Georgia Stewart is the co-founder and CEO of Tumelo, an impact-focused fintech with a mission to enable retail investors and pension members to create and benefit from a more sustainable investment system. Working closely with the investment and pensions industry, Tumelo enables leading investment and pension platforms to provide their customers with transparency over the companies they own and a shareholder voice on issues they care about, such as gender equality or climate change.
We discussed several topics with Georgia, to gain some insights into some of the key ESG issues currently on investors’ minds, and to dig deeper in areas where they are becoming more active.
Hi Georgia, thanks for joining us. Can you give us a quick overview of the services Tumelo offers?
Hi, thanks for inviting me. 275 million investors hold £54 trillion in investment and pension products across the UK & US. Most of their money is invested into funds. As a result, fund managers today control majority stakes in the world’s most influential companies. With ESG and sustainable investing increasingly taking top spots on the agendas, it is unsurprising that underlying investors are demanding sustainable business practices and transparency and want to influence how these companies are managed but have no voice. Tumelo gives investors that voice.
Tumelo enables investors to have a granular view of their investment portfolios and place vote preferences via their investment platforms on matters that are important to them at the companies their money is invested in. Our data also empowers fund managers to adhere to regulations and gain a competitive advantage by developing investment products aligned with their customers’ values.
What are the top issues investors are voting on? Is this evolving?
Environmental issues, particularly climate change and plastic pollution, as well as issues such as human rights and healthcare sit high on the list, however, this tends to vary from one case to another. For example, very recently, Legal & General, who we work with very closely, revealed that pay (relating to all levels of remuneration) and climate, along with other environmental issues were the most voted by their members. These were strongly followed by other issues such as rights, plastic pollution, diversity, packaging and lobbying among others.
Incidentally, we are also seeing animal welfare issue being of most interest to underlying investors across the board. That said, very few votes are tabled on this topic by shareholders and preferences of underlying investors tend to be split. For example, we counted a 55% in favour/45% against vote preference on a vote asking sportswear producer, Lulu Lemon, to ban the use of down feather in its clothing products.
Trends in investor voting – are investors becoming more active?
Underlying investors are becoming increasingly aware of their unwielded power as mainstream media covers increasing numbers of shareholder resolutions, especially at major US corporations. Exxon Mobil’s recent blow following a campaign launched by impact-led activist hedge fund, Engine No. 1, in spring of this year in a bid to hold the company’s management accountable for failing to bring its business strategy in line with global efforts to fight climate change is a great example of this. As underlying investors learn more about these issues, they are increasingly keen to participate by sharing their own views as the ultimate owners of these companies. Even though it is not something that was possible before and therefore is a new concept for many, the levels of engagement are increasing, which is very encouraging, and it is crucial we continue to build on this momentum. We’ve seen a tremendous uptake from the industry players such as Aviva Investors and Legal & General to name a few who we work with and who clearly see the value that our proposition adds to their ESG and sustainability commitments, as well as their business strategies, particularly from brand loyalty and building trust with underlying investors point of view. Building on this positive start and a strong pipeline we are very excited about the future and the role Tumelo is coming to play in driving positive change.
The voice of the younger generation is also critically important, and is growing louder, as the key stakeholders of the future – and therefore those who will bear the consequences of corporate decisions made today.
Are investors getting the transparency they need to reach their ESG investing goals?
“ESG” is incredibly subjective, both in terms of the investing approaches and impact outcomes. Understanding and measuring social and environmental issues from an investment point of view is very new to many investors. Without transparency, consistency, clarity and most importantly data ESG/sustainable investing is undoubtedly going to be a challenge. Investors need to be able to fully appreciate the perspective, philosophy, and values of their fund manager, and they must be able to easily access a list of any fund’s underlying holdings, in full. This will allow investors to know where their money is going and to hold their fund manager accountable.
Regulators and policymakers are working hard to bring a degree of transparency and regulations such as SFDR are a good starting point, although more could be and needs to be done to see any substantial difference. While more data and transparency are crucial in helping investors reach their ESG investing goals, engaging with investors, and empowering them to act on that information is equally important. For example, our data shows greater engagement through our platform simply for the fact that we removed all jargon making the information easier to digest and understand while proactively prompting investors to vote on any upcoming ESG issues at companies within their portfolios. Afterall, Richard Thaler, an American economist did say that “if you want people to do something, make it easy”, and that’s what we are trying to do.
What one must remember though that ESG transparency is not just about accountability. It also helps investment platforms and fund managers to engage underlying investors by increasing the tangibility of a fund, improving financial literacy, and providing context for the powerful, positive stories that stakeholders in the investment chain should be able to tell.
What are investors’ primary goals when approaching ESG? Risk management? Uncovering opportunities? Meeting disclosure requirements?
The primary goals for most investors are to gain return while managing risk. Incorporating or even being led by ESG is an increasingly popular strategy as investors seek to achieve future financial stability in tandem with future social and environmental stability. All generations, but especially the young – as the consumers of the future, can see the imperative of investing in sustainable companies to generate returns over the long-term.