Derek Rozycki: What Makes a Better Investment Decision?

The best investment decisions often come from asking broader questions.

In this epsiode of The Exchange, Derek Rozycki, Head of Responsible Investing at Mubadala, reflects on how investing has evolved over the past two decades, and why long-term performance increasingly depends on understanding a wider range of risks and opportunities beyond traditional financial metrics.

Derek shares how Mubadala approaches responsible investing as part of a broader effort to make better investment decisions, build more resilient businesses, and identify new sources of long-term value. He discusses how environmental, social, and governance considerations can help investors develop a fuller picture of a business, from human capital and governance to climate, regulation, and shifting market expectations.

The conversation explores how technology, societal change, and global transformation are reshaping investment frameworks, and why responsible investing is becoming a more rigorous and integrated part of how institutions assess resilience, competitiveness, and future growth.

Drawing on his experience across finance, investment, and sustainability, Derek reflects on the relationship between responsibility and performance, and why long-term investors need both discipline and adaptability to navigate a changing world.

From climate and energy transition to AI, governance, and human capital, this episode offers a thoughtful perspective on why responsible investing is ultimately about making better investment decisions.

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Transcript

Values, Judgment, and Decision-Making in the Gray Space

Derek Rozycki 0:07

We live the values here, and it's not just a plaque on a wall. It's something that when we get in that difficult space in business and the gray space, we draw on our values and it guides us to the decisions that we make.

Mustafa Al-Rawi 0:19

Hello, I'm Mustafa al-Rawi. And joining me in the exchange is the head of responsible investing here at Mubadala, Derek Rozycki. Welcome, Derek. Thank you very much. I'm excited to be here. It's good to have you for this time. And in particular, I would I've been noticing lately on my feeds on social media that there's a lot of Gordon Gecko clips from Wall Street Journal where, you know, very much when I was growing up, it was all about greed is good and the investment environment was, shall I say, pretty sort of macho, if you like. And here I am sitting with the head of responsible investing in one of the biggest institutions in the world. How how did we get here?

How Mubadala’s DNA Shaped Responsible Investing

Derek Rozycki 0:58

You know, there's a there's an arc to that story. Um and in my in my personal journey, but I think there's an arc for Mubadala too. So maybe let me talk a little bit about both. Um, first about Mubadala, because it's such a unique organization. Um, Mubadala was formed as a development company back in the early 2000s, and its mandate was to find ways to diversify the economy, to build a social infrastructure here in the UAE, create jobs. And so as a sovereign wealth fund, sort of our mandate is to have strong economic returns and to provide for current and future generations. So you can hear in that second leg that that sustainability and taking care of people and the environment is sort of fundamental to that first iteration of Mubadala. And so that has carried on in our DNA, you know, throughout uh the evolutions of Mubadala, and there have been many, but um we we really have held that close to us. And so the responsible investing team was formed to really codify that uh approach to bringing environmental and social considerations into our investment process across our investment lifecycle in a in a rigorous way and an agile way with an investor mindset. And so it's really been part of our DNA from the start. Um it's one of the things that makes Mubadala a really unique entity. From from my own perspective, it's an interesting story, I think, because I come from a um I come from the state of Vermont, uh and in, and uh, which is the land of Bernie Sanders, so sort of a very, a very activist state. And my family uh is also um a pretty activist family. My father was the head of Physicians for Social Responsibility, which was all about sort of the anti-nuclear proliferation movement, and we've been on marches and been pretty activist in uh in my youth. And as I went through college, I realized that um I had an appreciation for that, and I wanted to do it in a little bit different way from my own story as I came into the professional world and grew up and became and sort of found my own independence. And my version of that was to try and find my way to the inside uh so I could influence decision makers. And and so uh uh, you know, I when I left when I left school uh at the University of Vermont, I ended up going down and working in investment banking in the oil and gas space. And my my professors in the economics department were frustrated with me for doing that. I'd been working in sub-Saharan African development economics, and they were just very surprised that I went uh that path. Um and I tried to explain it to them and say, I I want to I want to be part of the decision making that helps us do business in a better way. And um, you know, I I like to think that I I manifested that over the the 25 plus years of my career, but here I am 25, 30 years later, and I find myself working with some of the foremost investment decision makers in the world at a large sovereign wealth fund, uh helping us figure out how to integrate sustainability into our decision making and doing it in the right way, um, and doing it in a way that respects the dual mandate of a sovereign wealth fund, which is to get good, strong uh uh market beating returns while uh being impactful and and and sort of thinking about future generations.

