BlackRock's Winshel: Millenials Driving Impact Investing(Audio)

months is raising doubts about the economy strength. The Labor Department report showed employers added one hundred sixty thousand workers in April, missing the two hundred thousand jobs that economists estimated. The jobs rate was projected to ease. Instead, it held steady at five percent, while wage growth accelerated. We check the markets every fifteen minutes throughout the trading day on

Bloomberg Radio. Down Industrial Average is up fifty three points three tens of a percent, trading at seventeen thousand, seven hundred fourteen. SMP five thundered up three points an eighth of a percent at two thousand fifty three. Then as Jack is up eight points an eighth of a percent

at forty seven twenty five. Plus Texas Cinemedia crude oil ups of barrel to about gold is up eighteen dollars thirty cents an ounce at six and the ten year Treasury is down eight thirty seconds with the yield of one point seven seven And that's a Bloomberg business flash. This is taking stock with Gadleen Hayes and Pim Fox on Bloomberg Radio. Impact investing, investing that does more than just look at the bottom line of dollars and cents. It looks also at the bottom line when it comes

to the Earth and the Earth's resources. Sustainable investing. Well, here to tell us more is Debrah Winchell, Managing director, Global head of Impact Investing for black Rock. They have over two hundred and twenty five billion dollars of assets under management and they've got a new Impact e t F. Debra,

thank you very much for coming into the studio. Appreciate it having me what tell us about what is how do you define impact investing and then maybe you can use that as a lead into the new e t F and how that expresses what you're trying to accomplish. Sure impact investing or sustainable investing, there are lots of names is looking for investment opportunities that have more than just a financial return. They also generate an environmental or

a social outcome at the same time. Now, this generation of both the financial outcome and let's just call it well being in general, how do you define that well being? Part of it the goodwill that the company will generate by providing these kinds of sustainable investments well as specifically

as possible. And I think that's really the goal of the investments that you see out there, and that we offer very specific definition around a climate outcome, perhaps companies that have lower carbon outcomes or more carbon efficient or

other outcomes along social or environmental dimensions. It could be around diversity, or how employees are treated, or the products that they create, health products perhaps that address certain issues that are particularly complicated or that are you know, very

serious in the world. Tell us about some research that you've done at black Rock that indicates that the potential investor, who is now let's say a millennial, is very interested and that this is an important factor when they're considering an investment. Right. Well, it's interesting, there are a lot of demographic changes that we're seeing that are really driving this interest in impact investing or sustainable investing. First of all,

certainly with millennials. I think you see it in the companies where we work as well as what we see with investors. There's an increasing interest by millennials to make sure that their investments have both a financial return and a social or environmental return, in the same way we see with women who are increasingly inheriting or generating more of the financial assets, and that trend is continuing significantly

over the next twenty years. Women also are looking for their dollars to accomplish more than just generate a return. So those are two very significant demographics that are driving this interest and sustainable investing. And I would say that you see it both on the investing front and you see it on the consumer front. You see it really the way that I think millennials and women look at

the world today. Your own personal background has both of those components as well, because previously you were at JP Morgan, but also you were the head of the Robin Hood Foundation, and you were also the chief financial officer and high level executive at the Metropolitan Museum of Art. How did those two career paths come together with this impact and

sustainable investing. Well, I think first, growing up in finance allowed me to take a very rigorous approach to thinking about problem solving or creating products, both at the met and where I was the CFO, but in a very mission driven organization where we had to think about both um outcomes that were entirely related to the mission of the organization, but also the bottom line so it could

be run in a very effective way. At Robin Hood, I had the opportunity to really learn about poverty fighting from just one of the best poverty fighting organizations I think in the in the world, and the what Robin Hood brought was a lens of metrics. How do you measure and compare one intervention to another? And I think putting metrics around something as difficult to measure as poverty fighting was very instrumental in what I could bring to

Black Rock. Putting metrics around environmental or social outcomes or impacts give us an idea of the conversation that someone might have with the chief executive of a company that is debating the value of sustainable investing in whether that ought to be part of their corporate message or whether they perceived that to be just a kind of the flavor of the month. How did you have that conversation

with the head of the company. Well, companies who are actually the ones who are being invested in UM, I think, are increasingly focused on what their impact is on the world. You see it with consumer companies as they look at their supply chains. You see it with lots of companies around environmental impact. We certainly saw with COP twenty one and the focus on climate that lots of companies are starting to think about both their products and their operations

in terms of how they impact the world. And I think companies are becoming very sophisticated about appreciating how consumers, investors, many stakeholders are focused on responsible operations. Do you believe that the companies will be less reticent about supporting sustainable issues that not necessarily have anything directly to do with their company, but just because they are, let's say, a public face, will they be supporting more of these climate

change and sustainable investing initiatives. I think companies globally are becoming more sensitive to and most and more supportive of initiatives of this type. I think a lot of companies are actually facing the an impact of environmental or climate impact. It actually affects their bottom line, So I think there's both the operating risks and opportunities the companies see. I think there's the consumer awareness and now increasingly there's the

investor focus on these outcomes. I think looking at all these different factors all impacting companies is definitely elevating this as a focus for leadership across the globe. The exchange traded fund give us the details. Well, the most recent fund that we launched is an e t F and exchange traded fund that is tied to the sustained the u N Sustainable Development Goals. So it's an index that constructed around companies derive a large percent of their revenues

from activities related to those goals. So it's one of the first times that there's been an investment opportunity where you can invest in companies that are specifically focused on

those outcomes. Looking at the u N s TOW Sustainable Development Goals was a very clear way of selecting a set of criteria that already has a large sort of support and following well, just looking at some of the holdings of the Eye Shares Sustainable m s c I Global e t F, taking a look at the lead company value in France, looking at water and treatment facilities, Schneider Electric, big engineering firm A b B, as well as Pierson PLC. I think a pierconis and education company.

How does that fit into this sustainability look. Education is a leading issue globally UM advancing education in terms of RYE in elevating UM the level of income around the globe. I think all of these companies derive revenues from something that's specifically related to improving the circumstances of the world or the population of the world. One of the most complicated, I would say elements of all of this is getting good data and measurement, and that's something that black Rock

is extremely focused on. Can we create opportunities that have a specific outcome that we can measure that investors can say yes, that's something that would be very appealing to me. And I just want to correct myself. I was wrong. I was thinking of Suez, which is also in the e t F that is the uh forerunner of the water company. But value of making automobile parts. Does this mean, for example, that coal companies or those that are companies that are focused on fossil fuel, would they ever have

an opportunity to become part of this sustainable investing. It's unlikely that a company that derives the majority of its income from fossil fuels would be a leading part of of an index like that. On the other hand, you sometimes see the companies that are most entrenched in some of the traditional forms of energy are also the ones that are leading some of the most innovative work around renewables. So one of the things that I think is a

challenge is finding investments that are just pure plays. A lot of time, companies that are doing some of the most innovative and exciting work can also have some traditional businesses that you might not associate with those outcomes. And and just the last point to you this e t F. This is something that Black Rock is gonna put its own, uh sort of muscle behind to popularize. Yeah, we had a launch a couple of weeks ago on Earth Day.

We partnered with the United Nations and had a launch and rang the bell and you know again, we're creating a platform of products across all asset classes. That is an effort to provide opportunities for lots of different investors across the globe to have the opportunity to make impact investments. Thanks very much for sharing your thoughts and educating us. Debra Winchell, Managing director, Global Head of Impact Investing for black Rock