we made our first investment in 2010 with a target of 20 percent
of the portfolio as kind of a test-the-waters strategy.
By 2014 we had exceeded that target allocation, and we surveyed the family, asking if they wanted to do more or if they
considered 20 percent reasonable and wanted to stay there.
They responded that they’d like to move to 100 percent. So that
directed us to rewrite their investment policy statement to integrate ESG and sustainability-themed investing across their
That was finalized at the end of 2016. This year we have been
looking diligently at what we have in the portfolio, how we
integrate or migrate the existing investments into ESG or
sustainability-themed investments, and from there how we
develop a strategy for filling in the blanks.
The family’s desire to move to 100-percent ESG and sustainability investing came about as a result of our listening to their
discussions about legacy. The office, like many family portfolios, is structured around long-term, generation-skipping
trusts. When you think about legacy, you think about passing
on the wealth through these long-term trusts, but our clients
were saying, “Yes, that’s important, and how that wealth is created for those future generations is equally important.” One of
our clients said, “It’s important to me to pass on wealth to
future generations, and I don’t want to tell them I’ve pillaged
the earth to do so.” That statement is our guiding light as we
think about sustainability or ESG investing in the portfolio.
Margaret M. Towle: Debbie, you seem to have a slightly
different perspective when it comes to ESG investing, including the use of big data in your investment process. How did
you get involved in impact investing, both personally and
Debbie McCoy: In my case there is a significant personal and
professional overlap. I decided early in my career that I wanted
to invest my time and invest capital in projects or companies in
which I could clearly tie my work efforts to some form of social
impact, and develop a deep understanding of how company
actions impact society.
My extensive work in emerging and frontier markets brought
me to sustainable infrastructure and private equity investments
in Asia and Africa, and introduced me early on to the ESG principles and impact investing. That introduction captivated me.
My interests also prompted me to pay close attention to ESG
and impact in public capital markets.
I came to BlackRock and to my role in ESG sustainable impact
investing as part of our firm’s quantitative, systematic active
equities team because of my ongoing fascination with just how
much publicly listed companies affect the world around us.
Stephanie, joined the foundation that we hired a millennial
portfolio director, Eric Stephenson.
The two of them came to us with an idea that a lot of millennials now want to do in their family portfolios. They said, “It’s
great that we’re doing 40 percent in the private sector, but why
aren’t we 100 percent in impact investments?” At that time, our
public portfolio was still very traditionally invested through a
number of institutional separately managed strategies, and the
reason was that I hadn’t paid enough attention to what was
happening in the public space, what I now consider the evolution from “Socially Responsible Investing 1.0” to “ESG 2.0.”
Though I was at the cutting edge of a revolution on the private
side, I was still living in an old paradigm of what was happening on the public side.
As Eric and Stephanie opened our eyes to this option, we
began to read and participate in a lot of research, and in 2014
we ended up being one of twenty foundations that made a
commitment at the White House to move to 100-percent
impact investing. Today, our holdings are about 50-percent
public, 50-percent private, and we’re 100-percent invested for
impact, including our cash, which supports a couple of community development financial institutions. I’m also involved with
two other much larger balance sheets. One is ImpactAssets,
which is about a $350 million donor-advised fund I helped
create in 2011. That platform has about a thousand clients
who are investing for impact. We also own a significant private
equity interest in an investment manager called MicroVest,
a $400 million private debt and equity fund manager rooted
in microfinance and now investing throughout the global financial inclusion sector.
In addition, every fall we co-convene the Opportunity Collaboration, a global conference focusing on social entrepreneurship
and impact investing. These gatherings have brought together
asset managers and folks from some of the major banks, and a
number of new funds have been formed as a result.
Margaret M. Towle: Rochelle, you are next. Please tell us how
you developed your interest in ESG investing and what you are
Rochelle Gunn: I have worked for the same family for nine
years, and it’s a single-family office. Before that, I worked for
another family for ten years. Near the end of my work with the
other family office, as part of general due diligence, I discovered a firm out of London that was doing ESG and climate-related investing.
This firm didn’t have a very long track record at that time, but
it was very interesting. I carried that due diligence knowledge
with me over to the family I’m working for now. In 2010, the
family expressed an interest in pursuing ESG strategies, and