Mustafa Al-Rawi 4:23

I mean, there's a few things there that I want to I want to unpick and don't think I'm gonna let you off the hook for you know going from that sort of very conscious upbringing to becoming an investment banker at the height of kind of the the the Wall Street Titans, but but we'll come back to that later. But uh but uh you know, something you said about impact. So responsible investing now is is very much the I'd like to say the child of of what was corporate social responsibility and then ESG, you know, maybe activist in investors and now responsible investment. And so that impact is very much built around how do you make the business better? You know, how do you use those considerations you mentioned, you know, whether it's environmental, social, you know, governance, um, looking after talent, developing them to improve performance and productivity. So you mentioned that you, you know, your team gets involved in the investment process. Tell me a little bit about that. Like when when do you get the call that says, let's go?

Derek Rozycki 5:20

That's great.

What Responsible Investing Looks Like in Practice

Derek Rozycki 5:21

So, you know, there's a it's a couple of different um ways that we get involved. We help the organization uh understand where we might be sensitive in some sectors. Um, so sort of in that initial screening process, we are a sounding board for the organization as they look to bring deals into our due diligence process at the beginning of the investment lifecycle. Where we really start getting engaged is once we decide to spend money on due diligence, we go in and work alongside and support the investment teams to make sure that we are uh bringing uh more uh comprehensive due diligence to the table and supporting them to understand a holistic picture of our investments, of course, on all of the financial metrics that we have always looked at in the past, and also to understand better and use some of the more sophisticated tools that have developed in the last few years to understand how taking care of the environment, taking care of our uh social aspects like our employee population, the communities where we're investing, uh, how that impacts our ability to have resilient businesses and to uh identify new growth opportunities and new markets and so on and so forth. So we really help uh delineate a broader, more, more holistic picture of the organizations we're looking to invest in so that our investment uh decision makers and our investment committees can make more informed, more holistic decisions and confront some of the tough issues that might be coming at us on the businesses we might invest in and make decisions. Are we making the right risk-adjusted returns? Have we taken the right mitigations uh to um to some of the challenges that the business might have or the sector might have? Or uh are we looking for forward into regulatory changes that might be coming down the line and pricing that into how we're making our decisions uh and our investments? And so there's a lot of ways that we get involved at the very beginning of the process, and then we work with our investment teams post the final investment decision throughout the asset management cycle to continue to optimize and and drive performance on these issues over time. A lot of them are basic business as usual things, tweaks and not the flashiest, biggest components, but it's stuff that makes business better, makes it more resilient, and helps uh senior leadership identify new opportunities going forward so that as we grow the business over two, three, four, five years plus, the business consistently is getting better. And then when we sell the business, we hope to get a premium for it in the future for for having positioned it well for future growth.

Mustafa Al-Rawi 7:58

So, to what extent is this the norm now in the industry to take that approach that you were that you were talking about? You you it's responsible investing, but it's almost common sense investing rather than just focusing on the best deal today.

Why Responsible Investing Is Becoming Common-Sense Investing

Derek Rozycki 8:10

Yeah, it is. So, you know, I I the way that I think about it is that business has been integrating sustainability forever. We've always cared about how our employees are uh are feeling when they come to work, whether they're they're uh feeling safe to share new ideas, because all of these fundamental components are what build productivity and innovation and enable that, where it's how we attract the best employees in the world and retain them. Uh it's about how we ensure that we uh are treating the environment well and don't get in trouble with regulatory regimes or that we identify new marketplaces. And so we've we've been doing this for a long time. The real interesting thing for me is that it's what's happened in the last few years where we've sort of started to develop much more rigorous approaches, much more sophisticated approaches to understanding how employee engagement drives higher productivity. We aren't there yet. It's still nascent and developing, but the data we're capturing now is more consistent. AI is helping us understand these relationships better. And so I I, you know, the most forward-leaning organizations in the world are understanding these individual components much, much better. They're investing time and resource into that. And so um I think we're on an integrating, uh, a faster pace of integrating these decisions into how we make our investments and how we manage them over time. Um so it's really for me, it's not a question of are people doing it or not? Everybody in business has been doing this forever. Are people doing it in a sophisticated way? The leading investors in the world are doing it in a much more sophisticated way now, and that's spreading throughout the marketplace.

