There has been rapid growth in women’s labour force participation over recent decades and the industries projected to experience the greatest employment growth in coming decades are female-dominated. In addition it is well documented that companies with women in senior decision making positions perform better. Despite these gains, the COVID-19 pandemic disproportionately hit women workers, increasing the need to adopt a gender lens in investment. Taking strong action to create and sustain high quality jobs for women will be critical in the recovery and create a more inclusive economic recovery. This session looks at the gender gap and the tools and processes available to improve the gender lens for investors both organisationally and for the companies they invest in.

Speakers

Lenox Park Solutions is a FinTech company providing collaborative software and data aggregation tools in financial services. The firm’s mission is to remove systemic bias and inefficient costs relating to capital access. Before Lenox Park, Lamin worked in the New York and London offices of Merrill Lynch, in mergers & acquisitions and structured credit derivatives.
Graduating from the University of Texas at Austin with a B.A. in Economics, Lamin remains active at his alma mater, serving on boards for the departments of economics and black studies. He was honored to deliver the Liberal Arts Commencement Address for 2017 University of Texas graduates, where he spoke about the importance of diversity and inclusion. He is an active member of the United Nations Private Sector Forum, and in 2008 founded Nyawa Funding Group, a not-for-profit organisation with a mission to improve living standards in Sierra Leone.

Helena Morrissey has over three decades’ experience in financial services, including 15 years as chief executive of Newton Investment Management. While at Legal & General she spearheaded the launch of the UK’s first gender-lens equity fund for retail investors. Helena is lead NED at the Foreign, Commonwealth and Development Office and on the board of Green Park, an executive search firm specialising in diverse appointments. She is chair of the global ESG practice at Edelman, the communications consultancy.

Morrissey is well known for her work on inclusion and diversity. In 2010, she founded the 30% Club, a campaign for better gender-balanced boards. Since then, the representation of women on FTSE350 boards has risen from less than 10% to over 30%. There are now seventeen 30% Clubs throughout the world. Morrissey chairs the Diversity Project, aimed at improving diversity across all dimensions in the investment industry.

She entered the House of Lords in September 2020 and was appointed a Dame in 2017. Her first book, A Good Time To Be A Girl, was described by Forbes magazine as one of the five most empowering books for women in 2018. She posts daily career dressing advice on Instagram and is one of LinkedIn’s ‘Top Voices’.

Morrissey is married with nine children.

David Neal is IFM Investors’ chief executive, responsible for executing the firm’s strategy and delivering strong results for IFM Investors’ clients, shareholders and staff. He leads IFM’s global business, with nine offices and four investment teams: infrastructure, debt investments, listed equities and private equity.
Neal joined IFM Investors from the Future Fund, Australia’s sovereign wealth fund, which he joined in 2007 as its inaugural chief investment officer before becoming the chief executive in 2014. At the Future Fund, he established the investment team and built and designed the fund’s investment model. Prior to joining the Future Fund, he spent 15 years with Willis Towers Watson, where he started his career in the UK. He went on to establish and lead the firm’s investment consulting business in Australia. As head of investment consulting at Willis Towers Watson Australia, Neal led the team providing advisory services to the Future Fund when it was established in 2006.

Moderator

White is responsible for the content across all Conexus Financial’s institutional media and events. She is responsible for directing the bi-annual Fiduciary Investors Symposium which challenges global investors on investment best practice and aims to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. She is the editor of conexust1f.flywheelstaging.com, the online news and analysis site for the world’s largest institutional investors. White has been an investment journalist for more than 20 years and has edited industry journals including Investment & Technology, Investor Weekly and MasterFunds Quarterly. She was previously editorial director of InvestorInfo and has worked as a freelance journalist for the Australian Financial Review, CFO, Asset and Asia Asset Management. She has a Bachelor of Economics from Sydney University and a Master of Arts in Journalism from the University of Technology, Sydney. She was previously a columnist for the Canadian publication, Corporate Knights, which is distributed by the Globe and Mail and The Washington Post. White is currently a fellow in the Finance Leaders Fellowship at the Aspen Institute. The two-year program consists of 22 fellows and seeks to develop the next generation of responsible, community-spirited leaders in the global finance industry.

