Episode Transcript
Johannes Lee: You can invest in the climate transition while generating at, or above, market rate returns.
Tony Campos: Hi, welcome to FTSE Russell Convenes. I'm Tony Campos, Head of Sustainable Investments at FTSE Russell. I'm here with Johannes Lee, an Investor with Builders Vision. Thank you so much for joining us today. We're going to be talking about sustainable investment. Johannes, great to have you.
Johannes Lee: Great to be here.
Tony Campos: Sustainable investment. A constantly evolving space, very interesting topic, lots we can go through. Before we kind of do that, let's set the scene a little bit. Can you tell us a little bit about Builders Vision and your work in sustainable investment?
Johannes Lee: Builders Vision is the family office and impact platform of Lukas Walton, who is the grandson of Walmart founders Sam and Helen Walton. We basically invest across three key thematic areas and that's healthy oceans, sustainable food and agriculture, and renewable energies. The family office and impact platform was really created was because Lukas saw that there's all these key pieces in between ranging from nonprofit all the way to market rate investing. And each piece has a piece to play in solving the climate challenge. And so bringing everything together into one organisation was something that was really important for him, and our mission is to build a more sustainable, healthy and humane planet.
Tony Campos: That's a terrific mission. Now, I want to understand a little bit more about the portfolio, so maybe if we can go into the sort of investment side of things, lay of the land, right? So you gave us the themes, you know, oceans, food, energy, maybe asset classes, and sort of an active passive kind of dimension. Give us a sense of sort of how the portfolio plays out.
Johannes Lee: Definitely, so we invest across basically every asset class that you can think of, I think with the exception of crypto. And we really, we have a lot of active investments, specifically on obviously the private side. We do a lot in that space. On the public equity side, we have a few active managers that basically we use to complement the more ballast of the portfolio, which is in passive investments. There we use everything from traditional screening to things like the transition pathway initiative, where we're on the steering committee, and try to have as much impact as possible while still having a diverse exposure.
Tony Campos: OK, so the Transition Pathway Initiative, you know, that's that global alliance of asset owners, asset managers, you know, trying to measure and manage portfolios for sort of the low carbon energy transition. Certainly an area that, you know, we've done a lot of work with in terms of FTSE Russell. And the passive piece is really interesting there, right? Because I think there's often a kind of conversation around active versus passive. But it seems like, you know, you've been able to dedicate some assets into the passive portfolio, particularly on climate.
Johannes Lee: Definitely, definitely. We have an endowment. We, at Builders Vision, we range all the way from a philanthropic grant-making endowment through to first loss pools of capital, through to even a venture capital firm and then to the team that I sit on, which looks to get market rate returns.
Within that, we have hundreds of millions of dollars dedicated to passive investments. And even within the endowment, we have forty percent of a one point seven billion dollar endowment invested in FTSE TPI Indices, which are focused on climate change and climate transition.
Tony Campos: But with that kind of market rate characteristic risk return protocol.
Johannes Lee: Exactly. Exactly.
Tony Campos: I'm sure it wasn't all sort of smooth sailing, right? So there's got to be some challenges. I often, you know, am heartened to hear about some of the work that an organisation like yours is doing. But I know there's plenty of other asset owners and clients that are struggling with the challenges. And in particular, in sustainable investment, you know, there's a lot of uncertainty. So, you know, it's a rapidly evolving space, regulation, data, technology, policy. These things are going to be constantly evolving. It feels like it's been around a long time, but it's still quite new. How do you think you balance that need for action today with the fact that we have imperfect information and a rapidly evolving context in sustainable investment?
Johannes Lee: I think that's really the question that you're getting to there, Tony. It's really, really difficult, but I think rather than wade into the argument whether or not we should consider all these different factors, how we should consider them, I think the best thing to do is just use all the available information that you have to make the best investment decisions based on return and risk parameters that you can. And so that's something that we've actively been trying to do.
There's people that don't really want to use all the information that's available and that's fine. We'll take advantage of the information asymmetry to just generate the highest return we can.
Tony Campos: And part of that information must come from discussion and dialogue with the companies you're investing in, right? So, you know, stewardship and engagement. I know that's a crucial part of the Transition Pathway Initiative and their work, and certainly we've been a part of that from a FTSE Russell perspective, but I'd really like to hear from you kind of where stewardship and engagement fits into particularly around climate transition, but in sustainable investing in general.
Johannes Lee: It's incredibly vital, and it's actually something that we've been working on a lot. A few weeks ago, we actually just hired our first head of stewardship, which is very exciting. They'll join us later this year.
In the meantime, we've been doing a good amount of engagement through coalitions such as Ceres Food Emissions 50, Climate Action 100+, and then also just being part of the TPI Steering Committee. We really take a lot of all of that very seriously, and we're trying to make as much change possible, but it can't just be us, and so we've also been engaging other asset owners, other investors, trying to show, really, demonstrate to other institutional investors that you can invest in the climate transition while generating at, or above, market rate returns.
Tony Campos:I think that's a really excellent note to finish on. I love the sentiment of that. Thanks so much for joining us, Johannes.
Johannes Lee: Thank you very much.