Mustafa Al-Rawi 10:01

And so is that like a suite of tools that that you would use and your team would use that's sort of proprietary that that helps you to do your job and and bring in that that value and that that impact?

Building Tools for Better Investment Decisions

Derek Rozycki 10:13

Yeah. It's a it's a great question. So I I you know the sustainability space has gone through some iterations. It was, you know, CSR and then ESG and then sustainability, and then and and where you really see people focusing on in the investment world today is sustainability in the context of investment practices and sort of translating uh uh sustainability speak into investor and business speak so that our our business colleagues can really understand it in the context of their normal day-to-day business. And um when we established the team, there just really weren't tools that were fit for purpose that could move at the pace of business, that could would focus on the investor agenda, that would would inform the processes on the material issues that helped us drive strong returns and be impactful in the future. Um, but but we're not concessionary. We're we're not getting lower returns for our investments. Uh and so we actually had to develop our entirely own suite of tools. We made the decision that we would in-house all this development, spend uh you know, thousands and thousands of hours by the responsible investing team developing tools that were fit for purpose for our organization that help us highlight what sustainability factors are important to each company in their in their legal jurisdiction, in their cultural regime, in the in their sectoral space, and how that impacts the financial um uh opportunity for that company and future of that company going forward. And so uh we've got some really, really fantastic tools that are early stage uh in their development, but um uh developing very quickly and provide us uh sort of help us get from zero insight on a company to 80% so that we can bring smart people in to ask good targeted questions and and and and move deals forward quickly through our investment process. Because sometimes we have days or a week to make a decision. We can't take a month or two to profile a company. We need to we need to have a profile quickly and ask good, smart questions quickly.

Mustafa Al-Rawi 12:24

I'm really curious about the kind of makeup of your team because we we talk about the the tools, the analysis, the technology. Yes, it's all part of it. But you know, you've you've been in your career an investment banker, you've been in structured finance, corporate finance, you've been a CFO, you know, you've been with Mubadala a long time. So I can I can understand how over the arc of your career, and not to mention, you know, your your kind of conscious upbringing and your understanding of development economics and and oil and gas, um, that you've landed in the perfect sweet spot for you. But then how do you recruit and build that team? You know, where are you getting them from? Are they, you know, what what's the ideal profile? What do they look like? That's a great question.

Derek Rozycki 13:05

I we have um we have a wonderful team. It's I I think to be active and have good discussions, it really comes back to this concept of having diver activating diverse perspectives. I mean, Mubadala is an organization that has always recognized that if you can bring diverse perspectives perspective to the table in an efficient and effective way, you get better answers, you get better outcomes, you have more rigorous debate and discussion. Um and so we've got we've got people from all over the world with all sorts of different backgrounds. Some of them we've got bankers, we've got uh people that have worked in private equity, we've got people that worked in development finance organizations, uh, and and and and beyond that. And so one of the wonderful things about the team that we've been able to create is a space where everybody can bring their diverse background together and confront issues and really have a vigorous debate from all these different perspectives. Um and I think we it's a it's it's important to have that that safe space for the dialogue for people that to have that um vigorous, amicable, and constructive feedback and challenge. And then we turn around and we present that to the rest of the organization. But I I think that the nature of the sustainability professional is evolving as the importance of connecting um sustainability and value creation and the investor agenda uh comes together. And so what we're finding is that we're uh sort of converging our our our backgrounds uh into what is, I think, that's gonna be the future of a sustainability professional, which is a strong uh um technical background on sustainability issues, complemented by strong uh value and financial um uh understanding. And so one of the things our team's gonna be doing next year is everybody's going on an accounting course. We have some people that have never been involved in finance directly. They need to be rooted in that financing uh background. And that's gonna be increasingly important for sustainability professionals in the business world and the investment world going forward. That is clear as day to me. It's an absolute requirement. So you can have great technical background on sustainability and and understand SASB and TCFD and all of the future iterations and growth of that. But you also have to understand finance and be able to speak in finance to business people.

