My first job after college was working for Brock Evans, a respected environmental leader, to successfully protect 44,000 acres of old growth redwoods known as Headwaters. When I told Brock that I wanted to follow in his footsteps, he surprised me by telling me to go to Wall Street. Very wisely, he told me that learning about, and harnessing, the engine of commerce would be the most impactful way to protect our planet. Thus, decades before the concept of impact investing was coined, I went from an environmental intern to a hedge fund investor, global venture capitalist, and even a White House infrastructure executive - all while following Brock’s advice of leveraging capitalism for conservation.
Almost twenty-five years have passed since I first worked with Brock, and the world has changed a lot. Climate change is the defining challenge of our generation. Many of the largest global economic trends such as clean energy and electric mobility have their roots in sustainability causes. ESG is on the agenda of most Fortune 500 companies. Most importantly, leveraging the power of ~$80 trillion dollar global stock markets is seen as a key climate and sustainability solution. This is a true sea change that I believe will lead to the betterment of our planet.
When I was younger, mentioning any of these “hippie” terms at a mainstream investment committee would be laughable. Now, impact investing is flooding the capital markets with billions of dollars of new funds branded with new and often confusing ESG jargon, screens, and metrics. However, the biggest risk to the long-term future of sustainable investing is the entry of inexperienced investors, opportunistic asset gatherers, and undifferentiated and/or insubstantial investment strategies. Any combination of the former will likely lead to poor returns. The market needs veteran investors with strong track records who understand that sustainability is a source of investment returns or alpha, not just a marketing campaign.
This is the primary reason I joined Terra Alpha’s Board of Advisors. Terra Alpha stands apart from its peers. Tim is an investment veteran who managed $26bn at one of the world’s premier firms. At Terra Alpha, he melds the best practices of “Wall Street” and couples it with the innovative insight that sustainable investing is an information revolution, and not a “philanthropic” one. Terra Alpha is pioneering the deep integration of material sustainability strategies and data, such as carbon efficiency, into a rigorous, fundamental stock-picking process. Tim and his team recognize that critical investment information is no longer limited to financial statements. Key environmental productivity data can be an informational “edge” in identifying the best investments (as well as avoiding risky ones). Terra Alpha’s ability to harness and use all the available data is the natural progression to better investment returns, and in my opinion, a better way to invest.