Ethos ESG staff from North America, Europe, and Australia get together to talk about executive compensation at Salesforce.com, the Great Resignation, and Nuveen's latest responsible investing survey.
This week Kevin and Nathan go head to head in ESG Trivia. See the questions below but tune in to hear the answers and find out who wins!
The Content is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this podcast constitutes a solicitation, recommendation, endorsement, or offer by ethos ESG or any third-party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Transcript:
This transcript has been edited for clarity.
Dan Carreno, ethos ESG
Thank you for joining us for another edition of this podcast, where we aim to elevate our investment expertise by sharing the latest resources and developments related to sustainable and responsible investing. I am Dan Carreno with ethos ESG. And with me today is Kevin Jarussi, Experience Manager at ethos ESG, who is based in beautiful Paris. Kevin, how are you doing?
Kevin Jarussi, ethos ESG
I'm doing well. Thanks, Dan. Hi everyone.
Dan Carreno, ethos ESG
And also, we have with us today Nathan Fradley, Co-Director of ethos Impact Australia. Nathan, how are you?
Nathan Fradley, ethos ESG
Yeah, good. Excellent.
Dan Carreno, ethos ESG
Nathan is joining us all the way from Melbourne! On the agenda today, we will do a quick round of introductions. Then we're going to go through a round table discussion where each of us will share something that we have either read or experienced lately that's elevated our expertise as it pertains to responsible investing. Then to close out the podcast today, we have a quick round of ESG Trivia. We've dug into the extensive ethos ESG database and found some interesting facts and figures. And I am going to quiz Kevin and Nathan on those. So before we go any further, I want to remind listeners that this content is being brought to you by ethos ESG. We are a financial technology firm that provides values-based investing tools, impact-focused marketing, and ESG research capabilities to a wide variety of investors. And if you would like to know more, please go to www.ethosesg.com and sign up for a free trial. With that said, why don't we do a quick round of intros? Nathan, why don't we start with you. Give us a little bit of information about your background and what brought you to ethos.
Nathan Fradley, ethos ESG
I'm a financial advisor and running ethos in Australia with my wife, Amelia. We met Luke serendipitously and got involved in ethos that way and have been around now for just over 12 months.
Kevin Jarussi, ethos ESG
I'm Kevin Jarussi. I'm originally from Montana in the United States of America. I moved to Paris a couple of years ago to get my master's degree in international management with a focus on sustainability. I have been with ethos since then.
Dan Carrenno, ethos ESG
Once again, my name is Dan Carreno. I have 18 years of experience in financial product distribution. I am a Certified Investment Management Analyst and a Chartered SRI Counselor. So why dont we launch right into our ESG roundtable? Any volunteers who would like to share something that's come up in their professional life that has really been interesting and intriguing as it pertains to sustainable investing?
Nathan Fradley, ethos ESG
Salesforce.com has shifted their remuneration to an ESG focus, which is really interesting. Salesforce is being a very progressive company. For those who haven't seen their Super Bowl ad, you should look it up. It effectively talks about why we should be focusing on the planet that we live on and not another planet. It's a bit of a shot at a few wealthy men. We are seeing that happen more and more. Its a shift in thought process from just pure share price-based remuneration, which can be manipulated through share buybacks and other things.PwC did some research where 78% of board members actually agree that strong ESG performance aligned with strong company performance. So, in general, there seems to be a positive view around this. It's figuring out what does an ESG based remuneration package actually looks like, but for a company like Salesforce to get on board with this is amazing news.
Dan Carreno, ethos ESG
I would like to highlight that if we look at the database of individual companies that we cover in the ethos ESG software platform, which company gets the single best overall impact rating?Salesforce! So it was funny for me to see that Super Bowl commercial as well. Excellent. Well, why don't we move on to the next topic? Kevin?
Kevin Jarussi, ethos ESG
Something that's really interested me recently isthe great resignation. I think it started in the United States. A friend of mine in San Francisco was the one who mentioned it a couple of months ago, and I hadn't really done much research into it. And then suddenly articles are popping up in Paris as well. Over the last couple of years, there have been millions of people who have quit their jobs, over 4 million alone in July to 2021. What I find interesting is that COVID has illuminated for so many people, myself included, the importance of work-life balance. What I find interesting is companies have to adapt to keep talented employees. So some of the ways that companies are going about to try to retain talent and try to foster the people are worth discussing.
