Three in Five Podcast

Episode 11: Three ESG questions for Anna

Steve sits down with Anna Murray, Global Head of ESG for SLC Management, to discuss ESG best practices in commercial real estate and the broader sustainability opportunities and outlook for investment managers. 

Steve Peacher: Hi everybody thanks for dialing into this next version of “Three in Five.” I'm Steve Peacher President of SLC Management and today I'm really pleased to be joined by Anna Murray, who was the head of the ESG at BentallGreenOak, our global real estate subsidiary, but is now Global Head of ESG for SLC Management. Anna, thanks so much for taking the time today.

Anna Murray: Thanks so much for having me here, Steve.

Steve Peacher: Anna you know, first let's talk about commercial real estate, which is obviously the focus at BentallGreenOak. When you look at, you know, what can be done within by managers of commercial real estate, what are some of the best practices that you see out in the marketplace, in terms of being environmentally sensitive and responsible as people buy develop and manage commercial real estate?

Anna Murray: Well, I’m going to take a bit of a different approach to answering that question, because I know the temptation is to go on about specific programs and details about ESG initiatives, but for me, I think, best practices really means going back to basics. And that includes collaborating with diverse stakeholders, integration across the broader business and commitment to resourcing a strategy. So, let me just unpack those three a little bit. I think there's enormous power behind collaborative engagement, so where varied stakeholders perspectives and objectives are taken into consideration. So that means sort of understanding goals across the board across the business – investors clients third parties, etc., and then, of course, hiring diverse teams to enable execution on the strategy. The second part is around business integration, so that means ensuring that the ESG teams are not operating in a silo but rather that ESG’s integrated throughout the investment lifecycle and across the business, and that allows for more holistic and scalable approach. It also reinforces the fact that ESG risks are business risks, we don't want ESG risk to be considered separate and discreet from the investment process, rather another element for consideration. And lastly, it's about backing, strategy with resources right so best practices include moving beyond ESG platitudes to actually showcasing substantive action, and that certainly requires a strong team that's well resourced for key initiatives.

Steve Peacher: If we step back, take a step back from commercial real estate and think about ESG more broadly from an investment management standpoint, there's been so much discussion over the last couple years. Where do you see the big opportunities for investment managers to move their ESG initiatives forward?

Anna Murray: 2020, as we know, was a turning point in the sustainable investing world. We saw myriad climate events, the pandemic, global social unrest and ground-breaking policy change so now more than ever there's an opportunity for alignment, disclosure and transparency. So, on the alignment side of things we’re really are hoping to see more consolidation around standard setting so, for example in the investment industry, we still have a ways to go in terms of how best to align industries’ approach on climate risk. So specifically around language metrics resiliency benchmarks. And that would include further clarity around the more technical elements of evaluating climate risk and assessing overall portfolio risk. For disclosures, I think there's a huge opportunity around making disclosures more consumable, so whether you're working with investment teams or operations teams, there's an opportunity for ESG insights to be delivered in a manner that's more consistent and relevant to varied business units, and this will ultimately enable better understanding of materiality, risk, opportunity. Disclosure matters and it's no longer enough to simply just capture ESG data, there's huge demand for increased granularity on the how of ESG integration and results. And then, lastly, increased transparency right, so to put it bluntly we're in the age of greenwashing and as investors become increasingly more aware, regulatory requirements more defined and markets more sophisticated around ESG, there's an enormous opportunity for increased transparency. There's still a lot of surface level commentary about ESG commitments and actions, but think we're shifting to a time in history, where words need to be backed by clear action and results. No juxtaposed to that it's incredibly motivating and inspiring to finally see proper channels and attention being paid to these impressive efforts and progress that we're making. So, while the temptation is often there to be a critic, I’m forever an optimist and believe that slow and steady progress is being made, so I think the opportunity to transparently communicate our respective ESG journeys is exciting.

Steve Peacher: Thanks Anna, you know there’s so much discussion about ESG today and firms are figuring out what they’re going to do, but let’s look forward – let’s look five years, seven years forward. From that perspective, how do you think will be talking about ESG in that timeframe? What do you think investment firms are going to be doing in five years from now, seven years from now?

Anna Murray: Yeah, so beyond the bold commitments that we're starting to see in market, I think the focus is going to be on being credible. Long gone are those days of hollow lip service. Instead ESG, as we know, is become table stakes for many investment strategies and that with that comes the necessity for verification. So, we're seeing this upward trend of companies making public commitments to reduce their overall carbon footprint and develop strategic actions towards the Paris Accord aligned to the SDG that's all fantastic. So, what we're going to see in futures is alongside these aspirational targets is this need to remain diligent and transparent around actions and disclosure practices. So, ESG reporting continues to be more granular. Further scrutiny from investors and regulatory bodies and people want to see proof in the pudding that the ESG assertions are credible. I'd also say a continued evolution and strategic approach right, and an increase again on this business integration side of things. There'll be a move away from this one size fits all approach to sustainable investing with a trend to offer a suite of strategies that are multifaceted and really, the intention is to address varied investor goals. You want to be able to demonstrate this flexibility of capital allocation that will ultimately allow for congruency of ESG goal-based investing and, ultimately, a shift in capital as clients see, they have a legitimate choice. And then on business integration, you know you want to continue embedding ESG as part of the DNA of the business. You don't want it siloed out. Of course there's going to be a continued focus on climate, large attention on impending regulation, which is coming soon. And this is going to include embedding those considerations into the investment process, aligning with all stakeholders and making positive climate positive commitments. Key themes to keep an eye on is beyond just those commitments, how is it linking back to executive compensation, we're going to see more of that. And also, you know there's a lot of focus on the E in ESG, on the environmental side of things, but the S, the social side of things, is becoming highlighted, which is fantastic. So, certainly an increased focused on equity diversity and inclusion initiatives and taking that critical eye and action to diversify compositions of teams, of boards, etc.

Steve Peacher: Thanks Anna, it's obviously a very big issue and it's obviously one based on our own interaction that I know you're extremely committed to professionally and passionate about. And I know also you've got young children, so what are, what are the kind of things that you, you know do with your kids at an early age to try to get them involved in, the solution, so you know things that we can all do as individuals, as you think about their future?

Anna Murray: Yeah, well, this is one of my favorite questions and arguably one of the most important questions is really how are we engaging the younger generation? So, I have three daughters under nine and I can say firsthand that the conversation has definitely changed from when I was their age. The focus in our family is about education, active engagement and keeping an open dialogue. So we encourage our kids to be mindful about their choices and share their perspectives and really reinforce to them that their input in their actions make a difference. For us, we talk about responsible citizenship and then this active participation beyond just words on social media. And again, this critical value around diversity and inclusion, around collaboration. All that before bath and bedtime ready.

Steve Peacher: Anna, thanks so much for your time, you know, this is obviously such an important issue for us here at SLC Management, but for everybody, every business and every person, so really appreciate your insights. And thanks to everyone for tuning in to this episode of “Three in Five.”

Anna Murray: Thanks very much, everyone.

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