Mustafa Al-Rawi 15:40

Which is kind of your your whole sort of argument to your professors probably back back in the day, which you know, I'm gonna go have an impact and I'm gonna, you know, help shape the world, but I have to understand how you pay for it.

Derek Rozycki 15:52

Have

How Sustainability and Finance Come Together

Derek Rozycki 15:53

to understand how you pay for it. If it's not economically viable, if it doesn't make the right return, it's not sustainable. It can't sustain itself. And so businesses to be sustainable, they both have to be able to sustain themselves, make a strong economic return. And also you can do that. And I think Mubadala believes that if you're paying attention to sustainability issues, you actually increase and and and and push out the return profile of companies. You make them more resilient to whether it's climate physical risks or disruptions in the employment market, or I mean, there's lots of different components that can cause volatility for businesses when your sustainability brings another lens to thinking about these issues. So you're more resilient, but it also helps us to think about those new opportunities that can be coming from uh shifting market dynamics, shifting regulatory regimes, uh, shifting consumer preferences, and it helps us see those coming earlier so we can be strategic in our decision making at a company level to then attack a market. Maybe we want to be uh uh leaders in the market space. Maybe we want to play a more defensive position and be a market follower, recognizing that it's hard to swim and catch up with a wave. And so our job is to confront our organization with a broader, more holistic picture and support people in making decisions. It's not about blocking things from happening, it's about enabling things.

Mustafa Al-Rawi 17:23

And and if you're good at it, and Mubadala is pioneering in this discipline, eventually, if all goes well, you'll put yourselves out of business because responsible investing will just be investing. Yeah, we are, yeah, we that's right.

Derek Rozycki 17:36

And and in many ways, I it it already is in Mubadala, and our team's job is to build those processes, to take advantage of new technologies, new data sets to be more sophisticated. And I actually think what will happen, and we're starting to see it in a few of the players that have been around for a while, the sustainability people are pushing out closer and closer to the investment teams. And we're already doing that with our own sustainability team uh now. We've got them hot desking with the investment teams, so sitting in and among the investment teams uh and the and our uh our platform finance people. And that's that's already having benefits of you know, when closer conversations, water cooler conversations, a little bit more um um fluid engagement uh within the organization. And that's just helping the integration of the concepts of sustainability, getting it closer to the business decision making and closer to the portfolio companies themselves.

Mustafa Al-Rawi 18:32

So, I mean, I I think that's really interesting, but I'm like putting myself in the position of maybe um what I might call not an irresponsible banker, but say a non-responsible investment professional, one that doesn't focus on that. And then I've got these sustainability colleagues coming in, I've got all these things sort of that are new to me. How do you kind of create that understanding that there is a link from here to better value business and also productivity, performance? Yeah, you know, how how are you able to connect the dots for people that don't necessarily understand it intuitively?

Derek Rozycki 19:07

So we are uh we we call that generally fluency building. Okay. Um and so what we try and do is help people understand that a lot of the issues that they've already been engaged on in the past are fundamentally sustainability oriented in part. And and that we can, by working with us, that we can help them uh sort of upgrade their skill set, go from version 1.0 to 2.0 or leapfrog to 5.0. And and I think that's what we're seeing within the organization is that uh it's it's been very hard to go out and train people uh you know in a in a sort of an academic way and get them in a classroom setting saying this is what sustainability is all about. That doesn't work so well. What the the best way to do it has been to take a deal and say, let's talk to you about sustainability and what it means in relation to this business. Uh for example, uh do you as an investment professional, does your board uh is your board aware of how many of your customers are asking questions about uh carbon footprint and product level carbon footprint? So this is just a sort of what's the the carbon footprint of an individual product that they're purchasing from you. And what we find is that many of the of the companies out there, many of the boards actually don't realize that their customers are increasingly asking about what the product level carbon footprint is. What's how much does it cost to make that um widget that you're you know that we're buying from you uh in terms of carbon? And and because they don't know that, they're not managing for it, they don't realize that the market is shifting and that the significant portions of their customers are starting to look at price, quality, and carbon intensity. That's a major shift. That's a top line shift. That's about revenue, that's about total addressable market, that's about profitability. Those are fundamentally business issues that that the the chief executive, the chief financial officer, and the uh chief operating officer should care about. And they do. So when we open that, when we get people to step away from the politicization and and the nomenclature of sustainability and realize we're just looking at uh fundamental business issues here and being more sophisticated about it. They want to get involved and want to learn more.

