Philippe Cousteau And Doug Heske Reimagine Impact Investing—$51 Billion Says It’s A Great Bet
Blue economy
gettyIn 2020, investors invested $ 51 billion in impact investing. This focus on ESG (Environment, Social, Governance) has more than doubled from 2019 and is due, among other things, to investors motivated by climate change, inequality and sustainability. Many predict that the White House's current focus on similar issues, along with improved technology and data, will fuel investment in ESG practices.
Philippe Cousteau Jr. and Doug Heske recently teamed up to deepen impact investing's ability to make our world better. You are not new to this arena, however.
Cousteau - grandson of Jacques Cousteau and son of Philippe Cousteau - continues his family's long legacy of innovating to honor the planet. Heske has been an asset manager for over two decades and is CEO of Newday, which offers portfolios for private and institutional investors to align their values with financial returns. In addition, Newday donates 5% of sales to charities such as Cousteau's EarthEcho.
I recently had the opportunity to interview her. Given their track record, the perspective and insights they share are worth listening to.
Chaka books: Philippe, in your Ted Talk you say: "We have lost the sense of the imagination, the wonder possibilities and the excitement associated with protecting our planet ..."
Philipp Cousteau: Absolutely. The environmental movement relies too much on doom and darkness because they are good short-term motivators. The bread and butter of the movement was philanthropy, often individual donations. A message that something is disappearing leads people to donate. But it is not the spirit of innovation and adventure that inspires in the long term. I think of my father and grandfather when you look at their films and books, what inspired so many people was a thirst for adventure, camaraderie and joy. We have to come back to that.
Books: What is the way forward?
Cousteau: We can't always say, "Stop it." Instead, we need to become a movement that “Here is a vision for a better world. Let's work on new investments and reinvents together. ”ESG investing is that and is something I've been involved in for many years. That's what I love about partnering with Newday.
Books: How does Newday determine whether a company is operating sustainably?
Doug Heske: This question is important because many organizations are accused of “greenwashing”, often for legitimate reasons. We have found a common denominator in most sustainably operating companies. Their concept of responsibility is rooted in long-term strategy and governance decisions that are becoming the main drivers of investment returns. These companies usually take a stakeholder approach as opposed to a shareholder approach when it comes to allocating capital. Not to the detriment of the shareholders, but in their favor.
Books: How does it play out?
Heske: When making decisions, these companies think about the distribution of value between all of their stakeholders - employees, customers, suppliers, the community, the environment. As a result, they acquire “contingent assets”, not from an accounting perspective, but assets that create long-term value. Contingent assets are typically not included in financial metrics. They are additional factors that are often underestimated in the market. They lead to market inefficiencies that we can exploit over time. When a company executes its ESG practices effectively, it drives future returns before they become real financial drivers that are embedded in security prices.
Books: They recognize a value that others do not yet see.
Heske: Our role as investment managers is to identify great companies. What do great companies do? They create extraordinary wealth for their shareholders, but they also leave a positive impact on the communities in which they operate. Tremendous power rests in the hands of these companies, which sometimes generate higher revenues than some countries. Sustainability work has almost developed from state to company-run functionality.
Books: Philippe, why are young people often involved in your work?
Cousteau: Young people have been the backbone of every major social movement. The best way to make change is by investing in leading and training young people. That's why I founded EarthEcho. Young people not only affect their communities, but also their parents. I've never met an adult who said, "I didn't believe in climate change until I saw that billboard on the highway." But a lot of them tell me, "My kids come home every day nagging about this and that. And now we've done this, we've done this." Changing adult behavior is very difficult. The exception is the incredible Power of young people to influence adults.
Books: What brought you to Newday?
Cousteau: About 13 years ago, I was listening to a panel that looked at the total of charitable dollars versus the trillions of market value. I thought how do we get into this business? We beg for junk as nonprofits. We started working on some initiatives and had a good run. We were a bit ahead of the curve, but now impact investing has arrived. When I met Doug, I learned how they make ESG investing accessible to everyone. I loved their vision, depth and authentic work as a catalyst for change as well as their work in education through the SIFMA Foundation.
Heske: We work with SIFMA to offer sustainability education. We provide our Sustainability Index as part of their National Stock Market Game, which is taught to more than 600,000 students. It's important that we educate tomorrow's leaders about transformative behavior.
Books: How can investing in the stock markets help our planet?
Heske: The transfer of a share of common ownership in a public company from one person to another does not have a direct impact. Investing in companies, however, increases the potential for shareholders to use their stakeholder power to demand that there be morality in the creation of value. Climate change, marine plastic, greenhouse gas emissions - all of these are symbols of the relationship between mankind and the planet. They are collective problems of action. We all have a responsibility to incorporate this type of decision-making into our daily lives. It would be irresponsible to ignore the public investment space, especially given its power. There are 100 companies, most of them publicly traded, that have been responsible for 71% of all industrial greenhouse gas emissions since 1988. It's staggering. Think of the impact we can have if we just address these 100 companies and their behavior.
Cousteau: There are extraordinary ways to invest in the blue economy and harness the power of the ocean. The importance of aquaculture is steadily increasing. Kelp and algae forests enable the renewal of marine ecosystems, carbon sequestration and job creation. They want capital flows to reward this. ESG stands for rethinking the fundamental economic levers in our society.
Books: How can people get involved?
Heske: On June 8th, we are hosting an ESG World Oceans Day event that will focus on moving from single-use packaging to reusable packaging. The world produces more than 380 million tons of plastic each year, which often end up as environmental pollutants. I recently read that we ingest five grams of microplastic - the weight of a credit card - into our bodies every week. We will have three executives who will present their work on the transition from single-use plastic to reusable plastic.
Cousteau: I'm excited because one of our youth leaders - Sadie - is on the podium and we will also hear the youth perspective. It will focus on innovation and investment in solutions. Not the downfall and the darkness, but the opportunity. How do we come together to resolve this? Where is the innovation and technology?
Heske: There is a long list of organizations supporting this event. SIFMA encourages its community to attend the event. There are seven or eight other impact investment firms that are backing it. This is great news as there is growing recognition that if we pool our efforts to promote transformative change, we can move the needle in really meaningful ways.
The conversation has been edited and condensed for the sake of clarity.
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