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This session examines research from Woodwell Climate Research Centre that assesses near-term physical and socioeconomic risks associated with climate change and demonstrates a model for embedding the insights of climate science into both public- and private-sector decision-making.

View Philip’s presentation slides here

Speakers

Philip B. Duffy is president and executive director of Woodwell Climate Research Center (formerly Woods Hole Research Center). Prior to joining Woodwell, Dr. Duffy served as a senior policy analyst in the White House Office of Science and Technology Policy and as a senior advisor in the White House National Science and Technology Council. In these roles he was involved in international climate negotiations, domestic and international climate policy, and coordination of US global change research. Before joining the White House, Dr. Duffy was chief scientist at Climate Central, an organisation dedicated to increasing public understanding and awareness of climate change. He has held senior research positions with the Lawrence Livermore National Laboratory, and visiting positions at the Carnegie Institution for Science and the Woods Institute for the Environment at Stanford University. He has a Bachelor’s Degree Magna Cum Laude from Harvard in astrophysics and a PhD in applied physics from Stanford.

Moderator

Tate has been an investment industry media publisher and conference producer since 1996. In his media career, Tate has launched and overseen dozens of print and
electronic publications. He is the chief executive and major shareholder of Conexus Financial, which was formed in 2005, and is headquartered in Sydney, Australia.
The company stages more than 20 conferences and events each year –
in cities which have included London, New York, San Francisco, Los Angeles, Amsterdam, Beijing, Sydney and Melbourne – and publishes three media brands,
including the global website and strategy newsletter for global
institutional investors conexust1f.flywheelstaging.com. One of the company’s signature events is the bi-annual Fiduciary Investors Symposium. Conexus Financial’s
events aim to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable
retirement incomes. Tate served for seven years on the board of Australia’s most high profile homeless charity, The Wayside Chapel; and he has underwritten the
welfare of 60,000 people in 28 villages throughout Uganda via The Hunger Project.

Related reading

Climate math: What a 1.5-degree pathway would take

Climate risk and response: Physical hazards and socioeconomic impacts

This session examines the development and evolution of sustainability bonds in emerging market debt, how they can be used for impact in developing and emerging economies and allow investors to be more targeted.

View Mary-Therese’s presentation slides here

Speakers

Mary-Therese Barton joined Pictet Asset Management in 2004 and is the head of emerging debt, responsible for the $10 billion franchise. Before taking up her current position in 2018, she was a member of the team for 14 years, first as an analyst, then as a senior investment manager.
Prior to joining Pictet, Barton worked at Dun & Bradstreet, where she was an economist focusing on European countries.
Barton graduated with a BA (Hons) in Philosophy, Politics and Economics from Balliol College, Oxford. She also holds an MSc with distinction in Development Finance from the Centre for Financial Management Studies, SOAS (School of Oriental and African Studies), part of the University of London. Mary-Therese is also a Chartered Financial Analyst (CFA) charterholder.

Farah Hussain is a senior financial officer at the World Bank Treasury based in Washington DC. As Treasury Regional Coordinator for the East Asia and Pacific region, she leads the design and implementation of financial solutions to help clients to help clients: (1) access financing for development by mobilising World Bank Group resources and private sector financing; (2) mitigate the impact of financial, natural disaster and commodity risks by facilitating access to market-based risk management tools; and (3) strengthen capacity to implement efficient risk management strategies by providing advisory services.