Mustafa Al-Rawi 21:37

Is it region specific? Like is there is there a disparity between sort of attitudes?

Derek Rozycki 21:43

Uh I think what we find is different sectors move at different paces, different regions have different cultural sensitivities or different regulatory regimes. Uh it it's it's it is very bespoken unique. I think that's one of the biggest challenges we face. Is that we have need when we've built our internal models, we've had to find um uh create models that could port into very different circumstances and be applicable to different sectors, to different uh industries, to different geographies, different cultural regimes, and still give common output and common insight to our decision makers, um, and give structured insight. And that is really, really difficult. Uh and I think that's why one of the reasons, one of the things we've seen with so many of the solutions out there is that they try and boil the ocean and there they try and gather too much data. Um, and and a lot of it isn't investor-oriented. And and so one of the greatest pieces of advice our chief executive, uh Khaldoon Al Mubarak, gave to me uh uh in the very beginning was only ask for the data that you're gonna use, that you know you're gonna use, and maybe 10% less. Start with that. And once you show us that you can create value and create insight out of that, we'll give you whatever you need. But don't ask for, don't boil the ocean.

Mustafa Al-Rawi 23:15

And going back to when you first started it with Mubadala, it's been it's been a while now. 20 years. Yes, quite, it's quite something. And um, you know, you serendipity and and I would I would I don't hesitate to say it, destiny plays a big part in your career. I think so. Um, you know, you what brought you out to Abu Dhabi in the first place? Because it's it's yeah, it was it was not necessarily um uh uh a happy coincidence that a crisis hit Wall Street and you found yourself in need of a new opportunity.

Derek Rozycki 23:46

Yeah, that's right. So I was working in the oil and gas, in oil and gas investment banking um on Wall Street, and the uh uh oil and gas crisis, the well, the Russian crisis and the oil and gas crisis hitting around 98, and oil was at $10 a barrel and below. Um, and I was sitting at my desk as I as young investment bankers twiddling my thumbs, not really doing anything. And across my desk came a flyer for the Middle East oil and gas conference in Abu Dhabi. And I, you know, eagerly brought it to my boss saying they must be doing business out there because we just weren't doing anything. Um and he felt sorry for you. I think he just wanted to get me off my desk, you know. He wanted to get me busy doing something. So he said, go ahead, you know, go out and check it out. Um and so we uh I came out to Abu Dhabi. I ended up meeting the, I was working with Barclays at the time. I met the Barclays um bank uh employees that were working out here at the time, and they were in the process of moving to be uh an investment bank from a corporate bank. And I was young enough and had enough background to be uh an interesting candidate to run the Abu Dhabi office. So I interviewed, got the job, uh, came out into the Abu Dhabi office, and it happened to be in the same building as Mubadala's predecessor, the UAE offsets group. And so I was bumping into Khaldoon Al Mubarak, Waleed, uh Carlos Obeid, our CFO, uh, you know, in the elevator. Um, and and Mubadala, when it was launched, uh became my largest client. And I happened to take uh to structure the first big uh foreign bank deal for Mubadala in 2004. Um so you knew them intimately. I knew them well. I, you know, and they were they were my biggest client. And when it when I had finally came to the realization that my uh one of my college professors was right, I didn't really belong in the investment banking world, I came and and shared that with uh with the leadership at Mubadala, and they said, Well, would you like to come work for us? And I was ecstatic.

Mustafa Al-Rawi 25:49

And and and that's because their philosophy really was in tune with your your kind of bigger world view, right?

