Shanny Basar talks to Julie Moret, the new Global Head of Sustainable Investing and Stewardship at Northern Trust Asset Management about having an information edge, avoiding greenwashing and taking measured risks.
Julie Moret is hugely excited after joining Northern Trust Asset Management on 4 May this year in London in the newly created role of Global Head of Sustainable Investing and Stewardship. She said: “We are at a pivotal stage in the sustainable investment landscape and, as data continues to improve, there is so much opportunity to innovate.”
Moret was previously Global Head of Environmental, Social and Governance (ESG) at Franklin Templeton.
Shundrawn Thomas, NTAM President, said in a statement: “Julie brings deep expertise and keen insights in all facets of sustainable investing and stewardship. Her investment acumen and product knowledge span all major asset classes, geographies and industries.”
NTAM’s combination of ESG integration with stewardship, which Moret described as unique, was one of the main drivers that made her switch jobs. Another driver was that Northern Trust Asset Management has more than 30 years’ experience as a leader in sustainability.
“I certainly felt that the organisation was not only speaking the rhetoric, but acting out its values in a very clear, transparent and actionable way,” said Moret.
In a new role Moret has a clean slate. The foremost priority is how NTAM continues to source the best-in-class ESG data and alternative datasets and develop proprietary tools, research and insights.
Moret said: “I think that, increasingly, what will set asset managers apart is the depth of their research and insights which ultimately leads to having an information edge.”
At Franklin Templeton Moret was responsible for building out a foundational data infrastructure platform that wove ESG considerations into the investment process. Trusted ESG metrics and data are critical in helping investment managers avoid accusations of greenwashing, or misleading clients about their ESG credentials.
“Asset managers have to manage greenwashing by being very clear around their investment objectives and evidencing the implementation and application of ESG issues,” said Moret. “Regulation will also drive enhanced data disclosure from corporations over the longer term.”
In May this year the asset manager introduced the Northern Trust ESG Vector Score™, which uniquely marries together disclosure under the Sustainable Accounting Standards Board (SASB) with the anticipatory framework from the Task Force on Climate-related Financial Disclosures (TCFD). Moret said the score assesses how publicly traded companies are performing on the most business relevant, financially material ESG issues and provides a more fulsome representation of risk across climate, social issues, and governance that can impact asset performance.
“The multi-dimensional risk signal incorporates not just a historical view of how companies have been managing to these issues but also how companies perform relative to their peers,” she added. “More importantly it gives a forward-looking assessment of how companies are managing ESG issues.”
The output of the ESG Vector Score aligns well with NTAM’s fundamental philosophy that investors should be compensated for the risks they take in all market environments and brings clarity and transparency in order to avoid greenwashing. If companies have a low score, that is a signal for further research and they could potentially become a target for engagement.
“There is a recognition that things aren’t black and white,” said Moret.
NTAM will continue to invest in technology to optimise workflow efficiency and support evolution of ESG in the investment process. There is also a commitment to review how NTAM extends the proprietary research and modelling of the ESG Vector Score to other asset classes outside listed equities.
Moret’s second priority is moving the engagement agenda forward, not just on climate, but also on human capital issues around diversity, equality and inclusion. Other priorities include client connectivity and industry advocacy.
“It’s incredibly important to be engaged with our clients and have their input into our thinking in a close collaboration,” she said.
Moret continued that NTAM has a responsibility to lean in at the ESG policy and regulatory level as a $1.1 trillion asset manager. “A huge aspect is ensuring we have a voice at industry associations, to promote ESG integration best practice and improve ESG data disclosure,” she said.
NTAM is a founding signatory of the Climate Action 100+ initiative that engages with 167 companies representing 80% of corporate greenhouse gas emissions globally, and a founding member of the One Planet Asset Manager Initiative. These investor collaborations are critically important, according to Moret, as they have the end-goal of encouraging corporates to disclose sector-specific material information.