Hussain specialises in sustainable financing, including green, social and sustainable bonds. She provides technical assistance to countries to develop local green and sustainable bond markets, including developing policy frameworks, identifying eligible projects, developing impact reports, and supporting capacity building among key stakeholders as part of the World Bank Group’s efforts to promote sustainable investment solutions. Her technical assistance engagements in Malaysia, Fiji, and Indonesia resulted in the issuance of the first green “sukuk” in the world; first sovereign green bond by an emerging market; first corporate green bond in Indonesia; the development of the ASEAN green bond guidelines and Indonesian green bond regulations. She was awarded the World Bank Group President’s award and the East Asia Vice Presidency award for her work on the green sukuk. Her green bond projects in Malaysia, Fiji and Indonesia have won a number of highly prestigious international awards. Hussain is one of the authors of the World Bank Guide on Green Bond Proceeds Management & Reporting for Public Sector Issuers.

Before joining the World Bank Treasury, she worked for the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group that provides guarantees to attract investors and private insurers into the world’s poorest countries and fragile and conflict-affected environments. Prior to joining the World Bank Group, Hussain worked for BNP Paribas and ING Barings, investment banks in London.

Moderator

Tate has been an investment industry media publisher and conference producer since 1996. In his media career, Tate has launched and overseen dozens of print and
electronic publications. He is the chief executive and major shareholder of Conexus Financial, which was formed in 2005, and is headquartered in Sydney, Australia.
The company stages more than 20 conferences and events each year –
in cities which have included London, New York, San Francisco, Los Angeles, Amsterdam, Beijing, Sydney and Melbourne – and publishes three media brands,
including the global website and strategy newsletter for global
institutional investors conexust1f.flywheelstaging.com. One of the company’s signature events is the bi-annual Fiduciary Investors Symposium. Conexus Financial’s
events aim to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable
retirement incomes. Tate served for seven years on the board of Australia’s most high profile homeless charity, The Wayside Chapel; and he has underwritten the
welfare of 60,000 people in 28 villages throughout Uganda via The Hunger Project.

Related reading

Climate change and emerging markets after Covid-19

ESG and EMD – taking the long view

World Bank ESG guide 2020

Poll results

Will you invest in sustainable bonds in emerging and frontier markets in the next year?

What will it take for you to expand your portfolio in emerging and frontier markets in the next year?

A new paper by EDHECInfra argues that selecting the right benchmark could completely change investors’ preferred asset allocation to infrastructure equity and debt.

Asset allocation choices famously determine a significant proportion of investment outcomes, but as recent research shows, benchmark selection is an integral part of this process. For example, the authors of Benchmark selection and performance in the Journal of Pension Economics and Finance last year find that in the cross-section of pension funds, asset allocation explains on average only 19 per cent of the variation in pension fund returns while benchmark selection dominates and explains 33 per cent of cross-sectional returns.

In a new paper published entitled “Strategic Asset Allocation with Unlisted Infrastructure – Better Data for Sensible Results”, we show the importance of benchmark selection for investors who want to include the infrastructure asset class in their strategic allocation. Using the latest benchmark data shows that unlisted infrastructure equity and debt could play a significant role in institutional portfolios with as much as 10 per cent of the global portfolio.

For years the OECD has reported low allocations to infrastructure of 2 per cent on average for large pension plans, suggesting that private capital is not about to plug the ‘infrastructure investment gap’ often lamented by the G20 and other international bodies. This new research suggests that with the right benchmarks data, allocations could be five times higher.

Given the importance of SAA in the implementation of efficient long-term diversification, establishing ex ante the role of illiquid asset classes such as unlisted infrastructure in the total portfolio at this stage is important because these investment decisions are not easily reversed: transaction costs are high and, in bad times, unlisted infrastructure is almost completely illiquid.

In fact, investors have been using the wrong data to assess the role of unlisted infrastructure investments in their global allocation: listed proxies and appraisal-based indices as policy benchmarks leaves them none the wiser about the strategic role of unlisted infrastructure.

Listed proxies are perfectly correlated with stocks and are therefore not a separate asset class, and appraisal indices are not correlated with anything and cannot be used to perform a serious asset allocation exercise because they rely on stale net asset values that do not reflect market prices. In the paper, we show that un-smoothing appraisal-based returns only makes the problem worse.

