"Inequality holds companies, the economy and society back": Q&A with John Streur, CEO of Calvert Research & Management
John Streur - CEO of Calvert Research and Management, an Eaton Vance company - was recently in Australia to talk about developments in environmental, social and governance (ESG) investing. He spoke to Industry Moves about the transformations in the sector over the past decade, and why investors and companies need to start thinking about inequality in society, an ESG area that could arguably become more important than climate change.
John Streur - CEO of Calvert Research and Management, an Eaton Vance company - was recently in Australia to talk about developments in environmental, social and governance (ESG) investing. He spoke to Industry Moves about the transformations in the sector over the past decade, and why investors and companies need to start thinking about inequality in society, an ESG area that could arguably become more important than climate change.
How have you observed ESG investing has changed over the past decade?
ESG investing has not changed over the decade, it has been transformed. The single largest driver of the transformation for investors is the amount of change happening at operating companies. Many companies are developing expertise in making their operations and products more resource efficient and sustainable, and are also more focused on the impacts they have on individuals and society. As a result, ESG research now helps investors differentiate between the companies who manage ESG risks with excellence and those who are lagging.
In terms of the evolution of impact reporting, how far away do you think we are from all investors being informed about the social and environmental impacts of any investment they make?
Reporting on the impact that any investment portfolio has on the environment, individuals and society is the immediate next major step in the ongoing develop of ESG investing. This critical step will become available during 2018 in initial form, and will take three to five years to fully develop. As investors see the ESG risks, or impacts of their portfolio quantified, they will see material differences between high-quality ESG portfolios and those managed without ESG. That will drive demand for the information, hasten the development of impact reporting and create another level of transformation of ESG investing.
Do you think inequality in society is an overlooked component of ESG investing?
Inequality in society as a risk to investors, and as a risk to corporate performance, is a factor that has not been well researched or understood. It is an area that will come into focus during the next couple of years and become as studied as the environmental issues, as relevant - or more so - than climate change. Inequality holds companies, the economy and society back; addressing all forms of inequality is a significant opportunity to strengthen our society and economy. Individual companies are developing their expertise in this area at very different paces, and that creates opportunities for investment research.
What other factors do you think the ESG investment industry needs to focus on and/or work towards?
Education. Many operating companies are way ahead of the investment research field in terms of deploying ESG strategies for the benefit of their companies. Analysts have yet to develop the ability to analyse these capabilities and differentiate companies on this basis. Also, investors and clients are in the early stages of developing their understanding of these factors and risks.
Does the Australian ESG investment industry have particular challenges of its own that you have observed?
I had my first business visit to Australia in March and I am looking forward to meeting with some of the most sophisticated institutional investors globally. Australian investors are generally considered to be very advanced versus their global peers in terms of ESG investing, stewardship and impact reporting. I have worked with several super funds on some high profile projects including the UNPRI, Sustainable Development Goals and the Sustainable Accounting Standards Board.
What were some of the challenges facing you when you took the role at Calvert Research & Management in 2015?
Calvert has deep experience in ESG research, investment management and shareholder stewardship. My extraordinary challenge was to build on this tremendous base, and to transform Calvert along with the ESG investment industry. We sought to build state of the art research systems to broaden and deepen the firm's research coverage and to scale the business effectively. Today, looking back on 2015, I realise how hard we pushed the organization and how well the team responded. The people at Calvert are mission driven, and we established the catchphrase, "Make the world a better place and beat the market". In one phrase, we have captured the audacity of the mission and this is what has been driving the firm forward since 2015.
What do you enjoy most about your role as CEO of Calvert Research & Management?
Calvert is an innovative firm, we identify the opportunities to improve the system, do our research and establish disciplined processes to create positive change. This is what I really love about Calvert: we do original work that is always designed to create positive change. Often, the change we seek benefits those most in need. Another critical aspect of our work is that we do it from an investor's perspective, and therefore we are also helping to strengthen the free market capitalist system. Both of these elements of Calvert's work, helping those in need and strengthening the free market capitalist system, seem to be urgent priorities today.
How do you think Calvert is a leader in its field?
Calvert tackles issues that matter to society and to investors that many other investors just do not go after, and we tend to move much quicker than others. Also, our research system and use of a wide set of data is industry leading. The Calvert Responsible Indices broke new ground, as we combine deep research with responsible proxy voting and direct corporate engagement. And we have developed broad expertise in responsible fixed income, from ultra-short duration, through core bond, high yield, bank loans, green bonds; it's the broadest and deepest ESG fixed income capability of any firm. Finally, in addition to our innovative indices, we have an internal team of active equity managers who have integrated ESG research into high value asset classes like global small cap, and global large cap. Calvert leads in so many ways!
What led you towards a career in responsible and ethical investing?
The opportunity to make a contribution to my profession, to our free market capitalist system and to society - I feel incredibly fortunate to be able to do this work.
You're also a director on the board of the environmental media association, can you explain a little about your role on this board? Do you think the media has a bigger role to play in terms of promoting sustainability and sustainability in investment?
The Environmental Media Association (EMA) is based in Hollywood, California and is dedicated to working in the entertainment industry to create awareness of the need to steward the environment and build sustainability. The media is a powerful tool to educate and influence society, and the top entertainment personalities and executives have come together at EMA to build this message responsibly. I am really one of the only "investment guys" in this group, so we have been able to expand the horizons to impact investing and ESG awareness.
What advice would you give your 20-year old self?
The same thing I tell myself today; try to do a better job for friends and family, try to get the hang of personal relationships and maybe work just a little less.
Do you have a mentor? What have they taught you?
I have been fortunate to compete at the elite level internationally in the sport of rowing and sculling. I came to the sport in college, after playing football in high school. Most of the people I competed against had four years of high school, prep school rowing. My coaches had recent experience on the US Olympic Team, and they mentored me. They taught me the difference between science-based physical training and hard work; they taught me about teamwork, and that perseverance is omnipotent. They showed me how to do things today that I couldn't have done yesterday. Those lessons have translated into other areas of my life, and I am still seeking to do tomorrow what I might not have been able to do today.
For more information on Calvert, please contact:
Louise Bradshaw
Marketing & Business Development Manager
Eaton Vance Investment Managers
Tel: +612 8229 0200 / +61 (0)411 554 778
Email: [email protected]
This information is communicated by Eaton Vance (International) Management Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority and located at 125 Old Broad Street, London, EC2N 1AR, United Kingdom. This is for professional clients only. The views expressed are correct as of March 2018 and are subject to change at any time.
