This is exchanged the Goldman Sachs when we discuss developments currently shaping markets industries in the global economy objects. You were gone. had of corporate communications here at the firm today. talking about a phenomenon. Investing that's gained a tunnel momentum in recent years. Yes, G invite Mental social governance are the key S and the terms valve quite a bit in terms of what it means to talk to had, including how companies all around the world are focusing on sustainability, the growth, renewable energy and much much more were joined by your manly head of global thematic stock our mental social governance, research in Goldman Sachs Research, really face in London, but here today in New York for the weak Richard welcome to the programme like your home you ve been involved in research for a long time. But how did you get focused on

sustainability and GS sustain, particularly what's the evolution there. It's a real interesting story. I think it is often the case with some about that. ideas that was outside influence. In this instance, it came as a result of a letter from the United Nations, then Secretary General Kofi Annan, to ask whether we would prepared to write a research report looking at whether good companies generated better returns and it ended up in the lap of our wilting that I was a member of in Europe in two thousand and three and look To say an oil analysed receiving a letter on do good companies generally. better returns when, when you are industry, had a fortune history of health and safety incidents. Environmental impacts community unrest, and am I time when it was quickly becoming part of the global warming debate, seemed an account one piece of research to have the right and we had to spend some time researching things we

considered? We had to spend? a lot of time looking at corporate social, Consequently, reports that, frankly we We had never invested as much time more energy and, as with hindsight, we should have been doing, but we very we started to realise that some was changing in the oil industry. It was an industry that is historically competed for access to resources through providing the best engineering solution and the best access to capital, but what we to see was some of the camp. He's at almost pivoted their approach to competition to positioning cells, is the best partner for the host action to develop their scars, hydrocarbon resources with and we were seeing a very clear shift towards a blanket ban on any activity that would constitute bribery and corruption, we were seeing investments been made in thinking proactively about community development. We

see engagement in working with governments to think about energy ministries, national accompanies source elements of the content for a elements from the local economy and rely on that a belief that minimizing environmental impact and health and safety issues should be degraded into the project plan from day. One is wonderful. What we found it. I think in the first instance, it was not our expectation to see it We encountered was a tipping point for the oil industry in a migration from a world of just focusing sclusively on financial and operating metrics too much more holistic approach to managing the business and one that was We focused on long term partnership with resources, and we wrote the report we have right pleasure of presenting at the United Nations and it inspires to look at other industries and whether we revolving the same way and over the course of the

three years. We took the coverage up from one industry to eighteen industries and more the product gs sustain into thousands of our right so Jack. sustain is focused on identifying long term. Industry leaders, perhaps before getting the details give us a long term high level thematic outlook will look the less five years, is worth his framing income contacts, because it's a short period. history of our species, but one of unprecedented change. There are two point: two billion more people living on the plan today in their wearing. Ninety. Three hats, affordable increase a lot of that. From the emerging markets. It's not as I developed markets didn't grow the population. The? U S, today's twenty five percent, larger than walls in ninety three deals, Consideration is that that increase in population nearly six times the current population of the? U S, most of those new people, on the planet living in cities and the rest

that's of notice that actually people who migrate from a rural lifestyle to a city, lifestyle, a typically consuming about two and a half times more stuff. Then world peers thinkable. happen or over that period doubled and on top of tat. We ve seen obviously a transformation how we connect with one mother. The internet only really got going in. Ninety three smartphones did Media are all much more recent developments, the result of this. We live in a world today, whether more people, living, a more resourceintensive lifestyle with more Ass, you can chew ending these connected in us, which means with seeing a real conversion in aspiration and expectations. Now MA If, though, seems gonna continue to grow, we think will be another two billion people living on the planet by twenty fifty again migration to cities is likely to continue incomes likely to continue to grow. Rotation, similarly likely to continue converging

a situation where we ve got more people wanting. If this more resourceintensive lifestyle, but the challenge becomes night resource with which the feeling I wished to see some of the unintended side effects of global growth, which is a great tail when, for corporations start to bite in terms of plastic waste in terms of water, ass in terms of climate change, I think the real opportunity set, which we should not lose sight of, is in the thirty years is. The economy continues to grow where either gonna see some inflationary trends as we try to satisfy the Schuman demand, all. We are likely to see knowledge the market, but regulators, corporations move to sent advise real innovation to address The challenges we gonna confronted those innovations are likely to see, has transformed the way we think about doing business, transform our approach to supply chain, currently we only recycle about nine percent of what we can do and I think it

