Tracey Groves, StoneTurn Partner, talks ESG to Anita Woodhouse, Chief Compliance Officer at V-Square Quantitative Management, a global investment manager with ESG at its core. Anita has been involved in ESG investing for many years having previously worked at Northern Trust Asset Management, building global investment compliance programs across advisor entities worth approx. $1.3 trillion.
ESG is fast emerging as a priority Board-level agenda item for business but why is it important, what are the critical components and how does business fully embrace ESG as a force for long term good? These questions and more are posed during an energetic discussion that gives listeners a unique exploration of ESG. The podcast shines a light on the transformational, integral and human nature of ESG, cutting across all parts of a business and lying at the heart of a sustainable business strategy.
Kicking off the discussion, Anita outlines how ESG is more than a ‘nice to have’ when considering investment products and strategies for her firm. Valuable elements of ESG are incorporated into the investment process, from the indexes that are tracked to the way in which the proxy voting policy is designed. This level of intentionality helps clients to invest in a manner that is in line with their ethics and values, whilst maintaining an exposure to the universes they want. Materiality is also considered, understanding that not all ESG factors are created equal. Investment firms are now seeking to optimize on those factors which they believe will provide returns in a manner consistent with what their clients are looking for.
The conversation goes on to explore how and why societal expectations, and increased scrutiny on the role and responsibilities of business from regulators, employees as well as investors, are driving a shift in priorities. No longer can business afford a disconnect between what they say and what they do. People see this as performative and will no longer accept tokenism. Business has to walk the talk. It’s no longer good enough having lofty goals for diversity, for example, without a clear timeframe and action plan. It is becoming increasingly important to stakeholders, both internal and external, to see the road maps for these goals and evidence of concrete activities.
Anita’s passion for leadership with integrity, ethical decision-making, diversity and inclusion, and organizational culture are revealed as critical driving forces of ESG. Sharing her personal story as a senior Black woman working in the US, we hear that Anita is pleased that diversity, a core component of the Social (S) agenda, now goes beyond diversifying investments and is also looking at the diversity of companies and their boards on a much broader scale. Anita points out that the focus on diversity does not come at the cost of excellence, rather it is a way to showcase excellent leaders. Diversity and inclusion should lead business to be able to foster a culture of diversity of thought and innovation. The conversation should never be about a “limited pool of Black talent”. Anita’s powerful voice and her lived experience create a sense of urgency on the need for accountability and ownership of those issues that impact every single one of us.
The human spirit of ESG shines throughout this courageous and compelling conversation. There is a resounding clarion call for action that moves ESG business commitments from the articulation of words to measurement and execution. Whether talking about leadership’s ability to build relationships across boundaries, protecting our environment for future generations, or educating each other on why this is so vitally important, the discussion dynamically illustrates why the human race cannot afford to ignore ESG. There is no way back.