What does climate change have to do with investments? A lot, if you're Lisa Stanton.
As the Head of Global Sales and Client Service for Moody's ESG Solutions, Lisa spends much of her time working through her inbound inquiry list, talking to companies of all sizes and industries about the shift towards more responsible capitalism and how to understand the climate risks they face.
ESG investing looks at the environmental, social, and governance aspects of a given opportunity. Per Lisa, it's gone from being the feel-good little sibling of bottom-line-focused investment decisions to being the future of investing.
"It's now a way to outperform the markets because firms that are not responsible in these areas—in their stewardship of the environment, their board diversity, their labor practices—they often do not perform as well as companies that are," she explains.
We sat down with Lisa to learn more about the evolution she's seen over the last few decades, as well as the career choices she made that led her to where she is today and what advice she has for other people interested in driving asset management towards a more ethical future.
When Lisa started college, she was committed to a journalism major.
As it turned out, she didn't enjoy interviewing strangers.
"It was not for me," she says, smiling. She still liked the investigative, storytelling, and empowerment aspects of journalism, though, so when she started taking more economics classes, she was especially drawn to the parts of them that connected markets to the rest of the world. "Finance may seem like a narrow field, but you actually have to know a lot about a lot of different disciplines—politics, economics, markets, societal trends. It's really broad, at least in the institutional asset management space, and is a great career choice for the variety you encounter every day."
Lisa followed her interest in learning more about the world to London, where she moved after finishing her degree and found an early role in the back office of an asset manager.
"It's the grunt work that you do that lays that all-important foundation of how your career progresses," says Lisa, who was eventually offered a promotion to being a portfolio manager. One of those early roles was in the company's RFP team. "It exposes you to a ton of different disciplines and you can really start to think of where your strengths are, why you enjoy doing what you're doing, and where you want to focus longer-term."
Lisa moved back to the States and ended up working at Barra, a FinTech company, for 12 years. She started out as an individual salesperson and worked her way up to running the firm's global client service team. Not only was that where she experienced her "greatest growth," it was also where she met Frank Freitas, the Chief Development Officer at physical climate risk data and analytics firm 427 (recently acquired by Moody's).
After her time at Barra, Lisa worked in asset management at a few different firms before Frank reached out to her about an opportunity to join 427 as their first salesperson.
"I agonized over it. Do I leave my safe, nice role in asset management to go to this essential startup?" remembers Lisa. "And it was the best decision I ever made. So even though it was one of the hardest, it's turned out to be brilliant."
She was attracted to 427 for one main reason: it was in line with her values.
Not only would she get to work for a woman founder, an experience she'd never previously had in finance, she'd also get to build something from scratch. And the thing she built, if it was successful, would actually have a chance to make a positive impact on the world.
"I'd be able to look my daughter in the face and say I tried to do something on climate change," says Lisa.
When 427 was acquired by Moody's, she stayed on in her new role for similar reasons.
Finding Meaningful Work
Working on ESG solutions for a risk modeling institution like Moody's broadens the impact that Lisa can make in her work. Lisa says she's seen an incredible shift in the acknowledgement of, acceptance of, and interest in ESG.
"First, it was people who wanted to do good, but didn't necessarily see it as something that could also enhance investment returns," explains Lisa, citing early divestiture efforts in South African investments during apartheid or from tobacco or weapons manufacturers.
"One of the most staggering changes that we've seen in the last several years is that it's not just asset owners driving the change, it's investment managers understanding that it's critical to how they manage money," she says.
That shift represents a broader movement to a more responsible form of capitalism, and Lisa describes it as a multi-faceted evolution. "It's holders of capital taking a stance, saying they're not going to have their money invested in climate-destroying fossil fuel companies. It's students that are pressuring their endowments to divest," she says. "It's the realization that shareholder maximization is an inferior way of running the economy."
Now, with prospects and clients, Lisa talks through hypothetical scenarios such as:
- How exposed a company is to hurricanes, floods, wildfires, or other climate-change-related events, and what the financial impact of that is
- What risks and opportunities exist as consumers and investors' preferences shift from fossil fuels to alternative energy sources
- How companies' peers are doing on social labor practices, governance, board diversity, and other metrics, and what that means for their performance
"Say, for example, a firm has a warehouse in a coastal region. If they are not prepared for the increased frequency and severity of hurricanes, their operations are going to be disrupted, and that climate risk exposure is going to have a financial impact to their credit worthiness," she says.
Empowering the Future
Shaping the way that investors and companies consider risk and return hasn't been easy.
"I have never worked so long and so hard in my life," says Lisa.
