There is strong skepticism towards ESG/Impact in the traditional investment world for two main reasons 1 - folks don’t believe non-financial especially employee or environmental information is material and 2 - most ESG/ Impact products look a lot like traditional strategies

What’s also interesting is most folks who run ESG funds actually don’t believe ESG data is as important as financial - and relegate they research to ESG teams who can’t make portfolio decisions - which is why ESG funds look pretty similar to regular ones

The shift that will be made involves rethinking portfolio construction and traditional theory because primacy of shareholders cannot be the framework for evaluating long term sustainability and impact. Shareholders are for the large part short term focused.

The highest quality governance and leadership comes from long term focused teams with broad experience, who work together to plan and execute. It seems simple but most boards do not operate at this level - good governance and leadership is really hard. But it’s not hard to find

if you use some ‘ESG’ inputs alongside traditional fundamental. This then focuses on the positive outcomes of the ESG inputs, not their ability to check boxes. So when folks say ESG is BS they are correct on the way most folks are using it. It doesn’t work as a secondary

input. It works as a primary research input to assess the quality of a company and their leadership. One day we will embrace leadership science and rely less on MPT and our industry will be better because of it.