20 Minutes With: Impact Investing Pioneer Jed Emerson | Barron’s Penta
By Abby Schultz | June 14, 2021
Jed Emerson was among the leaders in impact investing profiled in Penta magazine as a “champion” of the sector in September 2018.
At the time, and for most of his career, Emerson, 62, was advising investment firms and wealthy families around the world on what true impact investing was all about—that is, allocating capital to investments designed to create a demonstrated positive environmental or social impact.
He has also advised key social enterprises in the field, including Toniic, a global network of impact investors, where he is still a senior fellow; the Center for Social Investment at Heidelberg University in Germany, where he remains a senior research fellow; and ImpactAssets, where he is a senior fellow after serving as chief of strategy for many years.
Emerson also has written seven books, the most recent being The Purpose of Capital: Elements of Impact, Financial Flows, and Natural Being.
As the magazine article said at the time, Emerson is something of the “conscience” of the impact approach to investing, particularly as it enters the mainstream and is embraced by big institutions, from Goldman Sachs to the private-equity firm KKR.
Last week, Emerson joined Tiedemann Advisors as global lead of impact investing, a full-time role that marks his first job within investment management. He will work alongside Jennifer Ayer and Brad Harrison, co-leads of the firm’s U.S. impact strategy.
Tiedemann is a New York based firm with US$25 billion in assets under management, of which US$3.5 billion is in impact strategies—a figure that’s risen roughly 155% from 2018 to 2020, according to the firm. Tiedemann serves wealthy individuals, families, trusts, foundations, and endowments.
Penta recently spoke with Emerson about why he took on this new role, and what he hopes to accomplish.
PENTA: Why did you decide to take an “inside” role after years as an outside advisor?
Jed Emerson: I’ve spent literally the last 20 years working on the outside of firms and families and organizations to promote and to try to be provocative—but also relevant—in terms of impact investing.
We’re at a place now where we do have US$30 trillion to US$40 trillion globally in impact capital (depending on how you count). For me personally, the opportunity to come inside, to be part of a team, and work collaboratively with other folks to build the execution part of the conversation is exciting. A lot of my best thinking has come out of doing the work. To be at a firm the size of Tiedemann, and to be able to continue that exploration and go deeper in terms of the practice, is important.
Where we are in the field—there is some great work going on, and [at the same time] an opportunity for “impact washing” and for folks to take a light touch. My experience of working with Tiedemann for the last three years as an advisor on impact strategy and also sitting on the external investment committee [has shown that] the folks doing impact and the folks more broadly on the advisory services side, are approaching impact with an authentic and sincere effort to do this in a meaningful way, and not just have it be a marketing play.
I said to Mike [Tiedemann, the firm’s CEO]: Are you really ready for me to come inside? I’m not known as someone who hesitates to say what I think. I’ve been promoting what are pretty progressive ideas for a number of years. I won’t leave those at the door.
What do you expect to do once you’re on board?
A lot of momentum for this will be client driven, both folks coming in saying we want to have the capacities that a Tiedemann-type firm can bring, and [those who] want to push the envelope in terms of what impact looks like.
So, families who are global, and families who are interested in having a presence in multiple markets, families who want to go deeper in their impact journey. I want to work with these people. I’ve worked with leading impact families over the last decade, which has been a great experience and great process. But to come into a community with an existing client base that is impact curious, as well as a client base that already has gone to the firm and said: “We want to do more, we don’t want the off-the-shelf solutions.” To be part of that process is going to be great.
Are you hoping to bring more investors into the impact realm?
The opportunity for growth in the field is converting the advisors and families who see something and aren’t sure how best to execute. They want to be a part of it, but they don’t want to be pulled into something they are not fully up on yet. Working with a firm and families that are asking fundamental questions, and looking at what does all this mean for them in terms of their approaches, and then creating new answers, is what’s exciting about the opportunity, as opposed to saying [to a client at an impact-only firm]: “It’s going to be an impact strategy, here’s the ETF, and the mutual funds, and several direct investments we’re going to be participating in, and that’s that.”
That’s what I’m excited by. There’s a very dynamic internal conversation at the firm that is opening itself up, in collaboration with the clients, that is [both] committed to impact and is curious about impact.
What does the recent effort by Exxon Mobil shareholders to unseat three board directors say about impact investing?
It’s a great example of how every asset class has a different risk, return, and impact profile. For public equity investors who want to engage with large companies and use their shareholder voice to do that—to use their proxy voting to do that—that is impact. It’s a great example of how we are in a period of real shift in what it means to be responsive to shareholders, and that profitability is not the only measure. We’ll see more and more of these types of initiatives.
There’s that, and also the court ruling around [Royal Dutch] Shell that came out of the Netherlands [saying the company needs to cut its carbon emissions faster than planned]. We’re just going to see more and more of this. This is great thing about working at a portfolio level: You can collaborate with families around shareholder and stakeholder voice, through their public security investing, at the same time you are screening and doing [environmental, social, and governance] integration practices through those same vehicles, at the same time you can do direct and [private] fund investing that have a deeper kind of impact. It’s all impact, it’s just different shades. And to do that in a coherent, holistic way at the portfolio level is the type of thing Tiedemann and others are able to execute in a way that was very challenging to do 20 years ago.
It really opens up this whole conversation with clients and families around what is the purpose of their capital and their wealth, and how does it translate to the market, and how does it translate to the dinner table, and how does it translate intergenerationally.
The fun part will be to work with a firm and investment experts who do the fundamental research, who know the markets, who know the firms, who can do the analytics, and who are looking to pull impact—and sustainability and ESG—into those analytics in a new way to the future. You can only do so many books and so many papers. At some point you have to get down to business and pull the trigger on capital deployment.
This interview has been edited for length and clarity.
Read article on Barron's Penta here.