Derek Rozycki 25:56

Yeah, and and I'd I'd come to know Mubadala well, I'd come to know the leadership well, and and their mindset in doing business. And that, you know, it one of the things that's kept me at Mubadala all these years is that we live the values here. And and it's not just a plaque on the wall. It's it's something that when we get in that difficult space in business, in the gray space, we draw on our values and it guides us to the decisions that we make. It doesn't mean that we're always going to make great investment decisions, but we will always be able to hold our head up about the decisions that we make because we've done them grounded in our values. And those values come straight from the leadership of Abu Dhabi and of the UAE and this, you know, incredible ability to understand the multi-generational uh aspects and have a multi-generational vision and to realize that to achieve that vision, you have to have conviction in the moment and do it in a way that is consistent with your values, create an investment mandate, and then start to drive forward. So I'd done this with them uh and facilitated that as an investment banker for a few years. My first meeting was with Carlos Obeid, our CFO, on uh 18th of October 2000. That was he was the first guy I met here. So I I really I I known this company, seen it form, understood where it was going, and felt an affinity for that and couldn't have been happier to join it and couldn't be happier to be here 20 years later.

Mustafa Al-Rawi 27:30

I mean it's it's that balance between sort of returns and responsibility, isn't it, that that kind of makes it different compared to to what you probably experienced on Wall Street in those early days.

Derek Rozycki 27:40

Yeah. I and I think that it's you know, we we say that, you know, Mumbatala as a sovereign investor, we have this really unique approach to that. Um we are a commercial sovereign or commercial entity 95% of the time. And we look and taste and feel and smell and act like a like a corporate. And 5% of the time we're sovereign and we know when to switch back and forth between those. We bring that commercial discipline to the process. Uh, we don't do, we've never done concessionary deals. It's always been important to us to invest for returns and do it in the right way. And we've always had conviction that we, if we're taking care of our people, taking care of our organization, taking care of the communities, taking care of the environment, we will be the partner of choice around the world. We'll be somebody that gets uh extraordinary returns relative to our peers. Because we have a holistic view, we we we can uh engage that when you're investing for the long term and with a vision and with conviction, you have to think about all these issues and incorporate them into uh your business decisions. It's keep keeping humans at the heart of things. It's keeping humans and keeping, yeah. It's keeping humans at the heart of things and keeping uh you know, understanding that business uh can provide for everyone and make extraordinary returns. These are not mutually exclusive things. And that's been uh uh one of the magical things about Mubadala.

Mustafa Al-Rawi 29:13

I mean, we're far away from sort of Milton Friedman as as we can be, really.

Derek Rozycki 29:17

Yeah.

Returns, Responsibility, and Market-Beating Performance

Derek Rozycki 29:18

I well, I guess I I think it's it's it's Milton Friedman Plus Plus, you know, in in some ways. I, you know, Mubadala last year, we had the uh the the we were the top performing fund on five-year rolling returns, and we've been integrating sustainability in a thoughtful way since the beginning of our organization. And so I I think we're living proof that you can be a smart, sustainable, responsible investor and get extraordinary returns.

Mustafa Al-Rawi 29:48

And so going back now, if you kind of could talk to your younger self and and and give that younger self some advice, would you would you say go do it all do it all again exactly as I did it, roll with the crises, do it all over again?

Derek Rozycki 30:05

100%. I there's no question in my mind. I couldn't be luckier. I um I am doing exactly what I'm supposed to be doing right now. I I couldn't be more excited uh about coming to work with Mubadala. And and I feel empowered, I feel uh I feel trusted to make you know decisions. I know where my limitations are and I know when to engage with the organization and and discuss that. And if you look at the you know, the arc of my career with Mubadala, I've had so many different opportunities uh from uh I've now built two teams for the organization, everything from financing and in in and project financing, but capital markets, treasury, MA. I was a CFO of one of the divisions or what we call platforms. I worked in Colombia as an interim CFO for a while from one of our portfolio companies. I've um worked now as the head of responsible investing, had the opportunity to engage with all of these portfolio companies throughout the world. I mean, it's just been an incredible opportunity. And, you know, if if wisdom is the aggregate of experience, I've been so fortunate to have so many experiences and now be able to bring what I've learned back into Mubadala and offer it back to the organization and what I think is a really virtuous cycle.

Mustafa Al-Rawi 31:27

And and would you tell younger professionals sort of joining Mubadala's ranks that sort of the big the biggest lesson will be you you need you need resilience, but you also need, you know, kind of it's curiosity.

Derek Rozycki 31:40

Yeah.

