Pablo Berrutti is Senior Investment Specialist, Sustainable Funds Group at Stewart Investors. Starting as a risk specialist, Pablo became quickly aware of the dangers of climate change, even before he knew what ESG was. In this conversation, we discuss the likelihood of fossil fuel-based companies making the transition to low carbon business models and pose the question whether companies’ quick retreat from Russia during the invasion of Ukraine is a vindication for ESG.
Overview of podcast with Pablo Berrutti, Stewart Investors:
2:00 Becoming aware of climate change as a risk manager
3:00 Missing out on a mandate due to lack of ESG policy
4:30 My questions on climate change led to a role at an SRI fund
7:00 Risk and reward are the two sides of the same sustainability coin
10:00 You have described ESG metrics as ‘colouring by numbers’. You don’t seem a fan of these types of metrics?
12:00 The sin of aggregation
13:00 Companies still have different boundaries in how they measure their carbon footprint, so it is not a generic measure
16:30 We look at fossil fuel companies and we just don’t see how they are able to transition profitably
18:00 We actually like the companies that we invest in and we want them to succeed, so there are not that many shareholder resolution filed at the companies in our portfolio
19:00 Discussing negative screens: ‘For us, they don’t make sense.’
21:00 On macro events, such as the pandemic and Russia
25:00 It is another example of companies that lead the charge on sustainability can come out of these situations stronger
26:30 Several large, multinational companies pulled out of Russia relatively quickly. Do you see this as a sign that ESG has finally become mainstream?
28:00 Did any of your portfolio companies react unexpectedly during the pandemic?
29:00 Belarusian company EPAM did the right thing and focused on their staff
31:00 Are you worried about the dominance of large technology companies?
32:00 TSMC is one large tech company we can get behind
33:00 Between 2010 – 2019, large tech acquired 819 small companies that were below threshold reporting requirements, see report.
36:00 Are you excited about any particular technologies? ‘Yes, steam’.
40:00 Diversity study with the University of Technology Sydney (UTS)
41:00 Inclusion has to come before diversity
43:00 Sometimes change really has to come from the CEO
47:00 Talking SDGs, three things to look out for whether companies are overstating their contribution to the goals
This [i3] Podcast was sponsored by Stewart Investors.
[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe. The [i3] podcast is available on iTunes, Google Podcast, Spotify, Amazon Music, Stitcher or your favourite podcast platform.