Global investment management firms are increasingly seeking out more diverse perspectives to shape their approaches. How many, though, recruit a biologist working at UNICEF?
“People are often surprised to learn that Finance isn’t my background,” says Maria Souza at Baillie Gifford, from her office in Edinburgh where she’s at the forefront of helping the firm’s Health Innovation strategy to partner in new ways with companies that have the potential to deliver substantial improvements to human health.
As the team’s Impact and Investment Analyst since last summer, she’s had early and continued success finding innovative ways of expanding and amplifying the social and environmental impact of the 40 portfolio companies in which the strategy invests.
“Because our philosophy is to invest for decades and not just quarters, it’s important that we think deeply about how the concepts of environmental, social and governance (ESG) come into play,” she says. “We strongly believe that the companies driving material societal and environmental improvement, and therefore positive impact, will be the long-term winners.”
Knowing Which Questions Uncover Value
The scope of that can be overwhelming, so where does one begin?
“It’s not about evaluating the companies or exploring our risk if they’re not operationalizing ESG,” she says. “There’s no judgment on their current state nor where they should be. Instead, it’s about establishing a baseline to evaluate where we can help.”
For example: What are a company’s ESG targets? How public are they about them? How ambitious are the targets? Then what’s their cultural approach? That is, how are they measuring and reporting impact? What’s their business risk if they don’t do anything – and where are there hidden business opportunities?
“If we have an incredible company that makes really innovative medical devices but without a way to collect them afterwards,” says Maria. “We partner with them to discuss how to think about that. Because even the very best companies have room for improvement.”
Partnering with Industry Leader AlphaSense
Establishing a baseline for any given company requires a tremendous amount of research. This level of granular research is what led Maria to turn to AlphaSense as a business partner.
“I’m leading the establishment of a new impact assessment framework, so it’s imperative that I know every relevant detail about a company before I even meet with them,” she says. “And not just what’s on their website or in their ESG report.”
By using the financial search engine capabilities of AlphaSense, Maria has heightened conviction that she’s finding actionable insights. “Transformative” is the word she uses.
“Our mission is to drive positive impact across our portfolio companies and a critical step is understanding what actions and initiatives the companies are taking towards their environmental impact, how they’re engaging in the community, and the types of access they’re providing,” she says.
As anyone who has tried to do this has found, it can be incredibly difficult to build that picture because the information typically lives in silos across many different sources.
“AlphaSense has made this information gathering process seamless, by aggregating thousands of financial content sources and allowing me to search through this content using AI so that I can monitor literally hundreds of conversations happening across our portfolio names in a single dashboard view,” Maria adds.
“Now when I meet with portfolio companies, I am much better prepared because I know exactly what they are and are not saying about the healthcare impact topics that we at Baillie Gifford care deeply about, which helps drive more impactful meetings with each firm.”
Leveraging the Value of Dashboards and Alerts
“AlphaSense’s custom Dashboards cut out literally days of manual searching, giving me a tremendous amount of time back to focus on other areas I can have impact,” Maria says.
“I have my custom Dashboards and robust alerts, so it’s brilliant,” she adds. “Even better, we’re able to incorporate all of the content from our own internal research library to turbocharge this whole approach and drive meaningful change. It’s really exciting.”
By customizing her Dashboards, Maria is able to track how specific companies are engaging across several crucial ESG thematic global topics. She then easily created saved searches for each of those topics for each company of interest.
Because her searches are quite complex, they surface a variety of different keywords and specific phrases to explore. AlphaSense then layers on artificial intelligence and natural language processing, to account for variations in the language associated with each keyword. This ensures Maria doesn’t miss critical insight or conversation across thousands of sources. Each search is then easily replicated for every company she is tracking.
She especially likes that she’s able to be proactively notified in real-time, as portfolio companies begin discussing very specific topics that otherwise can be like trying to find a needle in a haystack.
Maria has set her custom alerts to a weekly cadence so that she has updates waiting for her every Monday morning. “I like that I have the option of updating the type or frequency of alerts as regularly as I might choose, to reflect learnings from particular trends or market factors,” she says.
Driving Growth Through Personal Conviction
Maria is a long way from the Amazon rainforest where she spent five years leading scientific teams. She’s also more than a short flight away from the United Nations, where she worked with UNICEF for six years. She feels, however, that she’s closer than ever to the purpose of her life’s work.
“At Baillie Gifford, we don’t want our competitive advantage to be that we’re the only ones using this approach and having this impact,” she says. “I want us to influence the investment industry overall in showing what has worked so well for us, and inspire progress for them.”
With ESG assets predicted to exceed $41 trillion this year, it’s clear that ESG has officially gone mainstream. What are the investment implications of these massive changes? And with these new ESG frameworks, how are companies positioning themselves? We answer these questions and more in our webcast, A Cowen Exclusive: The Biggest ESG Trends and Predictions for 2022.