When Amy O’Brien, global head of responsible investing (RI) at Nuveen, spoke at Barron’s 2018 Top Women Advisors Summit, the “conversations, energy and kinds of questions” were completely different from four years earlier. “Instead of legal, fiduciary questions, advisors now want to know how to implement RI,” O’Brien told me. “They’re saying RI is critical to their future, to transition management and to attract younger people to work in the practice. The plea I heard in the room was not just that we need better products, but to simplify the message: ‘Can you all just get on the same page on how you report out?’”
Early this year O’Brien and I spoke at length about RI and the role her team at Nuveen has in being a catalyst both for the development of differentiated ESG and impact products and for addressing a persistent communication gap about standards for measuring material ESG data across the economy. As O’Brien pointed out, Nuveen, as a universal owner and microcosm of the industry, is in the perfect position to lead the way.
Connecting The Dots: Going Beyond KPIs
When O’Brien joined Nuveen’s parent company, TIAA, in 2005, she was the first person dedicated to focus specifically on responsible investing. Today, she is tasked with developing a holistic RI vision and unified framework across Nuveen and TIAA. She brings more than 20 years of experience in RI research and CSR reporting. Her work at the Council on Economic Priorities (CEP), a pioneering public company research organization that carried out analysis of the social and environmental records of corporations, makes her the ideal person to act as a bridge between the earlier, more mission driven part of the industry and the more mainstream, ESG metrics driven phase of RI growth in recent years.
Based on her experience with both investors and advisors, retail and institutional, she knows the industry doesn’t make it easy for anyone to connect the dots around RI. So when O’Brien says, “We have a taxonomy problem,” she understands the complexity of the issue: “What do we mean by responsible investing? Is it exclusionary screens? Shareholder activism? Impact investing strategies? Dedicated mutual funds?”
Her team at Nuveen is addressing this communication gap internally in two ways: First, by focusing on client RI needs and working with key partners on streamlining and clarifying all marketing and informational material that goes out to investors and advisors; and second, by working with the Nuveen investment teams to systematically embed material ESG factors within investment decision making processes.
For example, using a traditional industry approach, advisors would focus on key performance indicators (KPIs) when talking to clients about investments. O’Brien is clear, however, that KPIs alone don’t capture the conversations that many clients want to have. “People come to RI with many different motivations,” she explained, “and we need to focus more on that client journey: better education and understanding of what options are available.”
After conducting extensive surveys and focus groups and learning that clients often don’t understand the technical jargon around investments and major RI initiatives, O’Brien built out part of her team to work exclusively on translating high-level conceptual language to be clear to the end user: “We’re aiming for a consistent narrative, streamlining what we mean by RI, getting a handle on the taxonomy and working really carefully with distribution partners so we’re speaking the same language.”
How Better Metrics Can Change Reporting And Drive RI
When I asked O’Brien how CSR and ESG reporting has changed in the last 20 years, she pointed out that although we’ve made progress as an industry in identifying key ESG metrics, we still have a global public policy gap in what is considered material and what companies are reporting against. In her view, this calls for multistakeholder engagement: getting companies, policy makers and investors to collaborate on what metrics matter. Her team at Nuveen acts as what O’Brien calls “the middle child,” identifying connections and matching information that investors most want while working across the board to embed metrics in core research processes.