Lessons for the Next Generation of Responsible Investors

Derek Rozycki 31:41

Yeah. I think resilience and curiosity and and I I those are absolutely crucial. And I think those both play into the idea of um having conviction about engaging, having an opinion. And even when you you don't know whether or not you're you're right, you haven't built your uh confidence on something, it doesn't mean you can't have a view and engage and learn. Because I think if I come back to that concept that wisdom is is the aggregation of experience, what I find a lot of the younger generation doing these days is um when they come across an issue that they don't understand or aren't fluent on, they go and they look it up on the internet and they they try and build their fluency through reading and and and watching, and they miss the opportunity to engage in the conversation. So the problem with reading and watching is that's not getting experience. By coming out and doing and engaging and debating, you're gaining experience, you're gaining wisdom and you're moving forward. And so I think it's a both and you have to have the courage and the resilience to offer that you're not sure, but you think you have an idea about something, and through that engagement, learn, you know, succeed, fail, and then grow through that process. And augment that by all the incredible resources we have from that from the internet and that AI can provide us now. I mean, I think it's a it's an amazing thing what AI is gonna build and and bring to the process of uh the growth of our younger employees now. Trevor Burrus, Jr.

Mustafa Al-Rawi 33:18

Do you think the younger generations are actually quite risk-averse in in nature compared to to maybe a couple of generations ago?

Derek Rozycki 33:26

Uh I think that there's and I think this is universal across the uh across cultures. I think that the younger generations feel like they need to know before they engage. They need to have a foundation more than what I've seen in the past. And I don't think that serves them well because because they sort of um it prevents them engaging uh, you know, through the process and to they they wait until they read and they they review, and they miss that time of that iterative dialogue that they otherwise could be having. So they miss the experiential aspect of it. Um so maybe it's a I don't know whether it's they're they're more conservative about that. I just it feels like they they have a need to be able to express that they know what they're talking about. But you only get that through actually doing it. So it's a catch-22.

Mustafa Al-Rawi 34:20

And and for you, you know, do you have any role models at the moment that you you look you're looking to that that kind of you'd you have been emulating or you'd you kind of would like to emulate? Oh I I have a I do.

Derek Rozycki 34:37

I I guess maybe I'll describe the types of people rather than the people themselves. I I really admire the leaders who are unafraid to say that they don't know, and who augment that by calling on the people who they've they've they've surrounded themselves with, the experts they've surrounded themselves with, and drawing their opinion out uh so that they can inform themselves, because nobody can can know everything about everything. And you think about uh, you know, somebody like Khaldoon Al Mubarak, our CEO, it's impossible that he knows everything about the what this organization is doing. He's incredible about activating all the different people around the table uh uh to draw their wisdom out so that he can then pull that together and make a decision. Um, and we see that uh I see that in many places and and um uh I really admire that and try to I I aspire to to leverage the knowledge around me well. And to be humble enough to know that to know when I don't know and to admit it.

Mustafa Al-Rawi 35:54

So I think I'm gonna ask you kind of as we rap as we wrap up to kind of look into the future. I know I know you said that you didn't you couldn't predict the future when you started out, but you've done pretty well, Derek, I have to say. So I I I trust your judgment. You're looking you're looking forward, you know, 10, 15 years from now, and where where would this commitment to responsible investing take an institution like Mubadala and and and uh and and Abu Dhabi, the the the the place it's from?

Derek Rozycki 36:24

Yeah.

The Future of Responsible Investing: AI, Alpha, and Better Returns

Derek Rozycki 36:25

I think I don't think we're gonna have to wait 10 or 15 years, but uh I think it's gonna happen sooner. The the focus that the country has on understanding the fundamental linkage between empowering the people, respecting the environment, and weaving that into good business, getting stronger returns. We are in the process of uh uh defining a new frontier on how to get extra return, get extra alpha and investor speak, um by being more tactical, more sophisticated, more knowledgeable, by leveraging AI to help us do this even better and figure out how to integrate this more fluidly, more agilely, uh uh, more effectively into our investment decision making. I mean, it's not 10 years out there. This is stuff that is happening at an incredible pace, uh, you know, today, tomorrow, next year, or and in the in the years to come. And I I see it happening, it's it's cascading from the leadership of the country, it's cascading into the leadership of Mubadala, it's cascading into the the leadership of our team and into our portfolio companies. And so I really uh uh have bought into the conviction that our organization has that by integrating sustainability considerations into our investment processes, we're just gonna get better returns than everybody else. Thank you very much.