But she wouldn't change it. "I always try to connect what I'm doing on a micro, day-to-day level to the big picture," she says.
"That's not hard with ESG. You know the impact of what you're doing. There is no place I would rather be in terms of a role that is dedicated to something that will hopefully make this global village a better place."
It's pretty common in your 20s and 30s to feel like you're treading water financially – dealing with the immediate bills and expenses and not thinking too far beyond the next year or two. But this is the ideal time to think about the financial objectives you want to achieve. The best rewards don't come without risks, and there's no better time to start setting goals and taking chances.
While you're young, why not invest in your dreams, start a business, or travel to places you've always wanted to see? Get yourself in the game and start playing.
Here are 4 risks you can take while you're still in your 20s and 30s.
1. Start Investing
Do you have some cash set aside for a rainy day? If you do, that's great – but is it sitting in a checking or savings account? If you want to be able to retire comfortably someday, you need your money to grow. That typically happens by investing in assets that grow in value or pay interest. Financial experts typically recommend that people start investing in their 20s — but if you're a little behind schedule, it's not too late to catch up and start setting aside funds.
If you're living paycheck-to-paycheck and find it hard to save, consider taking a look at your tax deductions. Having more withheld from your paycheck each month could yield a nice refund at the end of the year. That's another way to build a nest egg and get started.
Once you're ready to look at stocks, bonds, mutual funds, or other investments, consider putting a portion of your money into a growth portfolio. These funds are higher risk, but also offer higher potential returns. Fortunately, in your 20s and 30s, you're likely decades from retirement and can afford to wait out a holding period of up to 5-10 years. Consider putting some money into stocks for clean tech, marijuana, cryptocurrency, or any other burgeoning industry that's shaking up the world's financial markets. The eventual reward for such risks can be a sizable payoff.
2. Move to a New City
Life is all about change. It can roll over you, or you can roll with it and reap greater advantages in the process. Are you stagnating in your career? Have you always dreamed of faraway places or a different lifestyle? Now's the time!
If you're craving a respite from brutal winters or you want new career opportunities, consider moving somewhere with a milder climate and thriving economy. Changing jobs is one of the fastest ways to increase your pay, and living somewhere with a low cost of living makes it a lot easier to save. For instance, you can get a lot of bang for your buck in a city like Atlanta, which not only has pleasant weather, but also a strong job market with good incomes and surprisingly affordable housing.
Whatever direction you decide to take to invest in change and improve your life, remember this: Change will find you, no matter what. Better to be prepared and make the adjustments happen on your own terms than to be taken unawares.
3. Learn New Skills
People change careers much more easily and often now than in previous generations. If you don't love what you're doing now, start planning about your next act. Invest in your skills and passions to give yourself a brighter economic and professional future. Whether you sign up for a coding boot camp, master cloud computing, get your real estate license, or pursue an advanced degree, this move might require some sacrifice in the short run, but the rewards can far outweigh the risks.
On the other hand, if what you really want is to stop working for someone else altogether, why not leap into the world of entrepreneurship? There are grants and loans for small businesses, and there's a wealth of examples and advice to be found online.
Once you've established your business, you'll have to actively promote yourself if you want to get on the fast track to bumping up your retirement fund. Be sure to join some local business groups, attend trade shows, and network all you can. Once you get going, you'll be able to reap the financial rewards that come with owning your own company.
4. Redefine Success
The FIRE movement (Financial Independence, Retire Early) counsels you to think differently about your money, lifestyle, and goals. By changing your habits and stashing away money now, you'll help guarantee that later in life, you won't be chained to a desk — but you will have the power to make choices about how you spend your time.
This also can mean your life path might not follow conventional norms. Maybe you don't buy a house, live in the 'burbs, drive an SUV, etc., but instead identify a lifestyle that involves the things most important to you. For instance, traveling the world is a dream many people have but neglect to achieve; they get too caught up in the everyday responsibilities of life. But with the right money moves in your 20s and 30s, you can feasibly travel the world now, continue to earn a living, and even save money.
To get started, think of the different ways you could transition your career to fit your goals. The gig economy is rapidly changing the way people work. Will your employer allow you to work remotely? If not, consider becoming a freelancer. (A significant percentage of your peers — 43% of people aged 22-34 — currently work as freelancers.) Consider buying a home to use as a vacation rental while you're gone; it's a great way to set up a second income while you travel and prepare for the future.
Whether it's traveling or relocating, saving or starting a business, If you get going now, you can better position yourself to achieve all you've ever wanted — financially and otherwise.