Peter Kellner founded his family office, Richmond Global, in 1995, and designed it to invest in emerging and global technology platforms with superior returns, as well as the enablement of healthy societies powered by entrepreneurship. Since 1995, Richmond Global has seeded and provided growth equity to some of the largest platforms in technology, from the U.S. to the emerging world.
Given Peter’s venture capital interests in data science and financial technologies as well as his established commitment to sustainability, Peter brought his ideas together in 2017 to launch the first-ever sustainability focused global multi-strategy fund, employing machine learning to identify alpha generating metrics in Environment, Social, and Governance.
Peter and I sat down to discuss the effects of recent trends within the ESG landscape.
Christopher P. Skroupa: How do you see the shift from conscious investing to the fundamental incorporation of ESG practices having an impact on the environment and the economy?
Peter Kellner: There is no shift from conscious, or impact, investing toward the integration of ESG into fundamental analysis. Both efforts are pulling on the same oar, or greater planetary sustainability. The difference is that Impact Investing is an asset class; ESG integration is a process that has been proven to increase alpha and mitigate liabilities when material ESG metrics are factored into the process of analysis. Importantly, the complementariness of ESG to Impact Investing opens up much greater capital market access, namely, multi-asset classes, to the promotion of sustainability.
Skroupa: How do you believe the current socio economic and political climate either promote or inhibit the integration of ESG practices?
Kellner: Twenty years ago, ESG simply didn’t matter in people’s minds. But consumer choice has changed radically – see EV, batteries, soda consumption, etc. However, politically, beliefs remain polarized, especially in the US, whereas Europeans are far more enlightened with respect to the benefits of ESG integration. I believe ESG is the risk premia of our planet’s future, and thus necessarily will be adopted by broad capital markets, which have always been sufficiently entrepreneurial to capture premia. The question is when, and will we be too late?
Skroupa: In what sectors do you see ESG having the greatest impact?
Kellner: It is impacting everywhere, it is simply the adoption curve that lags from sector to sector. ESG practices require surmounting uncertainties, such as strategic uncertainty, or how one can derive the correct material ESG metrics to assess an organization, company, city, or nation? Implementation uncertainty is also at play: is one implementing ESG correctly, integrating it in a manner where leaders and management teams drive ESG through the enterprise, and to the consumer?
We also see measurement uncertainty: the data on ESG is horribly messy, non-periodic, self-reported, like financial metrics in the 1920s. Using A.I. helps to scrub data sets and provides an informational advantage. Finally, there is always technology uncertainty, and principally as it applies to the environment.
