How much has investing changed with the introduction of environmental, social and governance factors? “It’s changed dramatically:”, says Jackie VanderBrug, Managing Director at Bank of America’s U.S. Trust, who leads their Impact Investing platform and who defines and executes investment strategies across all asset classes. With a diverse background in technology, non-profits and finance, she shares “how banking and investors are critical to sustainability”. [10 minute read]
Patsy Doerr for Thomson Reuters Sustainability: Before we get into the crux of the topic, I would really love to understand what your role entails and how you got there?
Jackie VanderBrug: My pathway is very nonlinear. After going to school for math and computer science, I worked for the U.S. Congress, programming mainframe computers in terms of domestic-social legislation. After doing an MBA, I went and worked for a strategy firm. From there, I was part of starting a tech firm and taking it public. Then I really came back and said, “What do I want to do?” I started a nonprofit, closed a nonprofit, and got very interested in social enterprise.
That role of social enterprise and social investment is what led me eventually to start a social enterprise, private equity fund with the team, and then end up with the bank where I led our sustainable investment platform.
I call it “nonlinear.” At one point, President Obama called himself a “mutt,” so I thought I could call it a “mutt,” but actually, Catherine H. Clark, adjunct professor at Duke University, has done some research, and she calls it “multilingual.”
So there’s a concept of multilingual leaders. People who have spent time in the public sector and the private sector, in the social sector and the nonprofit sector, and are able to integrate the importance of all of those and the white space in between them.
PD: I know you are really involved in gender equity and gender investments and thinking about women in leadership; how did you get into that area?
JVB: I was working with a team to start an investment fund that was focused in this space, of how do we get additional capital to for-profit social entrepreneurs. At the same time, I was working with philanthropists who were in women’s foundations around the world. And I found that these two groups were working on the same goals. We were trying to address education, poverty, the healthcare gap – one with philanthropic dollars and one with investment dollars.
What was fascinating was, I found myself in the philanthropic room being the woman who was always asking, “Could we look at investments?” And in the investment room, I was asking, “Could we think about a gender lens? How do we drive forward gender equality?”
– which is what I had learned from the philanthropists. And so, being that woman, taking what I’d learned from those who had deeply integrated gender into their philanthropy and saying, “We need to drive this into our investment decisions. It will make us smarter investors.”
PD: I’m curious – how have you seen that conversation evolve over the past few years?
JVB: It’s changed dramatically, right? So when we started this, if you said, invest with the gender lens, people immediately said, “microfinance.” And, oftentimes, they thought you were talking about something that was soft and pink and small, right? And so now what we have is not soft.
This is about hard data. We know that gender inclusion drives better financial results. It’s not pink; it’s not about excluding men. And it’s definitely not small – we see firms like CalSTRS getting involved – so that conversation has shifted dramatically.
PD: Let me ask you this, a slightly different angle, but the link between women in leadership, investing, and sustainability – all these topics coming together – what’s your view on how they integrate?
JVB: There is something that goes back to many people, whether it’s Warren Buffet or Bill Gates, saying, “We’re not gonna solve the world’s problems with only half the population.” So, fundamentally, we know that we need everyone at the table to address the challenges that sustainability has.
There are two other factors, though, that I think it’s important for people to understand.
The first is that women are disproportionately affected by the challenges of sustainability because they’re poor, because they’re more dependent on natural resources globally, because they may have less mobility. And so you need those that are affected to be part of the solution.
And the other is that women are disproportionately more likely to say, “I want to use my investments to make a difference.”
PD: So now when you think about sustainability and investing, and you think about the role of the financial services and the banks, specifically, how do you see that playing out?
JVB: The banks and investors, in general, are critical to sustainability. And I would say that in some sense, necessarily, not efficient. So I’m not saying that policy is not essential here, that philanthropy is not essential; we need all of the sectors playing together, but investors have not been included in sustainability as they need to be.
And so part of that is, if you look at things like the sustainable development goals and the three trillion dollars of additional investment, we absolutely need investors at the table to address that.
The other side, though, which is essential, is that sustainability data makes us smarter investors. It allows us to mitigate risk, by understanding how exposed we are to things like climate change, to factors like population growth, etc.
So all of these increased transparency demands that the sustainability world is pushing for are also beneficial to investors.
PD: Also, you mention data and the importance of having access to data. So you think about Thomson Reuters as a data analytics organization – in addition to other things, but that’s a primary piece of what we do – and the rise of the importance of ESG data.