Nathan Fradley, ethos ESG
I think the concept of the great resignation has empowered people. They realize they don't necessarily have to stick to a job they hate. I think in Australia, it's been talked about a lot. I do remember reading something that in January that we actually had our lowest job mobility. What we see here on the supply side of the business is a complete shortage of workers. We've had our borders closed until two days ago. We are a country that imports people. We have negative population growth. We inherently rely on people moving to our beautiful country. And without that, the demand for workers has skyrocketed. We have seen remuneration across the board increasing quite drastically. In my local area, there was a cafe who was looking at paying $35 to $40 an hour for cafe staff because they couldn't get the staff.
Dan Carreno, ethos ESG
To keep us moving along, I will share the most recentResponsible Investing Survey from Nuveen. They surveyed just over a thousand investors at the end of 2021. They found in that survey that a majority of investors who are aware of responsible investing are actually doing it at 53%. Most people have heard of responsible investing at this point, but there is a significant difference generationally. 98% of millennials say that they have heard of responsible investing, but that number is only 70% for all of the non-millennials. 81% of those surveyed agreed that it's important for their financial advisor to talk to them about their values and how they could be reflected in their investments. And 79% say that they would be more loyal to a financial advisor who helps them invest in a way that has a positive impact on the world. There are surveys where an overwhelming number of people say that they would prefer to invest in a responsible or sustainable fashion, but then many advisors say their clients don't bring it up. There seems to be a disconnect there. And Nathan, since you're out there working with individual investors, I was curious on what your take is on that.
Nathan Fradley, ethos ESG
I think it's led by the conversation. When clients come to see a financial advisor, they come for advice. Typically, an advisor will say that this is my investment philosophy, and the client's going to say, okay. I remember reading that just under 50% of clients say they would leave their advisor if they didnt adequately handle ESG considerations. Most people assume they're already ethically invested. They don't realize that they're not. I think this puts the focus back on the advisor to have better conversations with their clients about what's important to them. I know a lot of advisors in Australia that dont feel as though they're competent enough to dive into these conversations. They dont want to be uncovered as a fraud or not knowing something when their job at that moment is to learn about what's important to the client, not to try and solve their problem right then and there. They can do the research after the fact. I've never had a no. I only work with ethical investment clients. Everyone was a yes. No one's ever going to say no to a better world or reducing harm. I think it comes back to us as financial advisors to take the proper steps to investigate what that means to the client because I think everyone's an ethical investment client. I've been saying this for a long time. We just haven't asked them the right questions.
Dan Carreno, ethos ESG
Well, Nathan, Kevin, thank you for your insights and sharing. Before we wrap up the podcast, lets take a few minutes to play ESG Trivia. So I have pulled some trivia questions out of the deep ethos ESG database as well as some current events. First question: recently, ethos ESG analyzed over 1000 impact assessments, a questionnaire provided by ethos and designed to facilitate conversations about the causes and issues of concern to various investors. In that analysis, what was the number one cause of concern to investors? Nathan.
Nathan Fradley, ethos ESG
That was climate action or climate change.
Dan Carreno, ethos ESG
Yes. It's amazing how sticky climate change has been as that number one issue of concern. Obviously, it's an existential threat to society as we know it. However, even throughout the social unrest in 2020, it remained the top issue of concern and just about every survey that I came across. One of the data points from the Nuveen survey that I mentioned before is that 66% of investors now say that they are more interested in sustainable investing because of a personal experience that they have had related to a climate disaster. Question number two: what percent of the proxy votes cast by BlackRock in 2021 were in support of ESG or oriented shareholder resolutions? Is it A) 40%, B) 63% or C) 82%. Nathan.
Nathan Fradley, ethos ESG
40%.
Dan Carreno, ethos ESG
That is correct!
Nathan Fradley, ethos ESG
It was 12% the year before though, so massive credit to the BlackRock team.
Dan Carreno, ethos ESG
And the average between 2015 and 2019 was only 3%. We would definitely like to see that number higher than 40%, but we are seeing some real traction and change in the way that they're approaching stewardship at BlackRock. Last question: a shareholder resolution recently filed by Green Century Capital Management aimed at reducing greenhouse gas emissions was overwhelmingly passed by shareholders of this large retailer. Kevin.
Kevin Jarussi, ethos ESG
Is it Costco?
Dan Carreno, ethos ESG
That is correct.
Kevin Jarussi, ethos ESG
What was so significant about this is that it involves scope three emissions as well. That's the whole supply chain. So it's was pretty significant.
Dan Carreno, ethos ESG
Gentlemen, thank you both so much for being on and sharing your insights and your knowledge. And I want to thank everybody that tuned in today. Articles, figures, and resources that were mentioned, we will link to those in the transcript of the podcast, which will be available on www.ethosesg.com. And of course, if you have any questions for us, you can always get in touch through the website. Thank you for tuning in, and we will be back soon with another episode of The ethos ESG Podcast.