He works with a volunteer agenda committee of twenty-one people from across the industry to help him sift through the 100+ proposals for speakers and session topics received every year.
Steven J. Schueth
It's an extraordinary collaborative effort among firms that compete for assets under management and investor clients on a daily basis. "In the early years of the conference," says Schueth, "collaboration among the small companies focused on responsible investing was a matter of survival within the larger financial services industry." Today, however, he says it's about meeting the scale of sustainable finance industry growth and demand for continuing education across multiple career paths.
Interestingly, over the past six years, between 30% and 40% of conference attendees were there for the first time, advancing or beginning their careers—which range from Registered Investment Advisor to portfolio manager to ESG (environment, social, governance) analyst.
“Part of the sustainable finance industry’s collective mandate for this event’s venue is a location that is accountable to investors regarding sustainable economic and business practices.” Julie Gorte, Senior Vice President for Sustainable Investing at Pax World further explains, “It’s one of the small ways we demonstrate to investors that conscious consumption and investment is about delivering value without sacrificing performance for the good.”
One look at the ambitious five track agenda for the 2017 conference suggests that attendees will have to manage their three-day schedule carefully to create “beach-time” at the Hotel del Coronado, San Diego. This writer attends every year and pays close attention to things like the Green Seal Sustainability Standards that this venue meets for “products and services based on life-cycle research, and developed in an open, transparent and stakeholder-involved process.”
Managing the large, volunteer committee responsible for the conference agenda is a year-round job for Steve Schueth. He sent the RFPs for the 2017 agenda out the day after the 2016 conference ended. However, no proposal on the UN Sustainable Development Goals (SDGs) was submitted for consideration until late in the process.(1)
“The agenda committee’s role is to create and deliver the very best content we can. And, the SDGs are becoming a very big deal. I’m predicting that the SDGs are going to become SRI 3.0,” said Schueth.
“In the beginning, SRI was ‘socially responsible investing’ and all we could do was avoid the bad actors. Nomenclature and investment processes underwent a dramatic shift when the UNPRI promulgated ESG integration, and ESG factor analysis is now the core of pretty much every responsible investment strategy out there. ESG integration is SRI 2.0.
What’s happening today,” continues Schueth, “is that investment processes are rapidly morphing toward viewing SDGs as lenses through which we look at companies and decide whether those companies are suitable for our portfolios. I think this process may become SRI 3.0.”
Schueth brought this up with the committee at an early agenda development meeting and the response was “Sounds interesting, Steve, but we haven’t heard much about this yet.” A month later, on the next committee call, several people had become aware of the growing interest in the SDGs on the part of public companies and major asset management firms. They joined in the effort to build something about this rapidly evolving perspective into the 2017 conference agenda.
“I had noticed in January of this year, as the large global companies were publishing their corporate sustainability (CSR) reports, that almost every one of them was talking about the SDGs. The CSR reports were saying, for example, “We embrace these three or four or five SDGs and we’re going to track our progress against them because they fit our market, our business, our stakeholders.” The global consumer products giant, Unilever, is perhaps the best example of a public company building it commitments to sustainability around the SDGs.(2)
”We now have two plenary sessions that are going to be looking at companies and investing through the lens of the SDGs. We will also be discussing efforts to map the SDGs against ESG factors and other non-financial criteria, like the SASB standards.”
The SDGs are more focused on outcomes than they are on how companies operate. They focus on how a company’s behavior is helping to positively impact society and the planet. Schueth believes the SDGs are lenses through which we can view that behavior and are a powerful way for financial advisors to communicate the value proposition of a particular company or investment strategy to their clients.
“I’ve been attending this conference for a number of years now,” says Sonya Dreizler, Impact Investing and Practice Management Consultant, “and I’m always impressed by the collaborative effort that creates a broad selection of continuing education opportunities for people throughout sustainable finance.”
The Financial Advisors
So what are Steve Schueth and his team doing to support the advisor community’s need for education and additional sustainable investment client-facing resources?
I mentioned up front in this article that there are five tracks on which the conference agenda will run this year. The fifth track is new and is a governance-focused track added with advisors in mind. “We’re increasing emphasis on the ‘G’ in ESG,” confirms Schueth. “Many advisors and asset managers believe that the ‘G’ is most important, certainly at a public company level. When a company has good governance ratings, active ESG asset managers tend to view this as a proxy for a well-managed organization.”
More advisor-focused content is one approach Schueth and his team are taking to make the conference more impactful. “Paul, this is probably the area where the SRI industry needs the most creative solutions,” Schueth confirms. “The analogy I use is that of an hour glass. The bulb at one end contains good products, research firms, and asset management teams. The bulb at the other end contains investors, many of them women, millennials, and institutions that want to make money and have a positive impact on the world, at the same time. The passage in the middle of the hour glass is occupied by the licensed, client-facing investment advisors. The challenge for the sustainable finance industry is how we help more advisors become educated, informed, and willing to have deeper conversations with clients, in addition to delivering the investment strategies their clients want.”
“The reason that firms like BlackRock, Morgan Stanley, and Goldman Sachs are on the playing field now is because they have a growing group of individual and institutional clients that are asking for investment strategies that are positively impactful. These firms also know that most of the assets owned or controlled by male baby boomers will transition to women and millennials over the next couple decades.”
Schueth’s point is well taken. Financial services industry investor surveys confirm the perspective that investor demand has driven and continues to drive growth in sustainable and impact investing.(3) Women and millennials, especially, want investment strategies that are more closely aligned with their ethical values and their priorities for the future of society at large. This is especially true when ideas for deploying investor capital for the long-term are being proposed during a period of economic flux and rapid technological transition toward a low-carbon economy.
As a former advisor for twenty-three years, I can confirm that trusted asset manager partners, who take the time to learn an advisor’s client demographics and the advisor’s value proposition before making investment recommendations, are worth their weight in gold.
The SRI Conference dates are November 1–3, 2017 at Hotel del Coronado in San Diego, CA.