Welcome in to another episode of “YourStake, Your Story,” a podcast dedicated to telling the stories of financial advisors who lead with socially responsible and values-based investing! Joining us today is Jeff Gitterman, Co-Founding Partner of Gitterman Wealth Management, LLC. Noted as an “ESG expert” by Financial Advisor magazine, Jeff has also been featured in the past in Money Magazine, Barron’s, Morningstar Magazine, The Wall Street Journal, CNN, and Affluent Magazine, among many others. He also speaks frequently about Sustainable, Impact and ESG Investing at conferences throughout the US, including Morningstar, Fidelity, Barron’s, Financial Advisor Magazine, Bloomberg, and many others. In 2018, he was named RIA “Thought Leader of the Year” by WealthManagement.com.
Gabe Rissman 0:00
Hello and welcome to your steak your story. We're a video series with advisors for advisors, highlighting best practices of ESG and sustainable investing. Today I'm really excited to have Jeff Gutterman, a trusted advisor. And Jeff has a really great resume Jeff is a widely recognized leader in the ESG and sustainable investing field. Jeff's the creator of the smart, sustainable metrics applied to risk tolerance investing solutions, a suite of global climate aware allocation strategies available to financial advisory firms and individual investors. With over 30 years of experience as a financial advisor, Jeff began realigning determine Wealth Management, LLC towards sustainable investing in 2015. The firm regularly hosts ESG focused events for financial advisors. Jeff is also the co host of the impact TV show, which airs on fintech.tv, and bluebird TV. And Jeff also serves on the board of directors for the Child Health Institute in New Jersey, at Rutgers, Robert Robert Wood Johnson medical school and dedicates much of his free time to raising funds and awareness for the autism community. Jeff, really excited to have you on thanks so much for joining.
Unknown Speaker 1:12
Thanks, Kay. Happy to be here.
Gabe Rissman 1:14
Cool. So, I would love to have you start by just telling the audience about yourself. Where did you grew up? How did you grew up? What was your journey to the field of financial advising.
Unknown Speaker 1:27
I grew up in Queens, New York. So we'll go York boy boarding raised. And parents we're definitely lower middle class, income. Retail, my dad worked at retail. During the 70s, lots of unemployment, lots of concerns about the next check and the next meal and stuff that did a garden apartment if we shared it with my sister and my parents. And I'd say the one influence monetary influence I had early on is that way Oh, God was in the insurance business. You work for all the time, Mitchell V. Or he was one of their top salespeople. And he work until he paid his bills for the month. So someone seat work two or three days, Bob, take the rest of the month off, it was a pretty interesting approach. It was never trying to kill, he just wanted to be a top producer. And once it I was builds cover. But if on Monday, the first day of the month, the big sale and it covered is not for the month, he would take the rest of the month and not work. And I saw it it's like indirectly comparison on a constant basis to my parents, like they're both salaried always worked for them. They never had much control over their life or their income or their job. So I think I was drawn early to just having more freedom. And also see what helping people selling life insurance medicals case could really do for you. And also your career and your freedom and your ability to evolve and develop.
Gabe Rissman 3:16
It's very cool. And then it's your you started wealth management 30 years ago. When did you What did you make that choice? And how was your I guess you said that was your first monetary influence? How did you get into the field? How do you make that decision? Was that like a start?
Unknown Speaker 3:38
You could say that maybe subconsciously I was drawing towards it because my uncle. But when I was on break from college, I got a temporary job at Merrill Lynch, to rotate or temporary to say so it was the first day I went in. I had a few months off from school and I was looking for some work and they said me literally that day. We'll be right back and the court sent me to Merrill Lynch. And I started that day. This was in my last year of college, it was at six when the market was fly and pre crash. And when the crash hit, they actually offered me a job full time because they were so swamped. I actually worked on the error desk. You can imagine during your crash, the IRA desk is a very popular place for sure. And I was working 70 hours a week and they offered me a full time job at once the best Electoral College and a were I supposed to pay for me to finish college? Well, and that started my career. So I think subliminally there was probably this you know, influence but really luck played a big part. It means starting out limits yield. And I was in college for a business degree. I should say it wasn't like I was at a philosophy degree they wound up in Merrill Lynch I I was going for a BSBA ride.
