RI Careers Interview: “ESG integration can only be successful if you speak the language of a fund manager”

Wim Van Hyfte reflects on his career in ESG

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Tell us a bit about your current role and the company you work at. 

I am Global Head of ESG Investments and Research at Candriam, and I have a broad range of responsibilities. One of my roles is to lead our sustainability projects and to make sure that we, as a team, engage with all other stakeholders. My other responsibility is to lead the company strategically to align with the interests of our clients and engage with them on a variety of ESG topics. 

I also participate in various roundtables engaging with external stakeholders across the whole industry: this might be media, regulators or other governmental bodies. For example, I had quite a bit of engagement with different stakeholders at regulators and the European Commission, given the critical debate on the Green Deal and the taxonomy. It's a very diverse and broad role.

As for the company, Candriam is an acronym; it stands for Conviction And Responsibility In Asset Management. We're a multi-specialist asset manager which means that we offer products and services across the comprehensive range of liquid asset classes. 

Who is on your team?

We are a team of 14 but are looking to recruit more people both on the ESG analysis and engagement side. The team is divided into smaller groups who are responsible for engagement and stewardship, research and analysis, product development and the commercial side of the business. 

Across Candriam’s fund management departments, we also have 'ambassadors' who help to champion ESG and make sure that it is properly addressed, understood and integrated by the fund managers.

Do you provide any additional education on ESG beyond your team? If so, what do you do?   

We hold internal lunch seminars every month on specific topics on risk, ESG integration and our methodology. 

Although ESG is being integrated into everything we do, we still see a need to educate fund managers on the 'relevance' or materiality of sustainability. As a former fund manager, I am convinced that ESG integration can only be successful if you speak the language of a fund manager. When I joined the team many years ago, one of the first things that I challenged my team on was to break down their silos and to understand how fund managers operate and help educate them on the importance and applicability of ESG. Having a transparent methodology and a framework that makes sense from an investment perspective is essential.  

Have you always worked in RI/ESG? Tell us about your career path.

I started working in sustainable finance in 2008, having previously worked in academia for nearly nine years. I started in finance and did an MBA, and then I completed my PhD in financial economics, focusing mainly on asset pricing and econometrics. My research thesis was about integrating intangible issues into quantitative risk modelling. I joined Candriam in 2006 as a quant researcher and fund manager and after two years, I was asked to co-manage the global quant ESG strategy for developed markets. In this new role, I worked with external clients convincing them to integrate ESG. One of my clients was a large superannuation fund in Australia, and at that time, Australia was well ahead of Europe in terms of sustainability. What surprised me the most was that ESG/sustainability was so niche that most of the conversations were around such themes as ethical, moral judgement, exclusions, etc. I think ethics and morality are valuable, but it's still a personal choice. 

At the time, I had a feeling that there was much more to sustainable investing than what was perceived as being important. As a result, I started doing some research with my colleagues on financial materiality. It wasn't that easy back in the day because there was no precedence for climate change impacting economic sectors, you wouldn't see that in back testing. What we could see, though, is that sustainability is crucial not only for what we do but also for what we want to achieve in terms of impact.

From a personal perspective, my sustainability journey has been quite unusual. I was a 'quant' academic, and I was one of the very few male professionals working in the field, so I was quite different from my peers. 

What do you like most, like least about RI/ESG?

What I like the most about ESG is that it's so broad. It has the ability to influence everything we do: from capital allocation to our impact on economic growth. I think it's not only about hard numbers anymore, everything and everyone is counted. It makes our job very interesting but complicated at the same time, but that's the beauty of it. 

And is there anything that you like least about it? 

It's not about sustainable finance, per se. It's more about the industry that we work in, and the lack of long-term thinking. Many people are trying to define what sustainability means from a moral, ethical or religious perspective. I struggle with so-called 'box thinking' when it comes to sustainability. For example, tobacco has long been viewed as a great investment performance-wise, and previously some of my clients wouldn't consider divesting from tobacco stocks just because it was unethical or immoral.

However, if we look at it from a much broader perspective, such as consumers' behaviour or changing societal norms, in the long-term that would mean that we didn't deliver on our fiduciary duty. I think when we invest, we should think of sustainability from different perspectives and angles and appreciate that this is a very complicated field.

What single thing or person has had the most positive impact on your career, and why?

When I was writing my PhD, I was going through some difficult times – studying for five years isn’t the easiest! A friend of mine referred me to a quote by US Senator Robert F. Kennedy, who said: "Only those who dare to fail greatly can ever achieve greatly." It resonated with me so much and I still refer to it. My message to young people is that even if you feel that you are going against the herd, you need to keep going. If you don't take on the challenge, you will never succeed. 

What advice would you give to someone starting out today?

In terms of education, I think what people need to realise is that data, artificial intelligence and technology, in general, are going to become very important and will impact every job that you might think of. In terms of soft skills, listening, empathy, being open-minded and having intellectual curiosity are fundamental. 

Looking ahead, where do you see the opportunities or growth areas for career paths in RI/ESG?

I think there are a lot of opportunities in the corporate sector, whereas companies are trying to become enablers for the sustainable economy. There are plenty of small companies, which are not as powerful as the incumbents in the industry, but they are the disruptors. Working for an innovative company like Candriam, that provides solutions for a sustainable economy, is to me what the next generation of ESG leaders should strive for.