How do you see that conversation evolving and what would you like to see more of, as it applies to that type of data?
JVB: The rise of ESG data is one of these massive trends that I think we have yet to get our hands around. But you can think of it like what the X-ray did for medicine. All of a sudden you have so much more information and insight that allows you to do your job better.
And historically the “G” part of ESG (environmental, social and governance) – because I have clients all the time who are like, “Jackie, can you talk about that ESQ stuff again?!” because we get into lingo so much here – historically, investors have been most comfortable with governance; they understand that good governance drives good long-term results, and they’re getting to underline the role of the environment in a resource-constrained world.
Companies that are using their environmental inputs, outputs, and throughputs better are well-managed firms. And then that “S” part is where we’re starting to understand again, but that’s not soft, right? That’s the way that companies treat workers and how that relates to the war for talent, how it relates to retention costs, how it relates to innovation … those are all critical factors for investors to understand.
PD: As you said, no longer a soft issue … and I think, as we start to see assets under management moving towards millennials and women … all of a sudden, you’ve got this huge asset pool to tap into – people care about this stuff.
JVB: 93% of millennials tell us that the environmental or social impact of their investments is important to them – 93% of a population. They’re saying, “Why are you asking that question?” And you’re absolutely right – women are 50% more likely than their male counterparts to say that this is important to them in terms of how they invest.
PD: When we think about the role of our leaders and also of men specifically, what role would you like to see them play when you start to think about women, leadership, and sustainability, and the impact of investing?
JVB: Men are essential leaders in this movement. Men need to: 1) Come out publicly and say that they stand for inclusion, and that inclusion is what makes the world work for all of us.
2) They need to use their leadership and power to identify places of bias. Iris Bohnet just wrote a fabulous book on what works around identifying implicit bias and how to create processes that mitigate for that.
And then, 3) they need to speak about why it matters to them, because that conversation about saying this is who I am and why this matters, both from a business case and personally, as a moral imperative, is something that male leaders can do.
PD: Switching audiences for a second, we talked about the millennials. I just came from the One Young World conference, so you have all these leaders from across the globe, 18 to 30 years old.
If you were to speak to that group of individuals, what advice might you give them as the next generation of leaders?
JVB: I might, firstly, thank you, because I love what we are hearing from this next generation of leaders in terms of their view of holistic capitalism that is powerful and works for all of us.
I would also encourage them to work in chapters.
If you look at my life, I realize I didn’t think I would start an Internet company, because I didn’t know the Internet existed when I came out of college.
So you don’t have to have it all figured out. There’s that aspect of, “What’s your next chapter going to be? What are you going to focus on that you uniquely love, that the world would uniquely value, in this chapter?”
PD: There is no longer that traditional view of career development being necessarily upwards; there are career ladders – multiple careers one can take.
When you think about what we discussed today and you think about the environment that we are in on a global scale – some of which is not so great – some of the issues that are happening right now, what, today, gives you hope for the future?
JVB: I try to be realistic and maintain that sense of hope, and to me, part of what gives me hope is seeing what I feel like is the zeitgeist of the time. As you mentioned, there is this aspect of the data being in – that the data for gender inclusion is clear; we no longer have to make that case, although we obviously need more data. Corporations are taking action, entrepreneurs are taking action, policies are happening. We are getting that flywheel, so to speak.
And then the other piece is the next generation. I have a seven-year-old daughter, and I watch her face light up when she sees Rey in Star Wars. That’s a heroine, that’s a role, that’s stepping in and saying,
“It’s taking all of us to defeat the dark side, to innovate in a different way.” And I think that that aspect of inclusive capitalism is what’s most encouraging.
PD: One final question for you – we have covered a lot of different areas based on your experience and your views, which is terrific.
Is there anything we didn’t cover today that you would like our viewers to hear?
JVB: I sometimes channel Jacki Zehner, who’s the head of Women Moving Millions. We did an event together, and at the end of it she said;
“Nobody can do everything, and everybody can do something.” And so I feel like, when it comes to gender and sustainability, there are so many ways you can participate.
You can decide to purchase differently, and there are lots of ways to purchase in a way that’s more sustainable.
You can decide to give to grassroots organizations that are empowering women on the sustainability front.
You can decide to invest and you don’t need to wait – you can invest as little as $20 in an investment note that focuses on inclusive energy companies in Africa.
Or you can go to your advisor and say, “I want to understand how my portfolio is going to be stronger because we’re starting to use the gender lens.” So give, save, invest, learn – but pick something, and start.