RI Careers Interview: “Responsible investment professionals are going to need to have financial know-how to keep an advantage”

Freddie Woolfe, Head of Responsible Investment and Stewardship, Merian Global Investors talks to Responsible Investor about how he got into ESG and his career to date.

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

I joined Merian Global Investors about two years ago with a view to helping the company set up and build a global responsible investment and stewardship strategy across all of our investment desks.

We operate under an autonomous boutique model; we don't have a chief investment officer which was a deliberate decision so that each investment desk can invest in the way that they believe best serves their clients. A lot of the work that we've been doing over the last couple of years has been helping teams think about structures and strategies for considering responsible investment in a way that will be most relevant to their funds and investment styles.

Who is on your team?

There's me on the investment team and we have a colleague with ESG expertise who sits on the investment risk desk, which enables us to have a ‘second line of defence’ approach. This means that while the investment decisions rest with our portfolio management colleagues these issues have a governance structure around them that is well understood across the house and any emerging issues can be escalated if they need to be in a way that isn't new or unusual to people already in the business.

How have you seen the portfolio managers’ interest evolve over time?

We have some portfolio managers in-house who have been and continue to be active and considerate around ESG issues. It has been encouraging to see this grow across the teams as we continue to implement and roll out our responsible investment strategy. Also, when it comes to interacting with companies or undertaking research, our responsible investment resource does not go off and do engagement without the portfolio management teams. This means we present one singular view to a company and, so our voting, engagement and investment views are completely aligned. It also really helps to stimulate interest among our portfolio management teams, as they are involved in the work and often lead it.

What do you do on a daily/weekly basis?

I would start by saying that there is no typical day as you probably would expect with this being in an investment function. A lot of it involves turning around and chatting to colleagues about things, presenting them with new information, discussing ideas that we've been having, talking through issues that we think we might need to engage on or model. No two days are the same!

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

I graduated with a degree in languages but soon realised that I wanted a different career path. I knew a few people who were working in finance at the time and it sounded like an interesting place to be. I went to work for a bank in fraud risk that lasted one year. Then a couple of friends and I set up a business, but for a variety of reasons it wasn’t the right time, not least due to the onset of the financial crisis.

Given the economic environment at the time, I was very lucky to find myself a temporary role at Hermes EOS covering the US proxy season. This then became a permanent job, which showed me the huge power and influence that finance can have on sustainability issues and promoting a better future for us all.

Throughout that time, I realised that finance could be a whole lot more than financial statements and buying and selling stocks. After eight years at Hermes EOS I decided I wanted to get closer to the ultimate capital allocation so I moved to Newton (Investment Management), where responsible investment was part of the broader investment research team. That gave me excellent experience at the coalface of investment processes.

After two to three years at Newton, the opportunity came to join what was at the time Old Mutual Global Investors and now Merian Global Investors to help them develop and implement a global responsible investment strategy that covers all areas of responsible investment.

What qualifications do you have?

I have a BA in modern languages from UCL and am currently completing a two year MBA programme with Cass Business School. The MBA process has been extremely interesting because you get to look at companies not just as an investment but think about them as if you were running them yourself.

Why did you decide to do an MBA?

Ultimately I wanted to learn something new that I could apply on a daily basis to my work. As I mentioned earlier, one of the benefits of doing an MBA is to learn to think about companies in a different way. There are, of course, plenty of benefits to CFA, however, one of the potential challenges with CFA is if everyone in the industry has been through the same training that places a huge onus on the providers of that training to make sure that it is up to date and as progressive as it can be. And I think there's a balance to be struck there between being on top of the most emerging topics and also being applicable and interesting to as wide an audience as possible. There are huge benefits in people having different views on different things.

I have ended up in a class with people from all sorts of different backgrounds and geographies. We have people from pretty much every sector represented from oil and gas to healthcare to start-up entrepreneurs and a huge range of ages from the mid-20s to mid-50s. There is so much to absorb from classmates as well, which was a huge attraction of the MBA programme for me. I couldn’t have hoped for a better bunch of people to debate with and learn from.

It is a big commitment both financially and timewise, and requires support from your employer not least in understanding why you might be bleary-eyed in the morning occasionally after having spent the night finalising coursework for a deadline! If you are going to do it is worth thinking of what’s going on in the rest of your life and whether you can give up two years to do it. But if you can, the benefits are huge.

Does the MBA you are doing have a sustainability element in it?

