EPISODE S1E12: INTERVIEW OF Chris mcknett, co-head of sustainable investment at allspring
Chris McKnett is Co-head of Sustainable Investing at Allspring Global Investments is our next guest in conversation with Graham Sinclair on ESG and Coffee Podcast. Chris shapes the direction and delivery of investment that integrates ESG factors for the firm, makes sense of the “what next” new themes impacting the way business is conducted, and tries to pace his coffee use. This pained expression was Chris recalling his disastrous Apple $AAPL trade..!
PHOTOCREDIT: ESG and Coffee Podcast, 2022.
OUR GUEST in S1E12:
I am pleased to welcome to the ESG and Coffee Podcast my next investor guest, Chris McKnett to our long form interviews in S1, “The Originals”. His bio reads “Christopher (Chris) McKnett is co-head of Sustainable Investing. He is jointly responsible for shaping and executing on a holistic strategy for sustainable investing across the organization. Chris is a member of the Diversity & Inclusion Sub-Council. Previously, Chris was a senior environmental, social, and governance (ESG) investment strategist. Before that, he served as head ESG strategist for State Street Global Advisors and was a member of the firm's senior leadership team. Prior to that, he worked at KLD Research & Analytics in Boston, one of the first research firms to specialize in ESG, and American Century Investments, where he began his investment industry career in 1999.” He is a First Movers Fellow of the Aspen Institute Business & Society Program.
We first met: I first met Chris when I moved to Boston MA in the winter of 2005 to be research product manager at KLD Research & Analytics, Inc., and he joined shortly afterwards from Denver CO to work on the indexes side of the business. We were both new to Boston, and had shifted our careers directly into sustainable investing. As Chris so kindly says, we have been friends ever since and fellow travelers collaborating in different work moving forward ESG in investmentland on at least three continents.
HIGHPOINTS:
“What we call human capital really matters.” Diversity is crucial, and not just in complexion or cognitive ability, but in how firms approach the problems they face and how they bring solutions to the marketplace. Companies that have a purpose beyond just succeeding financially are firms that have a compass within their operating environment the culture that will keep thriving through extreme economic stress. The datasets are not readily available now, but has driven the by Chris and his colleagues engagement with companies over this period. Here is a Deloitte survey of CEOs and in this interview on Bloomberg Live the Deloitte CEO makes the point that 87% of employees want the firm to work on climate.
Range of experience. Chris works across asset classes and investment strategy types so he sits with different investment teams daily working on mandates that cover growth equity to overnight money market funds. Maybe he always has an open mind - like “any tree he’s looking at”?! In some ways that’s captured in his movie moments, from Trading Places (1983) and Wall Street (1987), a range of (sometimes dark) humor and tragic hero arc. Most impressive is Chris’s quality where he speaks candidly about where he checked his proposition to restate something that sounded like greenwashing, where a fund’s description said “fossil fuel free” when it was “fossil fuel reserves free”. A professional who take antagonistic criticism, processes it, and fixes their work, does better quality work. He expects that greenwashing will reinforce the need to be better quality, and sees the upside of legal and compliance being sharper on what ESG is and is not. Short term pain, for longer term gain.
Tracking our impact. I listened closely as Chris thought through if/ how he would “update” his seminal TED@StateStreet speech from November 2013 published in 2014. It’s had over 1m views on TED and even got a boost years later from CalPERS social media person. Watch it for the historical context - nearly a decade ago - with the opportunity to benchmark for an update today, as I intend to do for mine in late 2023. Reflect on how much, or how little, has changed. As two humans who have been trying to make this path into investment where all factors - including ESG factors - make up the investment decision, tracking impact matters very personally, as much as it matters for investment clients and the overall industry and state of the world.
Rating ESG performance. Chris’s intellectual inquiry is reflected in the wide range of ESG data vendors that his team chooses to work from, but only as a starting point because ESG needs nuance and context. He uses the ESG ratings as third party “street view” as reference set to test how his firm’s ESG performance assessment maps as similar or different to “consensus”. I raised the example of 2018 paper on The Social Origins of ESG?: An Analysis of Innovest and KLD, as a reflection on how the ESG research is done, how ratings are made, and where the points of opinion are versus capturing data-points. Chris says we need to be in the spreadsheets, looking up at the client landscape and checking your biases. We are always rating our own performance, and so is the market.
Stay after the close for our BONUS TAPE where we talk briefly about portfolio names that may be surprising, where Chris expounds upon climate transition with small firms and large firms, and where the large diversified incumbents that have achievable plans that may benefit from transition and will help the economy shift happen.
If you enjoy the podcast, please post a 5 star review wherever you enjoyed it. If not please DM me @esgarchitect. Let us know on Twitter @ESGandCoffee what compelling investment humans we should interview, and to stay posted on upcoming episodes.
Thank you for listening.
Host of @ESGandCoffee podcast.
esgandcoffee[at]gmail.com
LINKS
Allspring main page
https://www.allspringglobal.com/investments/capabilities/sustainable-investing
Overview of approach:
Proxy policies & ADV https://www.allspringglobal.com/legal/policies.html
More on Stewardship
White papers/insights
Investment strategy
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