GMO Fall Conference | November 01, 2022

Climate Change and Ways to Leverage ESG

Real Opportunities for Alpha and Risk Management

As the world grapples with increasing destruction caused by climate change, its impact on investment portfolios is only growing.

Urgency to adapt our economy is presenting long-term investment opportunities like never before in clean energy and resource equities. Companies and countries that proactively manage ESG-related risks will stand out above their peers in both developed and, especially, emerging markets.

Explore our content below and Contact Us or your GMO representative for more information. Intended for accredited investors.


Featured Session:

Energy Transition Opportunities: Clean, Green, and Obscene

Extreme weather has become the norm in 2022 – we saw the worst European drought in 500 years, record heat waves across Europe, China, and India, two-thirds of Pakistan flooded and underwater, and at least eight 1,000-year rain events in the U.S. since late July. Adding to that, Russia’s invasion of Ukraine has caused an energy crisis around the globe, particularly in Europe, with energy prices rocketing up from already high levels before the invasion.

There are silver linings, though. The U.S. Inflation Reduction Act is a more impactful step forward in combating climate change than many realize, and renewable energy and battery costs continue to drop.

Lucas White, lead Portfolio Manager of GMO’s Climate Change and Resources strategies, outlined what he believes are misunderstandings by the market about continued secular growth in both resources and climate equities. The energy transition is already creating long-term investment opportunities in these sectors, which currently trade at attractive discounts to the market.

Read the 1Q GMO Quarterly Letter

Growth will be in renewables, but fossil fuels will be around for decades to come

Global energy consumption

As of 2021 | Source: IEA, EIA
Exajoule is a standard unit of energy defined as the work required to produce 1018 watts of power for one second.

Climate Risk: Hype, Hope, and Headway

Deborah Ng and Chris Heelan, from GMO’s ESG team, explained why financed emissions must be reduced across the entire value chain to mitigate climate change, not just with a focus on Scope 1 and 2 emissions. GMO has made significant progress in quantifying and managing portfolio carbon risk and generating real world emission reductions through our net zero strategy.

Learn about GMO's Net Zero targets.


Emerging Markets: Quality, Growth, and Sustainability

ESG is particularly relevant in emerging markets investing, given the outsized impact climate change is already having – and stands to have in the future – on these countries. Warren Chiang and Binu George introduced the next evolution of GMO’s Emerging Markets Select Equity Strategy, which focuses on finding high-quality companies that can take advantage of important growth trends in emerging markets and utilizes a climate change-oriented approach to ESG and sustainability integrated at the country, sector, and company selection levels.


Japan: An Active Manager’s Treasure Trove – Using Engagement to Unlock Shareholder Value

Japanese equities look attractive through both top-down and bottom-up lenses. Rick Friedman identified some of the secular and cyclical reasons why GMO likes Japanese Value equities today, while Colin Bekemeyer described the various ways GMO’s Usonian Japan Equity team generates alpha through company engagement.


ESG Integration in Emerging Debt Markets – The Challenges and Rewards

The GMO Emerging Country Debt team has integrated ESG factors into both its sovereign and quasi-sovereign/corporate credit research and analysis processes. Members of the team explained how this incorporation has impacted our emerging debt portfolios and results.

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GMO Presenters

Eamon Aghdasi

Eamon Aghdasi

Mr. Aghdasi is a senior analyst engaged in research for GMO’s Emerging Country Debt team. He primarily conducts research in sovereign credits, with a primary emphasis on the Latin American and Caribbean regions and spearheads the team’s sovereign ESG integration efforts. Prior to joining GMO in 2018, he worked at State Street Global Markets as an emerging markets strategist. Previously, he worked at Societe Generale CIB and UBS Investment Bank in similar roles. Mr. Aghdasi earned his bachelor's degree in Economics and International Relations from Tufts University, his MBA from MIT Sloan School of Management, and his MPA/ID from the Harvard Kennedy School.

Bekemeyer_Colin

Colin Bekemeyer

Usonian Japan Equity

Mr. Bekemeyer is a Research Analyst for GMO’s Usonian Japan Equity team. Prior to joining GMO in 2021, he was a portfolio manager at Oaktree Capital Management. Previously, he was an analyst at Taiyo Pacific Partners, and prior to that was an investment banking associate at J.P. Morgan Securities. Mr. Bekemeyer earned his bachelor's degree in East Asian Studies from Harvard University, his MBA in International Financial Economics and MA in International Studies from the University of Pennsylvania. 