Gabe Rissman 5:04
And how much of your role was client facing? And when did that start becoming part of what you did?
Unknown Speaker 5:09
Yeah, so I worked for probably four or five years and operations, first at Merrill Lynch that at Prudential mutual fund services and actually launched their 401 K division, part of a very small crew that launched the operational side of the 401k. Business Prudential, that exploded. I mean, it took off like a rocket ship. And again, I've found myself working 70 hours a week, making a lot of money for a kid, while he was I was getting paid overtime. So getting paid a lot of money for that time, not a lot these days, but a lot then. And after two years of that they came in one day, they said, Alright, we're cutting out over time, I realized my salary was a third of what my I've been making two years. And after two years, you can pretty used to what you're making. And that idea that I was going back to a third, while I make the prior two years was a little disturbed. And I saw the producers on the other side who was selling the form of gays making a fortune. And that's really when I made the decision to go from operations and moved over to equitable life insurance at the time and became AXA, I would say equitable again. But I'd moved over there and move to the sales side itd. Well, long time, but longer than you've been alive, we're
Gabe Rissman 6:36
barely getting there. But that's, and then when did you found good urban wealth management.
Unknown Speaker 6:45
So we were really lucky, I took a course by Tom Stanley Orchidee, to the athlet. Way back in the day. And it it said that the best place that I would be suited was working with teachers. And I started working with college professors in early biology and really built market that became determine about five or six years later, we actually formed a group of associates at the time, it's gone through a few different names, but always been good or have been very creative. Always been good in some form, in the name, but we started that and really worked in the college market. For the past 30 years or so that's been our primary target market. We have clients in other spaces, but we've got probably 5000 college professors at this point as clients for we're in the New Jersey pension system, as well, which happened. Lady six, so we started working with college professors, they wound up actually getting a slot in the college pension system, and have had that slot since 96. But of a long time. And I would say that, in hindsight, it really allowed me to move into sustainable investing ESG, which didn't happen till 2015. So a lot of time we're just growing up is this to 25 employees and about a billion in assets. And then in 2015, and I think the story a little bit, but I was introduced to the guys that were making itself called Planetary. And they'll be KEBA and Paul Hawken and Ron Garan, the astronaut, some indigenous teachers, and leaders from different communities. And they wound up making me an associate producer on the film, and they want to raise funding for the film. And when it came out, it just touched me in a big way. It's a beautiful film. For those who haven't seen it, you can find it on video. But again, it's called Planetary, but the film was really about telling a different story about our relationship to each other in the playoffs. And that made me take a hard look at what we were doing as an investment company, and a wealth management for and I made a commitment at that point as some sort of team to realize that business, and it's aligned much more with the messages. Phil.
Gabe Rissman 9:17
Before that time. Did you have any opinions on ESG? Or was it not even coming up in your conversations?
Unknown Speaker 9:25
Yeah, it wasn't really even on my radar. My personal life I've been a meditation teacher, I read the book in 2009 called the onsuccess redefining the meaning of prosperity. So I was plagued with these themes in my private life. I guess you could call them ESG they certainly for a long time really since my early days, I had a radio show called The onsuccess redefining the meaning of prosperity also were interviewed spiritual teachers, religious leaders and just people about happiness generally and success. And for that So I was always touching it. But until planetary came along, I had this kind of bifurcated journey where on one side of my personal life was in either raising money for autism seven, let's just spend some more working with these themes around success and happiness. My whole life is something I've been researching. I've been teaching about doing seminars well. But in 2015, Morningstar had just come out with their glow bracelets. And it was really perfect timing. Things always look better in the rearview mirror, it was easier to decipher. But in hindsight, that journey coincided with Morningstar coming out the glow ratings, which at least allowed us a starting point of how to do ESG and sustainable investing inside model portfolio delivery, which is what we have been doing for years, we're very big on not having each colleague in a completely customized portfolio that that wasn't scale. So we've been running our portfolio since 2002. That in 2015, we started running well. We started researching and digging into ESG, and sustainable workflow. So it took until 2017, before we launched our first models, and subsequently, we've converted almost probably at about 80 85% of the firm's assets are in ESG, and sustainable portfolios. And the only reason there aren't more sort of, you know, tax reasons, capital gains rates, and new colleagues only get offered bail ESG and sustainable votes, we don't offer non sustainable and on each street portfolio. So at this point,
Gabe Rissman 11:44
that's amazing. And that actually leads right into my next question, which is, what were the conversations like? I'm sure there were plenty of tough conversations when deciding to make this full transition to ESG to sustainable investing. What tell me about the conversations with your team, with your clients?
