Rephrase the speaker note

Author 1

October 19, 2018

Professor Frank Werner

Sustainable Finance

Speaker Summary: Alexis Schwartz- Bloomberg

In Alexis’s speech about Bloomberg, she discussed the importance of ESG, or environmental social governance. While ESG means different things to different people, it can be described as a “catch-all term covering Environmental, Social and Governance issues perceived to be relevant to company performance, risk, profitability and overall existence.” While many investors had not thought about ESG in the past, 18% of current investors are thinking about adding ESG to their portfolio due to its stable growth. Of millennials, 37% currently own ESG stock, while 40% are interested in adding to their portfolio. Even when the overall market isn’t doing well, high ESG stocks tend to do better because they are considered investments with a smart beta strategy. With the smart beta strategy, annual returns proved to be higher when a portfolio introduced an ESG stock.

One thing Alexis stressed was the importance of materiality and transparency in relation to ESG. Materiality is factors that are closely related to the profits of a business and is specific to each company depending on their industry. After the recession in 2008, materiality became a key factor when investing in stocks. People were insecure about investing in companies because they feared the companies were doing unethical things. They also wanted the companies to be able to survive another recession, so the key to investing was strong companies. Companies with a higher ESG score were more likely to survive in the environment, so these companies thrived.

One thing Alexis said that I found interesting is that as millennials come into power, they influence the way the stock market works. She said that even though the majority of high schoolers are not investing in the stock market, they are having an influence on whether companies are adding companies that encourage gun usage to their exclusion list. An exclusion list is ideals that a person may not agree with and therefore choose to not invest in associations with them (ex: The Catholic Church would not invest in any companies that support abortion). While exclusion lists are the most popular sustainable investment policy, ESG integration is second. As millennials, we are more aware of the environmental problems the world is facing, and we are able to prioritize ESG when investing in the market. I think ESG will become as important to my generation as exclusion lists.

Bloomberg began covering the ESG product in 2009, covering about 3,800 companies. From 2009 to now, the data set has grown from 72 to over 900 fields. More than 12,242 customers use the ESG data. The data most used include governance, executive compensation, and environmental data. I think it is important that Bloomberg has taken initiative in gathering data for ESG and making it an important factor to help investors make better informed decisions on the companies they are investing in.

Author 2

Speaker Summary – Alexis Schwartz

19 October 2018

Alexis Schwartz came to our class and talked to us about the role Bloomberg was playing in the field of sustainability. She noted Bloomberg’s commitment to sustainability and the advancements they have made to ensure that companies are properly keeping track of their own efforts to remain sustainable. The Bloomberg terminal is an extremely powerful tool to use for anything business related, and this includes the topic of sustainability.

Alexis started by talking about the many different definitions of ESG ( Environmental, Social, and Governance) and how this affected how companies recorded it. One point Alexis emphasized throughout her talk was the trends towards investors caring about ESG.

In the past, Alexis noted that investors looked at exclusion lists as a way to be a responsible investor. Inclusion lists referred to ETF’s that did not include companies that dealt with things such as weapons, drugs, and other things of that nature. Up until recently, that was largely the only criteria that mattered to be considered a responsible investor. Alexis noted exclusion lists were the #1 ranked sustainable investment policy. The current trends have shown that ETF’s that are focused on the ESG of companies have become more popular and they were ranked #2 on the sustainable investment policy rankings, despite only being introduced in the last couple decades. The reason for their popularity is not only because of their positive socio-economic effect either. Along with the main narrative of this class, ETFs that have a focus on ESG are also providing positive returns for investors. One of the most valuable traits about these ETFs is that they tend to have less volatility than ETFs that do not focus on ESG. Alexis noted that this is one way companies are able to manage their risk. With the economy expected to go into a recession at some point in the next couple years, ETFs with higher focuses on ESG can be expected to have less volatility, making them more valuable during times of a recession.

Using Bloomberg as a tool can be useful to anyone looking to prepare for a job, as Alexis noted, or anyone in a job looking to find extra information. The amount of data that is kept on Bloomberg is invaluable, especially when it comes to sustainability. Alexis went over Bloomberg’s ESG function (BESG) which broke down companies and tracked different areas of their sustainability. Bloomberg is helping to make the term of ESG more comparable across companies so that investors have a better idea of what ESG really means on a company-to-company basis. One thing that Alexis talked about that I thought was fascinating was the fact that Bloomberg was able to warn Equifax about their security breach a year before it actually happened. They were able to figure this out based on the information provided by the company and their internal analysis of the information. She also took us through a simple analysis of Abbvie, a company that on the surface looked like it was relatively safe. Through her analysis, Alexis was able to uncover concerns regarding their main drug, Humira, and their dangers to their global sales.

Bloomberg sees the importance of sustainable responsibility and the actions they have taken to incorporate it into their software shows their recognition. As we continue to point out in class, sustainable investing is socially responsible and profitable. Bloomberg is helping investors take note of this and take advantage of it.

Author 3

Professor Werner

Sustainability and Finance

Speaker Reflection

19 October 2018

Bloomberg & ESG- Alexis Schwartz

Alexis Schwartz’s presentation about her work at Bloomberg was fascinating. I had no idea that there was such a large outlet for sustainability focused jobs. I also have a great appreciation for Bloomberg’s ESG functions. Her presentation was engaging, informative and inspiring. I really appreciated her enthusiasm and varied experience with sustainability. Similar to our previous speakers, I found myself thinking about the future application that this information could have on my job and company next year. I am excited to become involved with J.P. Morgan’s sustainability efforts. Alexis’ presentation and information detailed the data driven and organization of companies in a way that really aided my understanding of how to understand, find and utilize sustainability data.

Alexis highlighted the extreme importance of materiality and transparency. She defined materiality as the data points that Bloomberg has decided to make a difference in a company’s sustainable performance on a sub industry level. There are countless fields that the data could be categorized into, however there is a large discrepancy in the validity of the data. Although a lot of companies have started to partake in Corporate Sustainability reporting, there is no standard for reporting and as Alexis discussed the sources of reporting and data are hard to decipher. The transparency of the data is crucial. A company could be operating with extreme efficiency and sustainability but if the company does not openly and succinctly report their work, it is near impossible to validate and affirm the companies great work. The concept of materiality and transparency are vital to the beginnings of sustainability reporting and as Alexis explained are key elements within her career.

I appreciated Alexis’ references on how to market and sell sustainability to businesses and enterprises who may be overly concerned with profitability. Her research, data and facts support that sustainability and ESG (Environmental Social Governance) has great positive correlation to profit and will continue to have an even stronger positive relationship. Even for those who do not yet appreciate the global affects, there is proof that ESG research and investing increases return and profit. Alexis talked about how there is increased risk and volatility of companies and investments that have poor ESG ratings. High ESG ratings are indicative of a good long-term investment, especially within ETFs.

Another topic that I found very interesting that Alexis mentioned towards the beginning of her presentation was in reference to what our current society sees as moral and immoral for a company and person. She mentioned that the money will follow the next generations perception of what is wrong and what is right. This concept that the landscape of morality will dictate where the assets and money end up is very engaging and exciting. Her information about the Bloomberg functions are then crucial as we evaluate a company’s performance and profitability. In order to accurately project a company we need to utilize the great data and information that Bloomberg has available to us. Even the supply chain management functions alone are astounding. I am very excited to have new information about how to find this data on companies through Bloomberg.

Author 4

Sustainability of Finance

Speaker summary-- Alexis Schwartz

Prof. Werner

Oct 19, 2018 

Alexis Schwartz： ESG in Bloomberg

This week, Alexis introduce us ESG overview and Bloomberg. ESG stands for Environmental, Social and Governance. Usually, analysist would use top down approach to look for ESG opportunity and in ESG risk management. There are 20 trillion dollars potential in ESG industry. 18% of people care more about ESG factors. Factors considered includes: carbon footprint, resource use, waste reduction, compensation, product safety and gender equality.

There is growing evidence that suggests that ESG factors, when integrated into investment analysis and portfolio construction, may offer investors potential long-term performance advantages. ESG has positive influences not only for IRR but also have high correlation between ESG rating and violatively. Therefore, in the long run, mutual funds are the largest investors for ESG.

There are several reasons for doing ESG such as want to be responsible for sustainability, risk management and management of quality. ESG is intangibles that make up the highest proportion of corporate value( book value).

