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<v Speaker 1>and where I was the CFO, but in a very

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<v Speaker 1>mission driven organization where we had to think about both

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<v Speaker 1>um outcomes that were entirely related to the mission of

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<v Speaker 1>the organization, but also the bottom line so it could

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<v Speaker 1>be run in a very effective way. At Robin Hood,

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<v Speaker 1>I had the opportunity to really learn about poverty fighting

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<v Speaker 1>from just one of the best poverty fighting organizations I

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<v Speaker 1>think in the in the world, and the what Robin

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<v Speaker 1>Hood brought was a lens of metrics. How do you

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<v Speaker 1>measure and compare one intervention to another? And I think

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<v Speaker 1>putting metrics around something as difficult to measure as poverty

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<v Speaker 1>fighting was very instrumental in what I could bring to

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<v Speaker 1>Black Rock. Putting metrics around environmental or social outcomes or

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<v Speaker 1>impacts give us an idea of the conversation that someone

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<v Speaker 1>might have with the chief executive of a company that

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<v Speaker 1>is debating the value of sustainable investing in whether that

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<v Speaker 1>ought to be part of their corporate message or whether

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<v Speaker 1>they perceived that to be just a kind of the

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<v Speaker 1>flavor of the month. How did you have that conversation

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<v Speaker 1>with the head of the company. Well, companies who are

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<v Speaker 1>actually the ones who are being invested in UM, I think,

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<v Speaker 1>are increasingly focused on what their impact is on the world.

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<v Speaker 1>You see it with consumer companies as they look at

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<v Speaker 1>their supply chains. You see it with lots of companies

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<v Speaker 1>around environmental impact. We certainly saw with COP twenty one

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<v Speaker 1>and the focus on climate that lots of companies are

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<v Speaker 1>starting to think about both their products and their operations

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<v Speaker 1>in terms of how they impact the world. And I

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<v Speaker 1>think companies are becoming very sophisticated about appreciating how consumers, investors,

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<v Speaker 1>many stakeholders are focused on responsible operations. Do you believe

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<v Speaker 1>that the companies will be less reticent about supporting sustainable

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<v Speaker 1>issues that not necessarily have anything directly to do with

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<v Speaker 1>their company, but just because they are, let's say, a

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<v Speaker 1>public face, will they be supporting more of these climate

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<v Speaker 1>change and sustainable investing initiatives. I think companies globally are

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<v Speaker 1>becoming more sensitive to and most and more supportive of

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<v Speaker 1>initiatives of this type. I think a lot of companies

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<v Speaker 1>are actually facing the an impact of environmental or climate impact.

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<v Speaker 1>It actually affects their bottom line, So I think there's

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<v Speaker 1>both the operating risks and opportunities the companies see. I

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<v Speaker 1>think there's the consumer awareness and now increasingly there's the

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<v Speaker 1>investor focus on these outcomes. I think looking at all

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<v Speaker 1>these different factors all impacting companies is definitely elevating this

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<v Speaker 1>as a focus for leadership across the globe. The exchange

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<v Speaker 1>traded fund give us the details. Well, the most recent

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<v Speaker 1>fund that we launched is an e t F and

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<v Speaker 1>exchange traded fund that is tied to the sustained the

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<v Speaker 1>u N Sustainable Development Goals. So it's an index that

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<v Speaker 1>constructed around companies derive a large percent of their revenues

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<v Speaker 1>from activities related to those goals. So it's one of

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<v Speaker 1>the first times that there's been an investment opportunity where

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<v Speaker 1>you can invest in companies that are specifically focused on

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<v Speaker 1>those outcomes. Looking at the u N s TOW Sustainable

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<v Speaker 1>Development Goals was a very clear way of selecting a

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<v Speaker 1>set of criteria that already has a large sort of

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<v Speaker 1>support and following well, just looking at some of the

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<v Speaker 1>holdings of the Eye Shares Sustainable m s c I

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<v Speaker 1>Global e t F, taking a look at the lead

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<v Speaker 1>company value in France, looking at water and treatment facilities,

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<v Speaker 1>Schneider Electric, big engineering firm A b B, as well

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<v Speaker 1>as Pierson PLC. I think a pierconis and education company.

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<v Speaker 1>How does that fit into this sustainability look. Education is

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<v Speaker 1>a leading issue globally UM advancing education in terms of

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<v Speaker 1>RYE in elevating UM the level of income around the globe.

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<v Speaker 1>I think all of these companies derive revenues from something

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<v Speaker 1>that's specifically related to improving the circumstances of the world

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<v Speaker 1>or the population of the world. One of the most complicated,

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<v Speaker 1>I would say elements of all of this is getting

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<v Speaker 1>good data and measurement, and that's something that black Rock

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<v Speaker 1>is extremely focused on. Can we create opportunities that have

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<v Speaker 1>a specific outcome that we can measure that investors can

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<v Speaker 1>say yes, that's something that would be very appealing to me.

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<v Speaker 1>And I just want to correct myself. I was wrong.

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<v Speaker 1>I was thinking of Suez, which is also in the

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<v Speaker 1>e t F that is the uh forerunner of the

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<v Speaker 1>water company. But value of making automobile parts. Does this mean,

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<v Speaker 1>for example, that coal companies or those that are companies

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<v Speaker 1>that are focused on fossil fuel, would they ever have

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<v Speaker 1>an opportunity to become part of this sustainable investing. It's

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<v Speaker 1>unlikely that a company that derives the majority of its

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<v Speaker 1>income from fossil fuels would be a leading part of

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<v Speaker 1>of an index like that. On the other hand, you

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<v Speaker 1>sometimes see the companies that are most entrenched in some

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<v Speaker 1>of the traditional forms of energy are also the ones

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<v Speaker 1>that are leading some of the most innovative work around renewables.

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<v Speaker 1>So one of the things that I think is a

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<v Speaker 1>challenge is finding investments that are just pure plays. A

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<v Speaker 1>lot of time, companies that are doing some of the

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<v Speaker 1>most innovative and exciting work can also have some traditional

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<v Speaker 1>businesses that you might not associate with those outcomes. And

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<v Speaker 1>and just the last point to you this e t F.

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<v Speaker 1>This is something that Black Rock is gonna put its own,

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<v Speaker 1>uh sort of muscle behind to popularize. Yeah, we had

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<v Speaker 1>a launch a couple of weeks ago on Earth Day.

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<v Speaker 1>We partnered with the United Nations and had a launch

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<v Speaker 1>and rang the bell and you know again, we're creating

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<v Speaker 1>a platform of products across all asset classes. That is

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<v Speaker 1>an effort to provide opportunities for lots of different investors

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<v Speaker 1>across the globe to have the opportunity to make impact investments.

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<v Speaker 1>Thanks very much for sharing your thoughts and educating us.

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<v Speaker 1>Debra Winchell, Managing director, Global Head of Impact Investing for

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<v Speaker 1>black Rock