Unknown Speaker 12:05
What was that like? Yeah, I made the commitment, I did make the commitment for the firm, I allowed the other advisors in the firm to come to their own decision. So between 2017 and 2019, there were, you know, constant conversations and dialogue. So all healthy, nothing, you know, negative about the reason for going in that direction. It's why I started hosting the conferences, because there's an old saying a profit, it's not honored its own whole, I thought it would be much better to bring in experts, and gather them together to lead the advisors in life for and ultimately, other advisors, invited to these conferences, partake in really good sessions of digging in around ESG inequality. And it's why we started working with the United Nations around the sustainable development goals and 2080, we held our first conference of the UN. That was really all my way, my way is always education, it's no fight. So my thing was, if I bring enough valid Indian education, to the table on a consistent basis, and we perform well, I knew it had to be both we were running our portfolios side by side with traditional portfolios for the first, really three years 1718 and 19. It wasn't until 20, where we stopped Raleigh, or Nam ESG and sustainable models. I just put my head down, and did the education and did the work. And also I have constantly been trying to learn as much as I can. So that's why be really made the move from ESG from ESG. But why we developed climate focused modeling as well in it, because I think the more we learned, the more we educated ourselves. And then the more experts we spoke to, the more we realized that ultimately, climate risk would be the biggest rest of the capital market so that while ESG was important, that was a really good way to examine more data in the investment decisions that we're making. That climate would play a much more central role in the effect and impact on capital markets brights. I just want to go back to and say ESG is very misunderstood. Since you know, we're talking to advisors today. I think it's appropriate to bring up the Wall Street Journal article series that's running right now by Macintosh. That is a very critical view of ESG or it's a critical view of ESG without explaining what ESG To eat basically makes the argument which a lot of people like to read fancy if they'd also that ESG investors want to save the world and ESG investing doesn't save the world. And I would argue that's a completely incorrect, you know, viewpoint or perspective. ESG is more data ESG is not investing, you can't buy an ESG fallen, that's just an ESG, you're still buying a large cap growth fund or a mid cap fund or emerging markets. But you're buying those funds with more ESG data, hopefully, being viewed by the manager for it's a passive fund, which he is very critical of, and I have, I agree a lot with his critique of passive funds, because you're just using a scoring methodology that doesn't really look hard at the underlying data. But if you're an active manager, and you're buying ESG data, then you're still looking at all the same metrics that are not ESG managers, but you'll get more data. And as we become well, the over analogy, that ESG is GTS of investing.