Moret herself has been a member of sustainable investment industry organisations including the Investor Advisory Group at SASB, ICI’s ESG Working Group and ESMA’s Stewardship, Market Integrity and ESG Investment steering committee. She believes investors have a role to play through engagement, stewardship and encouraging best practice around the measurable ESG metrics that will be useful in investment decision making.
There are also important ESG metrics that do not come from corporate disclosures, such as labour disputes, where NTAM has to be guided by its own research and insights and frameworks such as SASB. Moret described these metrics as “pre-financial indicators”, as companies that do not systematically manage areas such as human capital over the medium to long-term can ultimately impair value.
“The global pandemic has exposed the fragility of workers in certain segments of the economy who have been left with very little financial or healthcare protection,” added Moret. “It has shone a light on these human capital issues whereas historically in ESG, the focus has been on the E.”
Moret said the biggest surprise since joining NTAM has been the weight of importance placed on the wellbeing of its people, who are referred to internally as partners, and the investment in talent and talent management, which signals the long-term nature of the organisation.
“Diversity, equity and inclusion is a key pillar of strategic focus for us as an organisation and that is set from the top down,” she added.
NTAM’s senior management left a very strong impression on Moret as more than half, 65%, of the firm’s global executive committee is gender, racially and ethnically diverse, which she said spoke volumes.
“It underscores an organization’s commitment to the value of managing these issues as a long-term driver of success,” Moret added.
The same thinking extends into the asset manager’s stewardship activities. For example, NTAM advocates best practice as at least 20% female representation on boards when engaging with corporates, In the US there should also be at least one ethnically or racially diverse board member.
Moret studied economics and believes this laid a foundational groundwork to understand ESG issues through an economic financially-based lens and connect them together. The other aspect that deepened her interest is recognising that these are additional dimensions of risk, that complement the traditional quantitative measures, and can lead to value destruction if they are not managed by companies.
Taking measured risks is a contributing factor that has helped Moret find success in her career. She said: “It’s really important that we continue to ask ourselves what’s holding us back and what makes us scared.”
For example, when Moret moved from Aviva Investors to Franklin Templeton in 2013 she was a first-time mother and took the role of Head of ESG from maternity leave. “However, if I had not taken that risk I wouldn’t have been led to the fantastic opportunity I now have,” she added.
Her nine-year old son demonstrates the changes in consumer behaviour that will impact investors over the long-term as he is taught about climate change through an age-appropriate lens at school. This signals that for younger generations, ESG will inherently become part and parcel of their DNA so asset managers need to take into account, and price, the externalities of what a company produces.
Although Moret is inherently an individual that likes to take on challenges, she stressed that she doesn’t take blind risks.
“I take measured risks and as people say, ‘no risk no return’,” she explained. “The fact that I’ve joined a new role during this kind of unique and challenging time is a testament to how worthy it is to keep taking risks.”
Her advice to women looking to work in finance is to not be afraid of taking risks, or of leaning in, as there is increasing recognition of the value of having diversity of mindset and experience when making decisions.
Throughout her career Moret has proactively sought out mentors and sponsors as she believes both are required. Mentors are individuals that act as a sounding board and provide guidance, whereas sponsors are those that advocate for you and put you forward. “You need drive, determination and to build up your network inside and outside work, because you don’t know where some of those connections will take you in life,” she added.
In the latter stages of her career Moret has realised that being authentic is critical for instilling trust. “This means having confidence to show up as the real you, both in a professional and personal capacity,” she said.
She also recommended clarifying a personal definition of success to determine the stepping stones needed to get there, and making sure that you voice that within an organisation. Moret concluded: “A contributing factor to success is not just your technical knowledge but also emotional intelligence and people skills. There is not one silver bullet.”
NTAM is a Sustainability Accounting Standards Board (SASB) Investors Advisory Group Member and an official supporter of the Financial Stability Board Task Force on Climate-related Financial Disclosure (TCFD) – a consortium established in 2015 to develop a voluntary, consistent framework for companies to disclose climate-related financial risk to investors and other stakeholders.
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