Thirty years we should be anticipating changes to how we meet women demanded human aspiration really with a wholesome. reform of industry structure and supply chains to help navigate the otherwise potential pinch points associated with meeting human expectation investors. Are focused on this integration of environs social governance risks. Looking at that rubric as these select stocks has seen a big increase and focus on the last couple years. What's driving that our investors focus on these trends or are they seeing opportunities for better return, some companies that are thoughtful about this sound bite on this has to be that integrating he s, g for profession, Wes managers is becoming a business narrative. I was two reasons for that: one source of the driver. You can attributed to developments in capital markets and I think, the Are you can it too broad evolution, global macro trends, global industry trends that are made?

the culprits that fail to engage with the actual risks can create very rare environmental shareholder value, may to run through a couple of these on the cap. market side. There has been a very real growth in the number of asset owners that is committed to integrate a call, the, U N, principles, responsible investment six things you need to do, but they are basically to agree to integrate as of yesterday, issues into the election process to be an active owner to engage if companies around how their managing yesterday risks to engage with cold about increasing the disclosure of how the doing this to promote, integration and analysis of yesterday, more broadly in the industry, where you identity why potential opportunities, potentially to collaborate with other investors and lasting report on the progress now as soon as acid owners, to doing this, that putting pressure on,

set manages that are managing assets on my behalf to do the same, but I think we're gonna look back a few years time and realise that two thousand eighteen was an important milestone for this initiative want. It was when we passed two thousand signatories but also it was the year in which the EU and indicated that over a hundred and eighty of the institution that had made this commitment, wherein there ice failing in this commitment the case that, if they didn't step up how they integrating yesterday they may be please be removed from the list of signatories and this real implications. If the reason you have managed to gather assets is that you committed to de Grady Estuary and then they spoke serve. This process says. Actually, we don't think doing it the way we expect you to so what we have definitely seen in the last twelve months is a real step change in the intensity of investment. Firms integrating the estuary historically

those that have been doing this- have made big investments in stewardship teams and responsible investment themes any ashtray teams, but many of them have that may be slightly annexed from the election process and will we what to see in the last twelve months. Is them effectively been removed right into the heart of the investment process, to ensure that a better dialogue with our investors and a better dialogue with cooperation are investing in to ensure they really are integrating yesterday, as had been expected on top of that, we are seeing exchanges demand more corporate reporting of how their magic yesterday and we ve several equity it's around the world. I stewardship codes, so maybe some of the markets, previously were not that focused on COBRA govern said. Environmental social issues in the last couple of years have really compare investors in the local markets to be more engaged with these business risks. groundswell of forces in the capital markets to drive this change, but then also

play in shaping the global economy that a meaning that there's a valley when integrating? Yes, she because companies that are failing to do it. I having some accidents, and companies that are doing very well seem to be. negating some of these global trends more effectively in a mood of cigarettes Is the realities in the nineties these minorities to be a good company. You just had to be financially sound and operational, excellent it to be a great guy, We need a day, there's no Tional, financially sound operation? The excellent view was over have to be engaging with the community's your employees, your regulators, the environment, customers just supply chain if you know, there's a chance that you may have an inadvertent accident that potentially the real impact future any annexing. Shell did I Well, that is really make sense that companies that manage all the risks would deliver better value over time. We're is yes,