Unknown Speaker 16:12
It would be like trying to argue with someone today that it is that a GPS is not better than a mat. And that people using a GPS, only because they're trying to get somewhere faster, are being misled by the GPS manufacturer, that that's really the same argument that Macintosh is that people use GPS really more for safety. And for risk mitigation, they don't want to run into a six hour traffic jam with the li e, if they could be told ahead of time about that. That's what the GPS does. It doesn't throw out the data that's in the old map, it adds to that data set. And that's exactly what ESG does, it adds to the data set. And if you present it that way, I don't know anybody that doesn't want more data about the company their best. It's just, it's unfortunate that the Wall Street Journal is allowing us to really doesn't amount to much more than to knee like Facebook posts that he's posting every day about opinion pieces, really about ESG without much depth to it, and using ESG to bash it from an incorrect perspective. So I think we have to be clear, sustainable investing, and ESG are different. ESG is not investing its data, sustainable investing is saying, I want the companies that invest in to be not just better around certain environmental, social governance issues. But I also want them to be more sustainable for the planet. And that's like route preferences. Yeah. If you don't use route preferences, you're just gonna get the best route based on the data, that'd be out with the talent. But each individual can exercise their discretion in their GPS. So you know, I want to take the scenic route, I understand it's gonna take me longer. I'm willing to make that sacrifice. But it's important to my mental health drive along the ocean, you know, let's drive through the city every day. Same thing with sustainable investing, I would use ESG data no matter who you are. But then you could also make a personal decision that I know it might not save the planet. But I'm going to sleep better at night, if my investments are more sustainable forwards. And he argues the point that those people are fooling themselves. When he makes that point, you know, repeatedly the articles that he's posted. I don't think people care about that. I think people understand that they are a few $100,000 in retirement plan best more sustainably isn't going to necessarily save the planet. But it's going to make them sleep better either about subsidizing companies that are poisoning the planet. And then impact which we call a destination in our ESG is the GPS thing analogy, because it's measurable and intentional, is also different from sustainable investing and each Jade's maybe the highest form of the top of the pyramid where you're making a very specific investment impact that end result, or to drive it end result, and that you understand what you're doing. So I think it's always important when you write articles like this to be really clear about what are you actually open holes in or support and making sure that everyone's agreed upfront on what the language needs like that.
Gabe Rissman 19:50
That's a really great analysis. I've seen a lot of people be compelled by those arguments, and it's more of a miscommunication in my mind, and a mismatch of expectations. How do you talked about ESG? sustainable investing and impact? I think that's a pretty good distinction. I'm guessing, how do you find out which clients care about which client is in which bucket because you probably want to serve the impact focused clients with impact solutions, the ESG focus with ESG. Sustainable, but most people, they don't know what category they fall into. They just hear, Hey, there's this cool thing called ESG, when they might actually need something very different. What are you? What do you do in those situations?
Unknown Speaker 20:33
You know, this is where dialogue and conversation is critical. I think one of the easiest things to always do is just start with a typical backfired with a Addington. What are your philanthropic endeavors? What charities do you support? And have you made any decisions in your life that are more values driven than investment trip? Those questions should really bring up enough of a dialogue and conversation if you're listening, to really pinpoint how to help the client make some decisions about what investment strategy might be correct. We are adamant that ESG data be used in all of our models. And we explain it that way. It's just more data. You're not excluding any industries, you're not excluding fossil fuels by doing an ESG portfolio, but you're buying the fossil fuel company that leaves the environment better than 90% of its peers. So you're making a decision to strive for better, or best in class, as they call. But some clients have made really specific decisions, there's a Tesla in the drive. So clearly, either. It might just be a Tesla fan, which a lot of people are, but they might have made that decision specifically because they don't want to support the fossil fuel industry, it would be important to let them know that they could do that in their investment portfolio as well. And I think what we've learned is that we're very vocal about our opinions. I think for a long time you were told in the investment advisory community, don't talk politics or values, with your clients just get them the best return pots. I think things have changed a lot in the last 20 years. Certainly last 30 years, I've been straight, but were very vocal we post regularly on Lake Devon's. We are on webinars regularly, you have a TV show, and then that's aired worldwide about our opinions and bringing as much education or clients as possible. But we also don't judge our clients and anyone. If having ESG data in your portfolio seems antithetical to what you want to do. You're obviously not the right client, for us and our firm. And being okay with the fact that not every person out there is a good client for you. It's also important as an advisor, you're gonna have a much happier, more peaceful, more successful career is you align your values, the clients that you work with, and I'm not judging what those values should be. I just think it'll in the long run, it will serve you a lot better to be open about what your values are, and work with clients that are similar about
Gabe Rissman 23:37
you. You're mentioning your LinkedIn posts. I'm thinking about the great repricing, can you tell me a little bit about what that means?