I've been very impressed with the way that certain topics have been taught. I was half expecting it to be a Friedman-esque based course about profit maximisation but it has not been taught that way at all. It has been about a strategy as a process that starts with how you create value for your customers and then through the business model how you end up capturing and monetising some of that value for the firm. The modules on other topics, such as HR, have been fascinating and very useful for when thinking about labour relations at investee companies. 

There is also a core module on CSR which was very well taught, as well as some fascinating international electives. This year alone I have been to Vietnam, Israel, Palestine and Kenya with Cass. We spent a week in Nairobi doing a ‘technology for social good’ trip where we got to meet a lot of impact businesses and see some of the fascinating tech sector in Kenya: it is colloquially known as Silicon Savannah.

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

I've been extremely lucky to work with a lot of people who were very kindly supportive of developing my career. In my time at Hermes and Newton, I had some fantastic managers and colleagues who were a constant source of encouragement, and threw me into a few things probably before I was completely ready but gave me the support to develop and learn. Here at Merian management is very supportive of what I'm doing to make sure that we're implementing responsible investment in a way that is genuine, honest and most importantly, value adding for our clients.

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

I find it immensely rewarding section of finance to work in; you can have a lot of impact both on the business and wider society and every day I am learning something new which is fantastic.

You do have to be quite resilient though. Not everyone will buy into responsible investment as a priority, including some colleagues and companies. My advice for this is to always keep the other person’s perspective in mind and make sure that the argument is presented in a way that can be compelling in their terms to build influence. But it’s important to never lose the passion!

What is your understanding of a sustainable workplace?

The active management industry needs to be in a position to show that it is able to add value for clients over and above what could be achieved through passive strategies. We also need to recognize that without a top quality we will struggle to provide excellent service for our businesses, and sustainability is an ever more important criterion for the newer generations of talent. It also feels crazy that as an industry we would operate in a way that is contrary to the behaviours and expectations that we have of the businesses in which we invest. We need to be able to practice what we preach.

Therefore I think the concept of a sustainable workplace is a really big topic for the investment management industry; we need to articulate how we add value for our clients, which increasingly includes the sustainability of our investment processes, and why this industry should continue to be attractive for the next generation of talent we will want to attract.

If you knew what you know now what would you have done differently when you started here. What advice do you wish you’d been given when you started out?

Everyone who works in ESG or sustainable investment needs to be able to frame these topics within an investment context. And that does require two things. The first is to be able to look at a certain topic and to be fairly dispassionate about stuff because some realities need to be faced without even actually the ability of a business to influence certain things.  

The second, which I did ignore and I wish I hadn't, was to get some form of financial qualification under my belt early on. There are two reasons; firstly it gives you the investment edge that is increasingly important as this becomes more important to investment processes. Responsible investment professionals are just simply going to need to have financial know-how to keep an advantage in a rapidly growing area of finance that will inevitably become more and more competitive. Secondly, doing these things in your mid-30s is a lot more painful than it is doing it once you just finish studying for a degree or a Masters in your early 20s and you are more in the academic mindset. I am speaking from experience here!

What advice would you give to someone starting today? What soft skills are beneficial?

I think one of the big challenges is that people who take an interest in sustainability issues, and it's not a criticism, can be very passionate about what they do. However, you do need to be able to take a dispassionate view on certain topics to influence businesses and investment colleagues who might not be at the same level of understanding or have even half the same level of passion about the topics. I think the most important soft skills are firstly a lot of self-awareness and secondly an understanding of how to interact with and influence other people, and being flexible in determining what the most effective approach is going to be.

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

I do think impact investing is a fascinating area and one that if we get it right there ought to be a) some compelling investment opportunities and b) investment products to come out of it. I saw some of this in Nairobi where fascinating companies and new business models that can genuinely be transformative to people's lives are receiving incubation and development funding. The flip side to this is my worry that there is a lot of greenwashing going on in what we call impact today, and we need to be very careful of what we call impact. This is particularly the case as it is a term increasingly being used in the public markets with respect to some large, established companies that previously had not been seen to take such an interest – we must retain a focus on the intentionality and outcomes rather than get caught up in impacts that might at best be a chance corollary of a small activity or worse just plain marketing.

CV at a glance:

  • Merian Global Investors, Head of Responsible Investment and Stewardship, 2017 – present
  • Newton Investment Management, Responsible Investment Analyst, 2015 – 2017
  • Hermes EOS:
    • Associate Director – Corporate Engagement, 2014 – 2015
    • Manager – Corporate Engagement, 2012 – 2014
    • Senior Associate, 2010 – 2012
    • Associate, 2008 – 2010
    • Intern, 2008

To access other interviews and Sustainable Finance Careers Report follow the link: esg-data.com/careers