integration, most likely to add value for investors in the short and medium term. This really comes down to the mandate for the investment strategy that your pursuing. As you are aware, we ve got a vast lance. Of investors participating the markets from those that are employing very high frequency quantitative approach. The trading weather position size within the fund, will be a very small percentage of the fund and the holy period. Could be less than an hour before those investors, the potential for an ash tree event at a sin stop level too. a dramatic impact on the performance of the fund or their ability to preserve their assets is very low I certainly that end of the market does not a lot of incentive to be integrating yes, Julie unless you're investor is asking you to do the other end of the market, where we now got very, very concentrated Long duration, portfolios

that may be investing in just fifty positions in expectation of holding those positions for the next five and maybe weathers position sizes are very difficult to one and quickly given the concentration of the fond I'd say now for many of those investment managers. Integrating yesterday is a core, into the election process, because if you gonna stop for five years, not engaging with ease she risks the probability of it manifesting itself an impediment to value your clearly become much greater, is the holding theory grows in the middle of those two extremes. It really very much depends on the nature of the ants that you're investing if they can't is because maybe you have a lot of captain I said face with. ass, imagined firm. The level of engagement, maybe love, if you are using the typically managing third party assets than in function of who you are Vast, as are, they could be

a real requirements to be integrating yesterday into the strategy so v. much depends on the investment I also say this is definitely been more of a feature of the equity markets for the last twenty as we see real momentum in the equity markets over the last five years, but will also sorry to see this focus migrating into the credit market talk a little bit about sixteen and what role it plays in this landscape all. Seasonable approaches to picking stalks, typically work overtime? value strategies, growth strategies, income strategies, quality strategies they all work overtime, the textbooks one lying. What I say, though, is there, is one really quite persistent source of outperformance that we identify in the market I ought to typically adequately value great companies we know that high quality companies typically trade on a premium, but what we observe is Quality companies that stay highquality companies can really.

Perform over the medium term, so g sustain aims to identify companies most likely to remain, as industry leaders industry, leading returns on capital over the next three to five years by analyzing, just three inputs all these, companies already generating industry leading returns on capital. The second important does it appear that they build a real, moat or real source of competitive advantage around their business with it that if they have the ability to defend the current high return, into the medium term, will be more durable and then Lastly, an appraisal of how pro actively engaged company is in managing and engaging with the yes issues that are specific to their industry. The questioning really pretty simple, which trying to work out all these companies really that good, it's a free faced process, Are they already good? Do you believe that defend that through their operations and then

this is the real wrinkle vs ie do We believe that public disclosures, the corporate culture is robust enough forward. Thinking enough to be able to preserve, those into shrilly returns in the medium term. I could see at first to credit it could be measured and analyzed, how do you use data and public disclosures to get at that cultural issue, which is notoriously difficult wall we should admission of GM sustain is in the early days we had two collected all ourselves when we first launched the product azure sustained in two thousand seven, a lot of Roger and analyse reflecting the data from companies. Yes, our reports point. We only have two hundred and sixty thousand data points in the database, but the Good NEWS is where is she now able to sources through some of the larger market data vendors we seen as the rise of investor focused on. Yes, she has grown that the market data provided

The move to meet that demand by providing access to the data we use all of the available publicly disclosed communications that the companies make around that board structure Their incentives, energy intensity, their emissions, intensity, health and safety in the workplace. Attrition build a mosaic that is unique to each industry to determine what is material and how to companies, engage with it. it's been an evolutionary process over the last fifteen years, since we rode off first ever report on yesterday, but I think we saw me at the moment for the near thirty sector frameworks that we have that, where I to the arrive at a reasonably objective in creation of whether company has identified what material, whether the policies and the performance they haven't place, suggests, they are really managing these risks and that becomes the input. We

The one thing I'll say is this: isn't a conclusion companies good always companies bad really is more of an indication as to whether this company's engaging and how its engaging right to its peer group in mind. These risks accidents unfortunate. it happened and come back to maybe later was certainly seeing now. I they growth history in consulting on how companies could do better this kind of reporting when you're looking at these rate company You talk a little bit about competitive advantage eroding a bit over time becoming less durable. Why is that? Is that just a natural phenomenon No, I did some real changes taking place in the global competitive landscape. It maybe just a d still less to how to think about competitive advantage, typically only really full levers that company has to play with to generate superior turns on capital. You can grow faster, asset turn is really important to preserving returns on capital because, typically, oh concrete annual cost basis growing.