Instead, using data that reflects the evolution of asset prices yields convincing results. Using the infra300® index, which captures the fair market value of 300 infrastructure companies in more than 20 countries, we show that unlisted infrastructure equity could account for as much as 10 per cent of the portfolio of yield-seeking investors. Likewise, using a broad market index of infrastructure debt, the paper finds significant allocations to infra debt for liability-driven investors.

Most investors are under-invested in this asset class because they lacked robust data showing the potential of infrastructure equity and debt in the total portfolio. But thanks to recent advances in data collection and asset pricing technology, they can now answer long-standing questions about why and how they should invest in infrastructure.”

In the paper, we conduct multiple robustness tests of the quality of the data of the role of infrastructure in the portfolio. The infra300 index data is not smoothed, exhibits meaningful correlations with other classes and is representative of the investible universe. Now we can show that infrastructure improves the risk-adjusted returns of a multi-asset portfolio without using arbitrary or binding constraints.

The paper also explores how investors can improve the quality of their asset allocation by using granular data that matches their exposures to different infrastructure sub-segments, each of which corresponds to very different types of investments and risk exposures.

For investors just starting to consider infrastructure as an asset class, these insights can make a significant difference. For existing infrastructure investors, it is the opportunity to revisit and adjust their allocation to this important asset class.

The paper can be accessed here.

Frédéric Blanc-Brude is the director of EDHECinfra.

What does Robeco expect in the world of sustainable investing in 2021? We remain focused on the two main elements of SI: integrating ESG into the investment process and active ownership. In our latest webinar, Masja Zandbergen outlines her views on the market outlook for SI and sustainable strategies. She believes that the financial sector needs to dive into the deep end as EU regulation and climate change ambitions require better research, data and implementation in portfolios.

Click here to read the full paper.

The composition of an investment committee is the most meaningful criteria in assessing diversity, equity and inclusion in private market fund managers according to Mercer.

The consultant sets out criteria that it thinks will ensure success of a DEI program which includes: fund manager ownership, investment team composition, investment committee composition, thresholds and alignment. It believes that investment committee composition is the most meaningful criteria as this is typically where final investment decisions happen.

In the white paper, The Power of Change: The what, why and how of creating a diverse private market portfolio, Mercer says incorporating DEI into private market portfolios could result in an increased likelihood of outperforming benchmarks.

In the paper Mercer points to recent research suggesting diverse teams make better decisions and are less likely to be influenced by unconscious biases. A study conducted by the National Association of Investment Companies which looked at the diversity of private equity firms found that, from 1994 to 2018, diverse funds outperformed the top quartile benchmark on a net IRR basis, and outperformed the benchmark median quartile on a total value to paid in capital and a distributions to paid in capital basis.

“The pandemic and growing demand for social change, coupled with market volatility, have made investors realize that change is here. There are many benefits to embracing DEI, as well as risk mitigation considerations. By creating a private markets DEI investment program, institutional investors can send a strong signal to asset managers that diversity is a priority. We are working with managers and asset owners to help them transform investment management through their portfolio investment choices,” said Raelan Lambert, global alternatives leader at Mercer.

“By increasing the diversity of their managers, investors can create an environment where new ideas can thrive. This environment enables fresh perspectives and different networks through which to access potential new deal flow.”

But to develop and implement an effective DEI investment program in private markets, it is essential to have a clear, consistent and quantifiable definition of what the term means in investment practice, the paper says.

There are a couple of specific considerations that apply to due diligence around diversity within private market fund managers, the paper says. For example because some diverse managers may not have long track records, it’s essential to find ways to mitigate performance risk. In addition Mercer says it’s useful to assess the alignment of financial incentives across all professionals on an investment team and the organisation more broadly, and encourages investors to examine the decision- making influence of minority groups to ensure alignment, and make sure HR policies promote meritocratic DEI hiring, particularly within the investment team.

It is also important to have ongoing monitoring of the managers on diversity matters and investors need to create their own frameworks for monitoring and evaluating their DEI programs and ensuring they’re meeting relevant objectives and investment targets. Key performance indicators can be useful and should encourage data collection on diversity and a range of other important metrics.