“ESG is about how companies operate – treating society, the environment, and thinking about their governance in constructive ways. It’s about the how. We care about ESG. But the critical difference is that impact investing is about what the company is making. These are companies solving the world’s great social and environmental problems.”
— Eric Rice
Eric Rice is Head of Impact Investing at BlackRock and the portfolio manager and the architect of the world’s first diversified public markets impact investing strategy, Global Impact. Global Impact is an alpha-oriented strategy that invests in companies whose goods and services help address the world’s great problems, as defined by the UN Sustainable Development Goals. He also collaborates with other investors at BlackRock to help germinate additional impact and sustainable investment strategies.
BlackRock is the world’s largest asset manager, which has reported more than US $10 trillion in AUM as of January 2022. Eric grew up in Berkeley, California, and studied close to home at the University of California Berkeley, where he was awarded an AB degree in Economics. He began his career as a Diplomat in Rwanda with the U.S Department of State. It was during this posting that Eric quickly became aware that he wanted to do development work and projects that would make a difference.
Following his posting in Rwanda, Eric went on to earn a PhD in Economics at Harvard University. He then spent several years as a Country Economist at the World Bank, then moved on to Wellington Management, where he transitioned into portfolio management and eventually got permission to launch an impact fund strategy that he proposed after explaining what exactly sustainable investing was. Eventually, he and his sustainability team at Wellington Management landed at BlackRock in 2019, where he designed and launched the world’s first diversified public market impact investing strategy.
In this episode, Eric discusses impact investing in the context of a public equity fund and how, with the Global Impact Fund, he has worked to take the very best characteristics of impact investing that have been developed over the years in the private market and adapted them to public equity investing, to create an authentic impact strategy.
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Stitcher, 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 Eric Rice: LinkedIn
- Wellington Management
- Larry Fink
- BlackRock Global Impact fund
- MSCI All Country World index
- United Nations Sustainable Development Goals (SDGs)
- International Finance Corporation
- Impact Management Project (IMP)
- Alladin Climate
- Alladin ESG
- BlackRock’s impact engagement 2.0 strategy
- Scope 3 emissions
SHOW NOTES:
[00:00] Episode intro and a quick bio of the guest; Eric Rice
[02:50] What we will be discussing in this episode
[04:50] Eric describes what it was like being a student in Berkeley in the late 1970’s
[05:22] How Eric came to be posted in Rwanda and his experiences working there
[09:09] Eric shares his reasons for wanting to work at the World Bank
[11:22] How Eric came to join Wellington Management
[14:21] Eric’s transition from development finance to investment
[15:11] Eric’s proposal for sustainable investing at Wellington and how he developed this
[18:00] How Eric transitioned to work at BlackRock in 2019
[19:38] We hear more about Eric’s remit as Head of Impact and the Portfolio Manager of BlackRock’s Global Impact Fund
[23:37] Eric shares a common misconception around public markets
[25:01] UN SDG themes vs. BlackRock Global Impact’s theme focus
[26:49] Eric talks about the democratization of impact investing
[28:45] How impact investing in public equities at BlackRock differs from ESG investing in public equities at BlackRock
[33:09] Eric’s theory of change in buying and selling equity on the secondary market
[36:18] BlackRock’s ‘impact engagement 2.0’ strategy
[45:36] Eric discusses greenwashing and impact washing in the public equities landscape and how to resolve it
[49:31] The single most important challenge in the impact public equity space right now
[50:44] Lessons learned from investments that didn’t work out as planned
MORE ERIC RICE QUOTES FROM THE INTERVIEW:
“The idea that impact was the domain only of qualified investors with a million dollars of liquid assets seemed funny to me. Why are those people the only people who can do good through impact investing?”
— Eric Rice
“There are conglomerates that have divisions that are highly impactful, but what our clients want, I think, is more pure expressions of impact. They want access to companies that they don’t find in all their other portfolios.”
— Eric Rice
“As with every kind of impact investing, a lot of it lies with the companies, that their impact matters to us too. So we have that high bar for what’s an impact company. But it’s also important for us then to be there on the financial side, and to engage in an impact side. And one thing that we do that I think no one else does, is impact engagement.”
— Eric Rice
“A company is focused on survival. It’s focused on growing. It’s focused on doing what its core competency is, and there may be other things that they just haven’t gotten to. And if we can help that along, it’s great.”
— Eric Rice
“What’s new and very encouraging to me is the movement towards standards. I personally am working with representatives from all the biggest asset managers who are oriented to sustainability, to work on better standards, to work on more public standards, to work on encouraging governments and international organizations to enforce those standards.”
— Eric Rice