making sure you ve got access to top line. Growth is an obvious potential source of differentiation. The second commanding a higher price than if you can do for the same product, but charge more for it by virtue of the tunnel what she its performance, maybe inspiration, then that is able to eventually cover? Maybe inefficiencies in the balance sheet? All the operating costs base the is less cost, create the same problem for much less cost is a way to keep one margins, the last obviously just to use less capital, and that could be tied to your supply chain. It could be tighter working carpet management, it maybe counter cyclical laminae or compacts, but those are the fuller, with playing with and when with, is a million wasted due each of those four. But if you just the steel every industry to how we access growth, how we create pricing power, how we create leadership and how we manage our capital. There's a few things in place in the world today, the first and most differential

for me. I moved Asia in two thousand. Ten working gs sustain to try and find, and ages great companies doing the list at that time had a very large representation of. U S in european companies I believe that when I was in region when Japan had the great earthquake and subsequent too, that the change and changing economic policy and a dramatic depreciation in the yen, and had appreciated by a hundred percent in the fifteen years to two thousand and twelve its given back. Half of that appreciation so the historic, gonna, eightys and ninetys view of the world of the. U S, Europe and Japan, jerking off our growth, Japan taken out of the equation by this ethics headwind. Japan is now certainly back in the global competitive dynamic Second is really the return of the sea turtles, some very, very bright chinese graduates

that had been educated in many of the best schools in the world had fired and he has work experience in get leading. Multinational corporations returning home to China. The big difference in it another returning home to you today versus the China of twenty years ago is that China today has very very deep private capital markets, so very big venture camp industry, very big private equity industry, the generation of sea turtles that return home previously found themselves situation where only state owned enterprise, good rice funding, now in a position where they can access private capital to build some really very innovative. Not only industrial facing beat be companies, but also consumer companies and technology companies the challenge. There is a lot of global growth for multinational corporations. Over the last few decades has come.

China, China. Now it seemed very real innovation in domestic companies that is creating a credible sources. Import substitution, sir monetizing. China's growth set his big when more challenging? And the third is the rise of the internet It doesn't matter which industry or antipathy at the moment with seeing some encroachment with a digital alternative and because our global markets Institute recently wrote of another feature of this is the notion of everything. As a son you don't need to own a factory any longer to have a product manufactured, so we send me have a situation where global growth remains intact, but it's getting. We are encountering much more ferocious competition to actually monetize it we're starting in situation where asset light businesses, our broaching into incumbent marketplaces, meaning that actually, even where you ve created pricing power that Europe

that is as good as it used to be, and that is created probably one of the most globally ferocious competitive landscapes most corporations will ever have encountered. That should be good for consumers at some level, We haven't investors incorporates what implications does it have for corporate strategy as they look forward and look at this very dynamic and competitive landscape. If corporates engage with. Where they are really competitive, open minded about whether may have operations in the portfolios the maybe not as good as they need to be in order to thrive, in that competitive landscape. I they want feature will likely to see. Moreover, it suddenly been a feature of the last couple of years of corporate strategy is increased, focus on coke restructuring, Koper simplification, we seen over the last two decades, a reasonably high level of activity in the? U S: markets where companies have been spinning out or something

strategic investors or something to private equity investors. Non coral sub scale divisions of that portfolios in the last Eighteen months we started to see this become a bigger feature of corporate Europe. The weather frame? It is that in a world where you ve got finite human talent and finite capital. Doubling down on businesses that are sub scale that a typically falling outside the top three to five in the industry. is something that needs to be given further consideration verses? Maybe what would have been the decision tree a few years ago, because, to the extent that you're committing capital and committing human talent to businesses that are gonna really struggle to thrive, theirs opportunity cost and I think what we are seeing now is increased willingness to say, but these are all points,

in finishing divisions. This is where we actually top three in our respective markets. Let's focus a time, the folks, our capital, while people are making sure we get these right. An increase, openness to sunny others, and I would anticipate This will likely remain a real feature of european equity markets for the next several years. For this long standing, conflict or debate between those were very some short term results in those who really thinking longer term. How do you think about how to reconcile those too, competing pressures, particularly for both asset managers and for corporate before thing. I think it's a reality in response to the last point of competition is that corporate have been intended to push hard to overcome competition, then, at any point in time, when a corporate is required to think about how it can preserve all grow, its pricing power, its costs base, its balance sheet reconcile short term levers and

Actually, the long term viability saw implications. Those may there are things that corporations due to try and great pricing power to try and lower manufacturing calls that may involve outsourcing all manufacturing, pushing soup change deeper into the emerging markets. Maybe not in inasmuch as we may need to technology or data protection, cyber security that obviously, options that you can consider that, if those prove, after the event to be ill place, conclusions they can crystallize themselves is real business risk. We ve only seen now started to see very real growth in cyber attacks on corporations, Europe's new logic, nation on GDP are in consumer data. Protection has thought it is situations where data protection is, as for corporations are potentially gonna, create liabilities that impair shall devalues. I think

each of the world we live in today is be the half life of short Termism is shrinking and short term move to manage costs that we could have had ten or fifteen years ago. would not quickly translate into a potential business risk I think in the world we live in today, some of the Decisions need to be considered just in the medium term performance we can generate, but also the actual medium term risks they may be created where things are wrong?. Really, since the beginning of one corporations began to talk about there, She manage manned and asset management and talk about alleged sceptics through around the phrase green washing and you ve talked about it a little bit as well. How do you think got that from the outside a lot of times. I think skeptical people say you know, I'm not sure these corporations are that serious about this they're just doing this, because they know it's in vogue to talk about it and maybe suits their purposes. But

They question the level of commitment? How do you think about that issue? the real consideration for anybody trying to integrate yesterday into the investment process. I said back in two thousand: Seven, we only have two hundred and sixty thousand data points in our global database. I think today, were pushing six point, two million, and that's not because we were looked for more it's, because companies gave us a lot more data to analyze, in essence, belying the risk of more proactive corporate, ring of how they engage with the estuary situation where you'd hope this become easier. It's probably becoming harder tenure ago. A corporate that really believed any ash tree which stand out from the crowd I would want to start a meeting talking about yesterday they may become leave angelic Aubert. They would be saying before we started to allow performance or outlook. I wanna talk about initiatives that were integrating into a strategy that we believe will cry long term value, so I

defying industry leaders was relatively easy. The of data available to analyze was pretty limited, and the getting it wrong was really the false negative that there was a good company you wouldn't have been able to identify because they didn't have a siesta report that you didn't put into the fund roll on ten years? There is a lot more data, which basically means this become more expensive, and it's not always clear that the data raise been disclosed, Because the company has had a cultural revolution, and really is integrating consideration of yes, she into all of their business decisions all this has become an integrated part of that Cooper Communication strategy that we understand Our industry is expected to report on these metrics, so big report on these metrics, because child is demanded clearly the faster. Integrating. Yesterday, you is trying to identify the former and

maybe just identify whether the latter is to ensure that our own them That means the risk is transition from the false negative to the false positive and the false positive that I put I company into a portfolio that analyzing yesterday that isn't as good as the estuary schools suggest actually are, and nobody disintegrating issues of investment process today wants to find themselves owning the net. major environmental catastrophe when they ve told the client their investment processes, reinstated towards making sure that doesn't happen. Tradition a lot of the yes G focus has been on larger multi national companies and higher market cap stocks. Talk about implications of yesterday for small cap investing you're, absolutely right what we ve seen over the last ten years, as there are some invisible forces that seem to be compelling.

