Climate Change

ESG Ratings
• Methodologies
• Evaluation of research providers
• For users – asset owners, asset managers
• For rated companies

ESG Investment Strategies
• Integration of ESG research into investment research, fund strategy, design and implementation
• Customization to meet specific client needs
• Index approaches
• Concentrated approaches

In 1998, Hewson and Matthew Kiernan co-founded Innovest Strategic Value Advisors, now known as MSCI ESG Research, with the goal of rating publicly-traded companies based on their environmental and sustainability performance and selling that research to institutional investors. Under their leadership, Innovest gained blue-chip institutional investors as clients (asset owners, asset managers, banks, insurance companies, etc.) and established offices in New York, San Francisco, London, Paris, Toronto and Sydney. In 2009, the company was acquired by RiskMetrics, and then in 2010 by MSCI. After each acquisition, Hewson continued to lead a team and created products that include:

• MSCI ESG indexes – While the Innovest team had created several ESG indexes with partners like S&P, FTSE, Russell and others, once we became part of MSCI, we were able to bolt our ESG research onto the huge “index machine” of MSCI. The ESG index business now has over $50 million in run rate, and MSCI CEO Henry Fernandez thinks this will ultimately be larger than the “non-ESG” business.

• MSCI/Bloomberg ESG bond indexes – Though our ESG work started with ratings of stocks, from early on it was our intention to also rate bonds. We ultimately created a joint venture with Barclays (now Bloomberg), the most significant bond index provider, and rated over 240,000 bonds.

• MSCI ESG fund ratings – As demand for ESG grew, we applied our company ratings to mutual fund holdings, ultimately rating over 32,000 funds.

• BlackRock iShares ETFs – Using our ESG data, we worked with the MSCI Index team and with the iShares team to create a family of investible exchange traded funds with sustainability themes.

For Foundations and other nonprofits
• Market-rate strategies
• Program-related Investments
• Strategies for all asset classes – public equities and bonds, private equity, real estate, real assets, alternatives

For Families
• Training – “Impact Investing 101”
• Strategy development and implementation
• Investment sourcing and due diligence

In 2007, the Rockefeller Foundation coined the term “impact investing” and created the Global Impact Investing Network (GIIN). The GIIN defines impact investments as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” While there were many previous examples of investments made with the intention of both creating positive impact and making a profit (affordable housing, infrastructure, etc.), the GIIN sought to massively scale the amount of private sector investment in this activity. It has become one of the most important organizations in the field and includes financial institutions, foundations, and nonprofits. Though impact investing is broadly along the same spectrum, it differs from ESG because of the up-front intent to use business to solve social and environmental problems, and the commitment to measure results.

Below are examples of positions Hewson has held (employee, board member, or advisor) and products he and his team created:

• Global Impact Investing Network – Board member and audit & finance committee member for 7 years.

• B Corp – Member of the Standards Advisory Council for 10 years; this is the rating committee that oversees the Certified B Corporation rating and determines the treatment of controversial issues related to company ratings.

• Sorenson Impact Center – As the CEO, I helped lead this team of 30 staff and 60 interns in the many programs they operate, including:

• University Venture Fund II – Focused on early stage venture capital in highly-scalable, catalytic companies in the US and in emerging markets. Funding is primarily from Program Related Investments.

• OZ Catalyst – Forbes, in partnership with the Sorenson Impact Center, launched a new Forbes list to honor leaders sparking the equitable revitalization of distressed communities identified as Opportunity Zones: The Forbes OZ 20: Top Opportunity Zone Catalysts.

• JUST Capital – As the initial COO and Head of Research, I and my team undertook the first public surveys (focus groups, tests, and ultimately about 50,000 participants to get high granularity) and created the initial rating model to launch this effort founded by legendary trader and philanthropist Paul Tudor Jones.

• Access to Medicine Index – As with CDP, my Innovest team and I did all of the research behind this index from the start, when it had little funding. Ultimately the Index became funded by the Gates Foundation.

• Community Investing Index – Innovest’s client, the Heron Foundation, was one of the earliest pioneers of aligning their investments with their mission as a foundation. We created the Community Investing Index so that they could invest in public companies that had a high positive impact on local communities and mid to lower income citizens.