Katherine Collins – Impact and ESG Investing - [Invest Like the Best, EP.129]

My guest this week is Katherine Collins, who is the head of sustainable investing at Putnam Investments, a portfolio manager on two of Putnam’s sustainable investing funds, and the author of the book The Nature of Investing: Resilient Investment Strategies through Biomimicry. Our conversation is on the ins and outs of ESG and impact investing, a young but increasingly common topic in the investing world. This is challenging ground for me as a quant, because the data available is so new and limited—so Katherine’s perspective was very helpful as we continue to learn. Given the importance of this topic, I’m also searching for more guests with both positive and negative views on the role of ESG in an investing framework, and welcome suggestions for future guests. Please enjoy my conversation with Katherine Collins. For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag Show Notes 1:29 - (First Question) –Mechanical vs human judgement processes 4:21 – ESG, and the non-utility portion of it. 7:11 – Data behind the objective function that is different from returns 12:34 – What are the most interesting data sets 16:04 – How does she determine what factors to target 19:31 – Why do we know that diversity of experience/opinion/background is good for a company 21:30 – The social vertical and how it plays into her investing system and better returns 25:51 – Corporate Sustainability: First Evidence on Materiality 27:00 – Environmental factors and the issues that jump to mind 29:48 – Importance of signing the UNPRI and is it just box checking 32:33 – Data for companies on the solution oriented companies 34:53 – Why doesn’t the market recognize the Alpha 36:17 – LP interest in ESG investing 38:25 – How other groups of investors approach ESG 40:03 – Best practices at business making an impact in ESG 44:01 – Unique or interesting tactics in environmental 46:33 – Who is the biggest opponent or position in opposition of ESG 47:37 – Most interesting edge 48:20 – Playbook for business managers thinking about social for the first time 49:59 – Measurements vs principles/values 51:21 – Advice to quants trying to use ESG in how they gather data 53:04 – Most memorable encounter with a company through the lens of ESG 53:53 – Where to learn more about ESG 54:50 – How much role regulation plays in the future of business sustainability 56:30 – Any more lessons from her research into natural systems 57:05 – Kindest thing anyone has done for her Learn More For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag