Keesa Schreane: Welcome to the Refinitiv Sustainability Perspectives podcast, where we share examples of leadership and innovation. Small entrepreneurial businesses, large megacorporations and all types of enterprises in between are seeing a global shift in perspectives around the role of business and society, from ESG investing to sustainable finance to social impact in our communities. We're on a journey to leverage data and intelligence to make the best business decisions possible. Enjoy the podcast. 

Today's guest is Julia Wilkinson. Julia is founder and CEO of Imvest, a company that aligns asset owners and their financial intermediaries with their social and environmental values. Julia's clients include funds, family offices, foundations, endowments and entrepreneurs that aim to integrate impact into their models and investments. Julia has a decade of experience in the capital markets, including her work in the private wealth management area of Goldman Sachs, as well as four years in venture capital and private equity. She is board chair of Finance For Good Brazil, a nonprofit that supports Brazil's social finance ecosystem. She's also a board member of Social Impact Movement and is on the advisory board of Aminta Ventures. Welcome to the podcast. 

Julia Wilkinson: Thank you for having me. 

Schreane: As we kick off, we talked about your mom and your mom was an environmental attache to the State Department. And I'm sure that had to in some way influence your choice and career. So, really curious to get an understanding of what your early experiences were, what opportunities you saw or came across that really helped you to focus on the financial services industry and then within the ESG impact investing and then into this fairly niche career that you built for yourself. 

Wilkinson: Yes, actually, my mom and both my parents had a big influence on me. They were both U.S. diplomats. And as a result, we grew up moving every three years to new countries, mostly in Latin America. And as a result, I was always kind of an outsider looking at things differently and trying to understand how things operated, observed a lot of inequality. And, of course, through my mom, a lot of activity around how do we resolve climate issues and sustain the rainforest, particularly in Brazil, which was our last post. So that inspired me to start thinking about innovative ways to finance and sort of incentivize groups to invest sustainably.

That said, I didn't really think of capital markets as the way to achieve this at the time. My parents were both from the government. I really thought about more government and nonprofits as the tools to create social impact. So I went to school and really thought I would either be a diplomat, a lawyer or something in between. And when I graduated, I really felt that I wanted to do something very dynamic and that moved quickly. I worked on marl a little bit, but I wasn't quite inspired by that that model as effective for me, at least as a tool for change. So then I met some people who mentioned that finance was really quite a dynamic and powerful tool and that I should really start learning and understanding it. So that's really what I committed to. And I got a job at Goldman Sachs a few years later and worked on private wealth management there for six years. That was during the crisis, as I started in 2007. So I went through the crisis and saw kind of how when incentives are perhaps misaligned with the public good or short termism is the focus that we have, we can end up in big, sticky problems like the financial crisis that affect the entire planet, not just one piece of the planet. 

Schreane: So during the financial crisis were we even talking about ESG officially? Was more of a social impact leaning, I mean, how did the crisis help to shape where we are now or did it help to shape where we are now with impact investing, in your opinion? 

Wilkinson: I think it had a huge effect on shaping where we are now. There were already people investing with ESG. There was SRI investing, which was sort of screening out industries you didn't want to be in. And the concept of impact, which was coined by Rockefeller, I believe, in 2007, had already emerged. But it wasn't mainstream. And that's because I think people did not really understand or believe how deeply the decisions of a few financial intermediaries in this case could affect the global system and how important it is to have the right incentives in alignment between both the capital markets, the government and the public towards social impact. So I think it really reshaped that, the banks had to reconsider their role in the market. And a lot of people started to wonder how do we better de-risk and increase outcomes around environment, social and governance issues? 

Schreane: So you mentioned the financial intermediaries, I know that's a large part of your work and who you work with. In terms of how you can really get up to speed, whether you are a wealth manager, whether you're working with an endowment or foundation, the ESG role is changing quickly. You know, standards are being built. We're talking about impact investing here. How can those who focus on supporting investors, and as a financial intermediary, how can they go about updating themselves on trends and really understanding the basis of ESG and impact investing and understanding where the trends are moving forward? What can they do in that respect? 

Wilkinson: Well, I think it starts with basically understanding and accepting that this is a really exciting new way of investing that is becoming more and more not something you think about on the side, but key to every financial decision. So just sort of taking that leap of understanding and moving away from traditional financial theory is the first important step. And then really starting to research some of the themes that people are talking about. The Sustainable Development Goals are a great place to start, that those goals were defined after 10 years of research and speaking to stakeholders across the world about what makes sense. What we need to do to build a sustainable future.

So thinking about that is a great start, but it's also a very personal journey because impact investing really is about aligning our personal values with our reason and decision making around investing as well as thinking about those for the collective. So I think part of it is also a personal journey to sit down and think about what you care about and how do you want to see that reflected in your investment portfolio and in the world. And then that will really inspire you to get deeper into, you can research, you can use the Global Impact Investing Network as a great resource. They have tons of publications on this subject. You can come to intermediaries like myself who can literally work with you from day one till integration on every single step of the way. And you can also participate and engage in some of the market research that Refinitiv and other companies are putting out on this subject. 

Schreane: So let me play the advocate role here. You talk about understanding your own values and aligning those with some of the goals that you have from a financial perspective. 

If you're a wealth manager and you really think that you can prove that returns that you've been seeing over the past five, 10 years have been excellent. And there's really no need to boost the ESG component or look at impact investing. What would you say to that manager who says to you, well, Julia, my returns are just fine. The portfolios I manage, they're doing just fine without ESG. In fact, we can help the environment. We can go and donate money and get the charity. Why do we have to incorporate a portfolio and incorporate the issue into the portfolio? If they make that point to you, what would be your answer? 

Wilkinson: My answer would be that that more and more data points to the fact that investing with ESG and impact frameworks can actually de-risk a portfolio and outperform the market in the long run. 

So if you're a fiduciary whose responsibility is to both manage assets towards maximizing return and also reducing risk as well as, you know, as the Business Roundtable recently pointed out, engaging all the stakeholders along the value chain, then your responsibility is to integrate ESG, especially as more and more information points to its role in outperformance. On top of that, if you want to maintain and grow your client base, the next generation of millennials and women who are also receiving a large asset transfer -- they’ve broken glass ceilings over the past several decades -- they want to invest with these principles. They want to engage on these subjects. So I think it's a great way to add value to your current client base, as well as a tool to recruit new clients, attract better talent as well. Young people want to work with impacts. How are you going to get the best financial analysts in the market? We'll talk to them about these principles, for example. 

Schreane: So the way that we're going now, the demographics are really pushing this. And you mentioned the Business Roundtable, which happened in August of 2019. Jamie Dimon, lots of other CEOs, say that we need to move the needle in terms of how we approach and look at investing and how we have a social impact. So really important. 

Let's get back to the work that you do in terms of educating these financial intermediaries. So once they say, OK, you won me over, Julia, I am interested. I do want to learn more because my clients are asking about this. I just need to integrate this. What is your process? How do you go about training or teaching or really bringing all of these people up to speed because there is a huge engine behind a family office or an endowment, right? You have attorneys, you have wealth managers.

Wilkinson: Correct. There's a whole slew of people that touch the final asset owner who also influence their decisions. And it's really important for everyone to be aligned and on the same page. Just like at a big company when they've decided to integrate ESG and they have to think about it both from the C-suite level all the way down to the employees of supply chains. Everybody needs to be on board to really make it effective and truly integrated. So the same thing goes with the family and the family office and all of the people that touch them. So I do a series of things to touch on this.

One is that we're working on a symposium workshop series for the financial intermediaries themselves to help them understand these topics and be able to speak about them fluently. As the Global Impact Investing Network pointed out, one of the big obstacles to this integration across the market is that people who are mid-level professionals who have been in the industry a long time, they don't know how to speak about this. They're not necessarily educated on impact investing in ESG and therefore, they're not talking about it and they're not engaging their clients on it. They may even be discouraging their clients because they may be misinformed on, is it a risk of return? Are you adding risk and reducing return by doing these type of strategies? There's still a big gap in an understanding that that's not the case.

So one thing that we're working on is the symposium where we're developing content and bringing best in class asset managers from around the world to talk in Miami, which is kind of behind on the impact investment scene but has a huge amount of private wealth. It's one of the biggest capitals with private wealth in Latin America, in the United States. So we're going to encourage people to understand how to do this across asset classes by doing that.

But then on top of that, on the one to one work that I do as a consultant, I sit with both the family and their stakeholders, align them to these personal values that I mentioned. We have to go through an exercise to nail down what are the values that unify the family, that you want to leave a legacy around the foundation, is the same idea. Like if your foundation and your endowment is invested traditionally, how do you want to align your endowment to your mission? These topics take time and require everyone to be on board. But then once you've decided on the mission, you can reflect on how you can express that through a portfolio by using real world evidence-based investment strategies. So you obviously want that to be focused on real world goals like the Sustainable Development Goals or potential framework for how you can invest. 

And then you have to get your, then I would sit down with our with their team, family affairs lawyers, accountants, and sort of get them on board to this mission. Understanding what it is, what they're trying to do across the portfolio, across potentially even generations because sometimes we're talking about generational transfer of wealth and how you express that for decades and then really get the staff up to date. They have to understand the right targets and benchmarks, what data provider to use. Both on the ESG side, which would be, could be anything, Refinitiv or some of the competitors in the space. Or maybe it's a combination of all of these, determining then who is going to be in charge of ESG in the investment committee and how is that going to be integrated over time? Because you're not necessarily going to do this in the first, and rebalance your entire portfolio in day one. But you might have benchmarks and targets for how quickly you're going to execute this. 

Schreane: So if you're taking this approach, what's the proper AUM? So do you look at a certain amount that the wealth manager has for management or how do you go about it? Is there a proper amount or how do you go about looking at it from that standpoint? 

Wilkinson: Well, for me, the high net worth and ultra high net worth would be a target for this type of transition, although this can be done for retail investors as well. So the target is 20 million to several billion dollars under management. That way they can execute this both in every asset class, venture capital, private equity, fixed income, public markets and really do things thoughtfully. Often they have a very professional team that they're already working with, a family office that perhaps is very well trained and really just requires a little bit of restructuring to understand and integrate these concepts. But that is big money. And these people have a big impact on the economy. They may not be institutiona,l necessarily, but their wealth is semi institutional. 

Schreane: That is indeed big money. So when we when we think about the questions that we need to ask, because if we're dealing with that amount, any amount of money, from that perspective, we want to make sure that we're asking the right questions when we engaging, when we're thinking about getting into a relationship with a wealth manager. Right? So if you are meeting with a new potential wealth manager, if you are with an endowment or if you're meeting with anyone in that asset management space, if it’s a new relationship. What are Julia's top five questions that you would recommend to ask a wealth manager or to ask someone at one of these offices to make sure that, first of all, they are a good fit. And then secondly, they really take your impact investment and your ESG investing goals seriously. So what are some key questions that you would need to ask them as a high net worth investor to ensure that your match with the right person that they really take your plan seriously around impact investing? 

Wilkinson: That's a great question. Well, certainly they have to understand and buy in to the concept that they invest with impact and not necessarily think of that as pure philanthropy so that they can do that across asset classes. 

So my first question would be, are you truly committed to potentially transforming the impact of your entire wealth portfolio? And if so, are you willing to potentially open up the kimono, so to speak, and really dig into what your personal values are, how your family looks at those values? You know what? Whether you're willing to then take this to your family office and change their whole model and really put in the time, money and effort to make the transition. Are you really committed to the impact goals that you then select? Like are you going to measure towards them?

If it turns out that you're doing well on the financial side, but perhaps the impact is not really what you expected, are you willing to commit to making some shifts and rebalancing at these moments or putting pressure on the managers of your portfolio or the direct investments that you have to shift their strategy as well to commit to their underlying impact? These are important questions, and that doesn't necessarily mean I wouldn't take on a client because some of these things, they're not uncompromisable. And they could change over time as people start to understand this better because it is a process, then these things can change and we can work on them together.

Often I also ask, how engaged are your next gens in the family office or how engaged is your grant? And if you're talking my foundation, how engaged are your grant makers in what you're investing in on the endowment side? Probably not at all, because often these things are completely separated. But how do you kind of bring teams together around making a big impact? Is talking about these issues engaging next gens in this conversation because what they want to do is invest with impact. So that's a great way to get them more excited about the family wealth and managing it

And on the foundation side, it makes sense that the grant makers and the investors are sort of aligned. It means that you're probably going to come out with better an impact on society, that you can then report to your donors across your entire structure. And sometimes endowments are huge compared to what the grant making side has in their capital pool. Usually, you're only making about a 5 percent distribution a year, whereas an endowment can be billions of dollars. 

Schreane: So if you're looking at succession planning, specifically looking at that, is there a certain approach that we would need to look at in terms of how we would approach succession planning if ESG and impact investing is a priority for us? So would it be different than any other way of investing if you have impact investing top of mind, but you're very focused on succession planning. 

Wilkinson: Well, yeah, and some in some ways, yes. It might be that you could even include language in the trust agreement. Usually succession planning has some kind of trust structure behind it, so it can include language around restrictions as to what the portfolio can and can invest in. That could be perhaps changeable because the world will change, maybe the impact targets will change. So it said, maybe every year this is revisited every five years. But that it has to be integrated into the legal structure is an alternative as well. Part of the language in that the directors have to both report back on the impact of the portfolio with data as well as financial performance. And that's the responsibility then as trustees.

Schreane: And as you're going through this interview process, if you're thinking about looking at a new wealth manager. Is it incumbent upon the investor to talk to everyone who's in the ecosystem, to talk to the wealth manager as well as the attorney as well as the tax person? Do we really need to have to engage all those players? 

Wilkinson: Yes, I believe so, because in my experience, sometimes the asset owner has committed to impact investing and they'll either and perhaps even willing to do this at the portfolio level, which means screening every single asset class. But maybe the family office, because they have not been educated on the subject, will say that doesn't make sense, invest just like we always have. Also, it creates more work for them. They have to learn something new. They have to implement perhaps a more challenging benchmark that they have to then understand they have to measure things that they've never thought about before. And so that's what I really try to do is help them translate these concepts.  I've worked in all sides of this story in some way, both from different aspects of finance, but as well as on different sides of the coin of government and other aspects. So I can speak many different languages, both literal and social. 

Schreane: I know you're trilingual.

Wilkinson: But also to try and sort of make this more fun for everyone. And that's where the buy-in comes in, right. Everyone needs to be on board so that this can be fun and meaningful for them, too. But yes, the family office can be an obstacle, perhaps, and a lawyer is really worried, more worried about de-risking some things they might not be informed about, that this is not necessarily a risky concept, that they're not going to discourage necessarily their client from doing this and their accountant as well. They may not be well informed on the subject and not really understand how to report on this. So these are important subjects.

Also, we talk a lot about how in the financial industry itself, these things need to change as well, around reporting rather than it just being financial performance that we will report on the annual statement of the statement also have impact performance and the incentives of the financial industry should be tied to that, too. Rather than just getting a bonus based on your financial performance, what about the impact performance that you're reporting on? How can you link incentives and performance to that? 

Schreane: So incentives are important as well as really understanding the language of the different parties who are part of that overall ecosystem. So, Julia, in terms of the big idea, what is the big idea around the foundations, endowments, trends that you might see coming down the pipeline later in the coming months or coming years that we might not know about at this point? What's the big idea around this industry?

Wilkinson: Well, one big idea that I am excited by around investing in sustainable, smart cities. And why? Because urbanization continues to be on the rise. 

And while cities are great places to get new jobs and meet new people and have wonderful opportunities, which is why a lot of young people are attracted to cities, also with urbanization come many challenges. We see a huge rise in energy consumption when people move to cities, which accounts for a large portion of the global emissions. Traffic. Waste. Affordable housing shortages. And actually, when you move to cities, you tend to actually have a more sedentary lifestyle. So people end up getting more chronic diseases. 

So interestingly enough, all of these are problems, but they also are opening up opportunities, especially as health, as technology around, you know, IOT [Internet of Things] and 5G really takes off and it empowers us to have these smart cities. And you see a rise and decrease in price in renewables and micro grids, which will lead us to be able to have a more distributed energy system. You know, cities will be both generating and consuming energy in a very different way than they are now. We'll see shifts in transportation to e-mobility and cloud technology giving us a rise to have very smart and interconnected cities. And there's huge investment opportunities in the space, both on the technology side in some of these renewable energy and opportunities in investing in the startups that are redesigning transportation, for example, but also in changing cities to be more circular, reducing waste creating systems where we can reuse and repurpose waste is very important. There's lots of opportunities there, managing clean and efficient energy consumption and improving health outcomes. These are all hugely investable opportunities across asset classes and very exciting. 

Schreane: And that's interesting to you talk about investing in these startups. And I know that you are an investor and advisor. How do you go about finding opportunities to invest in these types of startups if you are interested in smart cities and if that is something that you think is a big idea as you do, how can you go about finding opportunities to invest? 

Wilkinson: Oh, there are so many exciting ways to do that. You can join an angel investing network. I personally go and meet people all the time and anytime anyone asked me for mentorship or advice, obviously when I can fit it into my schedule, I do. And so I offer myself at many coworking spaces. You know, once every quarter or so. And often I will meet potential investors this way. But also, you know, reading about interesting deal flow on the Internet, for example, on Impact Alpha or some of my favorite impact newspapers is another great way. Or just participating in these emerging ecosystems, going to pitch competitions, offering yourself as a judge if you're from the financial services industry. That's a great way to meet people and also find exciting opportunities in the space. 

Schreane: Great. Well, everything from understanding who's in the ecosystem, who you're investing with, not just that wealth manager, but the ecosystem, talking the language, understanding the big ideas that are coming up, such as smart cities and really being open and attuned to what's going on in the ESG space and ensuring that your values align with ESG is a step. Those things are all very important. Julia, thank you so much for sharing them with us and for joining us today. 

Wilkinson: Thank you. This has been great. 

Schreane: We invite you to subscribe to the Refinitiv Sustainability Perspectives podcast on iTunes, Spotify or where ever you stream your content. What did you think about the podcast? Leave us a review on iTunes. Or follow us on LinkedIn and Twitter for updates on our show. Thank you for joining. See you next time.