You’re the CEO of Mirova US and living in Boston. Where did it all start for you?
I was working for a Belgian bank, KBC, at the beginning of my career, which also had an asset management business. They hired me as a financial analyst.
We were working together with an Irish team and, at the time, there were a number of common projects. Ultimately, KBC asked me to move to Dublin to further develop their thematic strategies from Dublin.
Towards the end of the 90s there was a lot of talk about technology and the ‘next generation’. In contrast, there was also growing awareness of demographic changes in the developed world and KBC had launched a fund focused on investments related to an ageing population. In addition, there were also strategies related to water and alternative energy, as well as financial themes like IPOs and buybacks.
Although the strategies proved very successful, a lot of the growth came through performance rather than inflows. I witnessed competitors emerge and raise millions and sometimes billions with a shorter or less compelling track record than ours.
In the mid-2000s, I went with a business plan to my senior management at the time which effectively said, ‘Listen guys, if you’re serious about becoming a world leader in thematic investing, we need to build a dedicated team around that’.
So we built out a thematic team which very quickly began to focus purely on the environmental side of those themes. We launched an agricultural strategy, as well as a climate change strategy and a multi-environmental strategy.
Fast forward 10 years and, one day, I received a call from Philippe Zaouati (Global CEO of Mirova), who I had met on several occasions. He asked me whether I’d be interested in joining the new sustainability branch of Natixis, which a few months later was renamed Mirova. I accepted and moved to Paris.
What interested you about Mirova?
For me, it was an opportunity to broaden out from pure environmental investing, especially given I had past experience managing demographic strategies as well.
The way I saw it, there were so many opportunities to bring a range of themes together in a single portfolio fund. Instead of being a satellite allocation, I felt that such an investment strategy could have its place in the core of an investor’s portfolio.
However, for this to work it would require the support of a large team of analysts and portfolio managers covering a wide range of areas beyond just environmental equities. This was exactly what Mirova had to offer in addition to the global reach of the Natixis organization as a whole.
‘Instead of being a satellite allocation, I felt that such an investment strategy could have its place in the core of an investor’s portfolio.’
You launched Mirova’s Global Sustainable Equity Strategy in 2013. How do you go about identifying suitable investment candidates for the strategy?
We do a lot of research. We talk to people, we talk to companies. We make sure we're surrounded by good people in our own company as well. We're one of the few houses to have a dedicated ESG team that’s been together for so long.
What we’re looking for is the speed at which various companies are transitioning their businesses toward the future. We see a world where the demand for fossil fuels will be in decline. It’s a world undergoing continued demographic change, be it population growth or urbanisation. And it’s a world where corporate governance and corporate social responsibility come under increased scrutiny.
We try to find companies that have identified trends such as these early, and that are among the first movers within their peer group. Then we then try to identify the laggards.
And finally we connect the dots. There's no magic formula to it, unfortunately.
Can you provide examples of companies that have been successful at doing this in the past?
As a company whose ‘raison d’etre’ is about creating a positive impact, we’ve been forced to ask ourselves whether the rise of more mainstream managers positioning themselves on the topic of ESG is a good or a bad thing.
I think on the one hand it's positive because it helps raise awareness for companies like ours. Even though many of these companies may have much deeper marketing pockets than we might.
But just like the water strategy I was managing back in the 2000s, at the time it probably would not have grown as much as it did if it wasn't for some big competitors spending a lot of euros bringing attention to water as an investment opportunity.