For ESG Clarity’s June 2023 digital magazine Q&A, Stephanie Kelly, head of Greenwheel at Redwheel, shares her thoughts about working with Redwheel’s investment teams and what ESG projects are in the pipeline.
You joined Redwheel in 2022, and became head of Greenwheel at its launch in January 2023, to ‘lead the sustainability ecosystem’ behind Redwheel’s Enhanced Integration, Transition and Sustainable funds – what does that mean in practice?
Greenwheel acts as an internal but independent adviser to Redwheel’s investment teams. Being in-house allows us to tailor our research to specific investment team needs and work hand in glove with them to build sustainable strategy frameworks, processes and tools. Being independent of the investment teams ensures investor autonomy and allows Greenwheel to be a partner they can go to rather than police they fear or clash with.
Your previous role was in macro ESG and political risk research at abrdn – how does ESG work within a traditional asset manager compare with an ESG-focused firm?
Redwheel is an independent asset manager with a range of strategies whereas Greenwheel specifically supports those funds that go beyond traditional ESG risk integration. This is quite different to my previous role, where I got to do a lot of really interesting research, but it wasn’t as closely linked to investment managers and how they construct and make decisions in sustainable funds.
At Greenwheel, all our research is directly commissioned by investment teams for investments to build products, do investment research and engage with investee companies.
What is the biggest ESG risk you perceive currently?
The lack of agreement of what exactly ESG is and why it matters. Some people in the industry think ESG is something they have to tick the box on, rather than recognising ESG risk as a fundamental part of understanding investee companies, and as a result don’t fully understand the huge opportunity it creates.
People also often conflate ESG risk with sustainable investing. Even within sustainable investing, asset managers disagree on what counts as a sustainable company. Differing regulatory regimes that are still in flux are exacerbating this issue.