“We’re really talking about a system change. But you can only change the system if you change every moving part . . . the way you measure, the way you incentivize, the way you report. And the complexity of integrating ESG properly into the system is something that I think we all underestimate. ”
— Daniel Klier
Daniel Klier is CEO at ESG Book, part of the Arabesque Group, a global group of financial technology companies offering sustainable investment, advisory and data services through their advanced ESG and AI capabilities. Prior to joining Arabesque, Daniel was Global Head of Sustainable Finance for HSBC, where he developed the global climate strategy for the bank and led the development of the sustainable finance business across the corporate bank, retail bank, and asset management business. He joined HSBC in 2013 as Group Head of Strategy in London, following nine years as a Partner at McKinsey & Company.
Daniel is a member of the Board of Sustainable Energy for All and has also chaired the Bank of England Climate Risk Working Group and the Sustainable Finance Working Group at the Institute of International Finance.
At the time of our discussion, Daniel was CEO of Arabesque S-Ray, the predecessor to ESG Book, so when we refer to Arabesque S-Ray in our discussion, we’re essentially talking about what is now ESG Book. In this episode, we talk about how Daniel came into the world of sustainable finance from a more traditional private equity and financial services background. We hear an overview of Arabesque and their mission to mainstream sustainable finance and we discuss what quantitative investing actually means.
Daniel explains more about what was, at the time of our discussion, the Arabesque S-Ray artificial intelligence platform and how it allows companies to customize their investment strategies. We look at greenwashing in the public equities landscape and how Arabesque protect against this in the algorithms used in their AI technology. We discuss how Arabesque S-Ray differs from competing ESG data providers, and Daniel introduces us to the ESG Book initiative, which at that time had not yet been launched.
I really enjoyed my discussion with Daniel and I hope you will too!
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. You can watch the interview on YouTube here.
What was your favorite quote or lesson from this episode? Please let me know in the comments.
SCROLL BELOW FOR LINKS AND SHOW NOTES…
SELECTED LINKS FROM THIS EPISODE:
- Connect with Daniel Klier: LinkedIn, Twitter
- Allianz
- DWS
- ESG Book (formerly Arabesque S-Ray)
- GPIF
- HSBC
- IFC
- McKinsey
- Morgan Stanley
- Parametric
- St Gallen Business School
PEOPLE MENTIONED:
SHOW NOTES:
[00:00] Episode introduction.
[03:18] Why Daniel chose to study at the St Gallen business school in Switzerland.
[05:21] Daniel speaks about his early career at McKinsey and how he has always enjoyed an entrepreneurial/ownership mindset.
[06:33] We discuss Daniel’s move to HSBC as Group Head of Strategy and what prompted this.
[08:50] Daniel shares how he became involved in sustainability during his time at HSBC.
[10:01] We discuss Daniel’s move to Arabesque in 2021 and he goes on to explain his dual role there as President of the group and CEO of Arabesque S-Ray.
[12:36] Daniel gives us an overview of Arabesque, and their mission to mainstream sustainable finance.
[15:00] We discuss how Arabesque started off in responsible investing, encompassing faith-based investing and Sharia compliant funds.
[16:44] Daniel clearly defines quantitative investing and how this investment approach is purely data driven and removes human bias, which makes it different to most other investment strategies.
[18:06] We discuss whether identifying sustainability out-performance naturally leads to share price out-performance.
[20:32] Daniel speaks about the artificial intelligence platform that was developed by Arabesque S-Ray and the use of an artificial CIO (Chief Investment Officer) which allows each client to customize their investment strategy, including defining the sustainability criteria.
[26:41] We talk about Arabesque’s use of ESG data analytics in making informed investment choices, ensuring ESG score transparency.
[28:40] Daniel shares how Asset Management can change corporate behaviour and sustainability in three key ways.
[30:31] Daniel describes Arabesque’s transition from being a pure asset manager to a solution provider, enabling companies to use better data to make better informed decisions.
[31:10] We talk about greenwashing in the ESG public equities landscape and how Arabesque protects against it in their use of algorithms.
[33:49] We discuss how Arabesque S-Ray differs from competing ESG data providers.
[37:08] Daniel tells us about the ESG Book initiative (of which he is now CEO).
[42:42] The single most important challenge in the ESG public equity space.
[43:07] Daniel shares what he knows now about ESG investing that he wishes he had known when he became Global Head of Sustainable Finance at HSBC in 2017.
[45:19] Daniel gives his advice on how to get into the sustainable finance space.
MORE DANIEL KLIER QUOTES FROM THE INTERVIEW:
“I think that to grow and to learn, you need to change environments… sometimes you need to change something to become the next best version of yourself. ”
— Daniel Klier
“I wrote my own job spec. as Head of Sustainable Finance. I think I was one of the first in the industry at that point. Now everybody has one. ”
— Daniel Klier
“The financial services industry is one of the most fragmented industries in the world… very few companies will be able to develop their own tools; data sources; data models… we want to be the engineers behind the industry that helps others achieve sustainability outcomes. ”
— Daniel Klier
“95% of the economy is olive. It’s neither brown, nor green. It’s somewhere on the spectrum. ”
— Daniel Klier