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Rick Friedman

Mr. Friedman is a member of GMO’s Asset Allocation team and a partner of the firm. Prior to joining GMO in2013, he was a senior vice president at AllianceBernstein. Previously, he was a partner at Arrowpath Venture Capital and a principal at Technology Crossover Ventures. Mr. Friedman earned his bachelor's degree in Economics from the University of Pennsylvania and his MBA from Harvard Business School.

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Heelan_Chris

Chris Heelan

Dr. Heelan is a researcher at GMO and is responsible for ESG-related quantitative analysis across the firm’s investment product strategies and asset classes. Previously at GMO, he was the Machine Learning Development Lead for the Investment Data Solutions team. Before joining GMO in 2020, he was a senior quantitative research associate at Brown University where he worked in the Neuroscience Department using cloud computing and machine learning to analyze large-scale brain data sets. Dr. Heelan earned his bachelor's degree in Electrical Engineering and Biomedical Engineering from Vanderbilt University, and his MS in Innovation Management and Entrepreneurship and Electrical Engineering and PhD in Electrical Engineering from Brown University.

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Deborah Ng

Head of ESG and Sustainability

Ms. Ng is the Head of ESG and Sustainability at GMO. Prior to joining GMO in 2022, she was the Head of Responsible Investing at Ontario Teachers’ Pension Plan (OTPP), where she spent more than 18 years. At OTPP, Ms. Ng developed and led the Plan’s Responsible Investing Strategy and climate change initiatives and headed OTPP’s Responsible Investing team. She was responsible for key deliverables across several pillars, including climate change and ESG thought leadership and innovation, ESG integration frameworks and tools, and corporate engagement. Ms. Ng and her team also provided insights and subject-matter expertise to the global direct investment teams. Previously at OTPP, Ms. Ng was part of OTPP’s Strategy & Asset Mix team, where she focused on the research, evaluation, and introduction of innovative asset allocation strategies designed to help meet the Plan’s long-term liability objectives. Ms. Ng currently sits on the Investment Committee of the United Church Pension Plan and is a past board member of the Global Real Estate Sustainability Benchmark (GRESB BV). Prior to her years at OTPP, she founded Acuity Communications, assisting investment firms such as UBS Securities, CIBC WM, and Desjardins Securities with their investment research requirements. Ms. Ng earned her Bachelor of Commerce and Master of Finance from the University of Toronto, where she was also awarded with a Directors Award from the Rotman School of Management. She is a CFA charterholder.

Sobolev_Sergey

Sergey Sobolev

Mr. Sobolev is a senior analyst engaged in research for GMO’s Emerging Country Debt team. He conducts research on complex financing structures and corporate credits, with a primary responsibility for state-owned enterprises (“quasi sovereigns”) in Latin America and China. Prior to joining GMO in 2018, he worked at ING Financial Markets as a vice president in debt capital markets. Mr. Sobolev earned his BS in Economics from University College London and his MS in Management from Imperial College London. He is a CFA charterholder.

Ulukan_Mustafa

Mustafa Ulukan

Mr. Ulukan is a senior analyst engaged in research for GMO’s Emerging Country Debt team. He conducts research on complex financing structures and corporate credits, with a primary focus on state-owned enterprises (“quasi sovereigns”) in Asia, Emerging Europe, Middle East, and Africa.  He is also the team’s expert on banks and financial firms. Prior to joining GMO in 2015, he was an associate for East Asian Financials at The World Bank Group, where he participated in Financial Sector Assessment Programs jointly with the IMF. Previously, he was a Private Equity Analyst at Grea Ventures. Mr. Ulukan earned his bachelor's degree in Economics from the University of California, Irvine and his MBA from the George Washington University School of Business. He is a CFA charterholder.

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Lucas White

Portfolio Manager, Focused Equity

Mr. White is the lead portfolio manager for the Resources and Climate Change strategies. He is a member of GMO’s Focused Equity team and a partner of the firm. Previously at GMO, he was engaged in portfolio management for the Global Equity team, including responsibilities for the Quality, Tactical Opportunities, and U.S. Growth strategies. Prior to joining GMO in 2006, he worked at Standish Mellon Asset Management and MFS. Mr. White earned his bachelor's degree in Economics and Psychology from Duke University. He is a CFA charterholder.

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