In shaping corporate disclosure larger cap companies, maybe you could call it tool poppy syndrome, very proactive reporting there yesterday engaged The second consideration is the stock exchange. Your listing on listing requirements certainly shape corporate reporting, We won't your shares if you shall around by institutions integrating yesterday. The management team will typically have started to respond to the questions that getting with more proactive reporting. and lastly, environmental sensitivity, so we do find very big companies listed in developed markets in action. Quite environmentally sensitive companies do a very, very good job of explaining that management with the actual risks, but this isn't free to rashly analyzed a report, this data to get this data. What it is is something Is it not inconsequential burden on accompany big companies? That's easy to absorb smaller companies. That's an issue, so

In contrast, we will receive a large gaps with small account companies. We typically see less disclosure. This is a challenge. Because it doesnt mean this more cap companies, a disengaged, if you think of a fall, million dollar, Mark account small camp company that trade on twenty times, twenty million dollars of post tax earnings, we probably die want them. Michel was to be spending a lot of money on that corporate social responsibility reporting, but in contrast, that it might actually still be a company that only has one site. It may just have one factory the sea: oh my been personally involved in hiring many of the people. But working that company that but he may be a real part of the local community and have really strong cultural values and proactive engagement. It thinking other environmental impact that water scarcity, how they with their employees and their communities really belying.

the risk of green, washing and Lee Disconnect. We see between the levels of large cap and small cab reporting of yesterday engagement, the real message that we take or investing clients. Is this headline? Schools should inform you tat the shape of the commission. and you have when you meet with management aims It really is about a small outcome when he would allow reporting, doesn't mean its disengaged, but you We have to have a very long conversation with this more camp company to understand whether they are engaged, press without a large outcome. He's gonna have a lot of data to share with you and he made his to work at how harder to work out whether that really the essence and the culture of the company, or this is part of that broader. Negation strategy with a market. You mentioned it But the issue of plastics and plastic waste has gotten alive attention in Europe and even in the U S,

Even thinking about that issue, a lot and wrote about the fact that solar, which is really become mainstream, might be a good blueprint for solving the plastic problem. Explain that, but I was blown away when I started to look at this that the first solar array that was ever install on a rooftop in a city, was in eighteen. Eighty four here in New York, I hadn't appreciate solar technology had been around for so long, so so the technology, that's been kicking around then four hundred and thirty years, but has really seen a transformation in the economics of the technology and the use case. until really the last decade. Why would that be able? we actually worked out very efficient ways, Mine, coal, we master Really efficient infrastructure in color and the country. We also mash innovate around nuclear fuel Over the years we managed to work out ways to get access to pretty

oh cost gas, so the economic incentive to pursue technology that conversion rate of just one percent was really very low, the tentative waste. the generate electricity with romantic, cheaper relatively easy to scale and as a result of the being no disincentive to use conventional fuels are no incentive to invest in, king, the alternative, the renewable fuel cheaper, we literally had a hundred years. Whether wasn't a lot of investment in thinking about the commercialization of solar few things started to happen. The first was broader, both public and regulatory awareness of the potential climate change risk associated with hydrocarbons and As soon as that became, I think, a feature of the public debate. We started this mechanisms around the world like Europe we created a year.

PS carbon market. We started to come a friction or a distant. And gave to consider fossil fuels, the long term alternative waste to make them just a little bit less efficient than they have been. Historically, we also started to put in place: subsidies and some incentives to invest in May solar, more efficient and we ve seen, and it really is just in the last ten years, the level eyes cost of energy. Think of this is the break. Even power price you need to commercialize solar power in Europe has fallen from that written forty Euro megawatt our to close it forty and we anticipated it for further in the years ahead. Now, as a result of becoming so quickly economic expectations for how we will place all the power in North West. Europe has really transform The eyes estimate fur global

Power generation by the end of next decade has increased. Fifteen fold little more than a decade, just afraid. we had a disincentive to maybe things business. As usual. We had broad public away This is a potentially less well understood so effective business as usual, and we to see industry regulators provide incentive to innovate around alternatives and that's dissimilar to what was starting to see with plastic. Today last year, in they cities in the developed world. I common action of a little bit of a regulatory change, a little bit of a change in consumers expectations. We find the plastic drinking straw, for but really medical, uses signed a history forever. As we see, growing awareness of the side effects of single use plastic.