Exclusion lists remain the most popular sustainable investment policy. There are two ways to look at ESG: not to do something bad or active ESG rating, which is from self-interest loop to do something good for the planet. Even firms or individuals don’t have money in the market, it is still possible that can push the sin industries. But consumer views and practice vary by country, and they follow the morality by country.

Materiality and transparency are important for ESG. It usually analyze in a sub-industry level. Materiality means all data point will going to affect ROE and alpha. Hit rate means the medium spread: how much better the firm do. The “G”, governance, is easiest to find data because a good ESG score means more likely to battle with recession.

ESG is a data science. Smart beta means lower the risk and increase the earning. It usually known by layer smart beta strategy. To forecast, analysist need to load all data into a smart system, then analyze by industrial experts. There are also scales for transparency to rolling up, if there are no transparency, the outcome will be negative.

Bloomberg has 5k subscriptions globally, mobile device access by more than 8 million users a month. ESG product in Bloomberg started in 2009 with coverage for 3800 companies. The data sat have grown from 72 to over 900 fields. 12242 customer are using ESG data in 2016.

Governance data is historically the most actively referenced. It usually better reporting new governance and executive compensation fields, and increased interest in Board and company diversity. For example, the proportion of women board members.

Author 5

Sustainability & Finance

Prof. Werner

19 October 2018

Alexis Schwartz – Bloomberg

Alexis Schwartz, a head director at the Bloomberg NYC branch, presented to our Sustainability & Finance class about her career and environmental relations. She began her presentation by giving us her school background; she studied at NYU Stern and Duke University. From there she worked at Morgan Stanley (even though it was not a good fit for her) and learned her role in the ESG department. Now at Bloomberg, Schwartz heads an entire department focused on Environmental, Social and Governance for Bloomberg. This department has three sectors all focusing on sustainability and ethical impact for the company. Schwartz mentioned how she is very passionate to be working at a strong company so focused on ethical impact. Bloomberg strives for “intangible value – goodwill and reputation, brand equity and proprietary technology.” The company’s sustainable financial decisions both set trends for other investors and companies, as well as, drive the business value and risk management. The Bloomberg ESG information helps to inform investors across asset classes, company management, and other companies within the market. This enables companies to understand their risks and opportunities both with their impact on other companies as well as their impact on society and the environment.

Alexis Schwartz focused heavily on the “responsible investing” and “sustainable impact investing” segments as that most relates to ESG risk management and opportunities. These investments, in comparison to other asset class segments, have seen tremendous growth in recent years. The sustainability factors and high financial returns have been a key towards making solutions for climate change, population growth, water shortages, urbanizations, etc. Millennials, Generation X, and Women have all had a strong impact towards the growth in capital for these sectors. A chart showed that 61% of investors (37% are millennials) are already considering ESG during the investment processes. Assets tied to ESG strategies have also been increasing. The primary reason for these investments is the social and moral considerations from investors. All these factors have made ESG the fastest- growing smart beta strategy in the market to this date. And yet, 38% of investors have no interest in environmental investing. The best way to increase the impact investing is to explain the high returns of investing in this type of strategy. ESG is important not only to help focus on financial gain, but also to help with highest proportion of company value – intangibles. Intangibles, made up of physical, human and social capital, reputation, brand value, corporate culture and innovation, are now the main focus from employees at Bloomberg, as well as other companies, in their bottom-up approaches towards ratings.

ESG helps provide the backbone on reporting, analysis, and sustainable information for investors to evaluate companies. Bloomberg handles massive amounts of data analysis and provides others with this information to better investing. The main purpose for Schwartz’ division is to allow investors an easy way to notice the positive impact of ESG in their investments.

ESG factors provide a framework for reporting, analysis and a link to sustainability for companies and investors. At Bloomberg, Alexis and her team handle massive amounts of data of analysis. Her job is to explain to people that there will be a positive outcome if they consider ESG in their investment. Her clients ask “How does Bloomberg use data to make an impact from a top down approach?” She reminds them that there are many values in ESG programs. Investors will reach more growth, a greater return on capital, better risk management, and increased management quality.

After listening to Alexis Schwartz’ presentation, I understand the social and financial impact of ESG as well as the motivation for Bloomberg as a company. The company strives to have an impact not only within this industry but to help spread environmental awareness to other industries as well. They want to have a broad sustainable impact both inside and outside their boundaries. I want a job there!