55: Trillium's Matt Patsky – Trump, Facebook and Fiction in Media

[i3] Institutional Investment Podcast

Matt Patsky is Chief Executive Officer and Portfolio Manager at sustainable investment firm Trillium, which was recently acquired by Perpetual. In this interview, we talk about the power of Facebook, truth and fiction in media, excessive remuneration and rainbow washing. We also discuss the impact the Trump presidency has had on the ESG industry. “A shift has occurred [in attitudes towards sustainable investing] that has been fairly dramatic ... and in some strange way that was partially because of Trump. He was anti everything and suddenly people are waking up an saying: ‘What? No, that doesn’t make sense,” Patsky says. Overview of Matt Patsky Podcast: 2:45 I remember thinking: ‘Why aren’t more people going after this information?’ 4:20 Nobody wanted to meet the Head of HR, but we did 6:30 Is sustainable investing about alpha or risk management? 7:15 I realised I found a method to assess what a good management team is 9:30 Should you talk to company management? 10:00 Why are shareholder resolutions important? “For us, the objective is to generate positive societal and environmental change.” 11:15 Bank of America engagement on arctic drilling 12:30 Is achieving a target the only real measure of success? 16:00 Facebook and shareholder resolutions 16:30 “63% of the non-Mark Zuckerberg shares voted in favour of the separation of chair and CEO. That said it all. But that board decided they didn’t care.” 18:10 “Using the stick of a shareholder resolution is not taken lightly and ... we are making sure that it is increasing awareness.” 20:30 Regulatory differences between traditional and internet media. 21:30 “I’m amazed that you can call yourself ‘news’, [but] that there is no rule that says you actually have to present some news”. 25:30 Fox News, voting machines and engagement in the absence of a regulator. 27:00 Pay inequality. We need the EEO-1 data, but it is not released by companies. It is material information and it should be disclosed 30:30 How have sustainability issues changed since you started? 32:00 “A shift has occurred [in attitudes towards sustainable investing] that has been fairly dramatic, particularly in the last couple of years, and in some strange way that was partially because of Trump. He was anti everything and suddenly people are waking up an saying: ‘What? No, that doesn’t make sense.’” 34:00 “Given that ESG has investing has demonstrated to reduce risk and increase alpha, you are violating your fiduciary duty if you are not incorporating [it].” 36:00 Sustainable Development Goals; are they helpful? 37:30 Rainbow washing. Do you see a lot of it? We have seen greenwashing and it has been bad. 41:00 “If your objective is to truly have a positive impact on the world, you are not going to accomplish that by simply investing in a portfolio of better companies, because you are buying in secondary markets, you are not really influencing capital flows. If you are really, truly trying to have a positive impact in the world, then you are going to be an active owner. You have to act like you care about what the companies are doing” 42:00 Compensation problems of C-suite in the US. 43:30 That is the problem: you can’t find a director who is going to tell you that their CEO is not in the top quartile.