Or maybe put another way, the growing side effects of not reintegrating plastic into the drastic supply chain he's having real consequences for particular Marine health? We ve seen a lot of talk. Trees. A lot of movies now made around this debate. We have some global ambassadors in terms building consumer awareness and regulatory awareness of plastic and just two ago we saw some of the largest but he's involved in the plastic industry globally and Bob upon a new alliance to stop plastic waste on this, the oil companies, the placid companies, the consumer product companies and the waste companies commit to spending a billion over half dollars. Thinking about how to reengineer plastic value chain to take plastic waste and put it back into the supply chain, the tangled the technology to recycle plastic has existed for thirty. Is it now

efficient as we would need to be in order. really recycle plastic to the volumes, would be relevant for the supply chain of the plastic industry, But the other thing when you think about here is how to change human behavior. There is probably what is good, awareness of the different kinds of plastic war can be recycled as they would need to be in the average household, the waste collection the waste recycling industry would have to change from what Carly structured like, but I think there is good reason and growing optimism to believe that in the next ten years, something that is maybe been something we ve hopeful for decades really could see a transformation. I think we should be open and domestic about human ingenuity and our capacity. If we have the right incentives and the leadership by corporations to see a transformation in the classic supply. In the decades ahead. So Richard out

Much question most people's minds who follow this topic closely, that Europe is ahead of the pack when it comes to energy. Investing in the day, the rigour of the debris There is well ahead of the rest, the world. Why is that one of the factors drove that in what can the rest well learn from Europe I think it is very fast say it region that has led the Ici agenda over the last two decades. There's a confluence of things that took place in the light nineties early two, thousands that got the ball rolling in Europe before other regions, and they were things like the cap Rico focused on corporate since there are initiatives where governments mandated municipal ass at owners to report on their yesterday reporting. There was a events have requirements by stock exchanges to report on how companies with thinking about various risks, but the thing that then very quickly stuff

to build momentum around. It was some of them, larger asset owners quickly embraced the view that over the medium term and remember somebody's largest around a pension funds where they really thinking about very long term liabilities started to be very proud, even articulating that they felt failure to manage yesterday risk could be a long term risk fur. There the service Malta on pensions that resulted in them very quickly, asking if there party manages the people they were giving their assets due to manage really put it pressure on them to demonstrate they were thinking the same way and managing risk the same way in other areas of the world. In contrast, there was some debate, about fiduciary responsibility and our view that is a fiduciary you're responsible for preserving and growing capital and making. The right investment decisions to support that

and that maybe integrating yes G would be in conflict with me. Fiduciary. if this environmental risk, or if this water stress risk, is not gonna crystallize itself as impairment value. Then why would I be doing it now, but that divide? has come a long way in the last fifteen years, It has now been I've, a very real view that aging in thinking about some of the actual risks is actually integral to being a fiduciary on that, we ve been the reason we ve seen so much increase momentum elsewhere in the world of integrating he s chief men, look today. We still see a bigger share of these Wells assets on the management that integrate yesterday in Europe, the EU ass is catching up very very quickly, but then the some interesting twisted that that the first growth area. The world at the moment is Japan.

The combination of both the introduction of a jewish code requiring investors to be stewards of capital, and importantly, their sovereign acid owners saying that they want to see their manages integrate analysis of yesterday and that's just a process that started in your of twenty years earlier. that was a great wide, ranging discussion thanks for joining us today. Thank you for having me. We appreciate You listening and we hope you join us again next time. This spot Gaskell's Where did on February, first, two thousand nineteen- all price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced in whole or in part. The information contained in this package does not constitute. Research

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