Unknown Speaker 23:45
Yeah. So in 2015, when I started seeing all this data for people like Paul Hawken, and building the cabinet, and really people that have been leaders in at least the climate conversation since the 70s, actually, when George Bush ran on greenhouse gas emissions, and one which is uncanny that we're sitting here 50 years later, with the Republican Party fighting any future evolution or discussion on climate issues, but regardless, he did right on greenhouse gas emissions. And Bill McKibben and I forgot the other guy's name it was the garrison or something, was really instrumental in helping guide that policy, the public record at the time. But things have dramatically changed at this point. We have seen that from all the scientists that we speak to, in all the different verticals, whether they're quite sure experts, whether ocean acidification experts with global warming experts, that every vertical is collapsing to the brim. And it wasn't a Stretch to understand that would affect pricing capital markets at some point, you can't manage what you don't measure. So we do, it was instrumental to get an understanding of where we were in measuring these risks, but really in 2018, and this is as well as anyone, the large rating agencies and data companies started by climate data. And they started Godley got physical trips, it shouldn't risk data. And it doesn't take a rocket scientist to understand that they're not spending millions of dollars on companies to not incorporate those risks and measurement tools into their ratings data. So the data is widely available today to make assessments on this will bonds mortgage rates, supply chain risk, there's just an incredible amount of data to understand that once the market picks up on it, and once the rating agencies which is emitted, start actually reporting on those risks, that there's going to be a shift in markets to bring in visa assumptions are and climate threats. And right now it's not priced in. So we call this time that we're in the great repricing because we're literally on the precipice of seeing huge repricing risk across reinsurance, you're already seeing it Florida and California, people, renters have seen reinsurance double and triple the last two years. So some flood risk and increased fire risks. And we're already seeing it dribble into the marketplace. But it'll, in our opinion, become an avalanche. But right now just trickle in right now, what I try to get across to the market is that you can really assess that risk and try to sidestep some of that, where it's free to do that. A bond in Tampa, Florida, is at a hospital on the waterfront that has there's a VAR calculation on bonds and different instruments value at risk, that bond probably isn't 85% value at risk due to climate change. You can buy a similar bond with similar coupon with similar yield similar rating in Rochester, New York, May, that gives you the same deal, same maturity, everything else being equal. And your half, maybe it 11% vieo reps. So to not do that. Now, when there's no additional cost to doing that. I just, I can't find one valid argument to not realign your portfolio, you could look at flood risk scores on meats across the planet, literally look at flood risk scores on every single hole in the United States ripple through StreetEasy. But you can use companies like 427 client in park and delta, all of these companies are assessing risk of property so you can look across it reads, okay, this read has 30% of the underlying commercial properties are at risk to severe flooding, history has 5% at risk this year flooding and they're both pay the same yield and at the same class of properties and that, why would I buy this? Those decisions are going to become much more
Unknown Speaker 28:36
magnet gonna be felt much larger magnitude a bit more complex over the next 1224 or 48 months? Yeah. And then once the price did that price, that ETL then you suffer the price disconnect.
Gabe Rissman 28:50
Why do you think there is such a essentially you're saying this is a tremendous market failure? Why do you think this exists? Is it data quality? Or is it? What's your thesis on that?
Unknown Speaker 29:03
I'll point to someone wastewater the mayor, if you return the ground, newest article about bubbles, you go back to 2006 2007 during real estate level, and there were just too many people making too much money on the status quo. And there was just no belief. This is very interesting, because there's never been a real estate bubble in the United States. And Greenspan was very adamant about the fact that you could go back and fine writings at the time. That said it was impossible for there to be a bubble in the real estate market. And prior to that, the real estate market was very kind of multiclass it was only really when residential real estate started getting support through subprime led stuff that he saw it is once the evil real estate bubble and no one really paid attention to that disconnect. They looked at real estate as a whole lens. And they didn't understand the subprime market, my chief operations officer at the time used to call those instruments sausage. And he said everyone wants to eat, uh, but nobody wants to know what the hell's inside. It was a great analogy at the time. And we sold out of all over real estate in 2007, which was very fortuitous because of them. But nobody wants to see what doesn't generate a past, return or past it's very, it's mentioned, and climate change in our lifetime, really, in the past couple of bouts of years, it's been this very stable instrument. And people will argue all the time, I have friends that say climate changes all the time. That's totally true. I don't even care whether you think it's manmade, what I'm telling you is the climate has never changed this fast in our lifetime. So all the assumptions you have about climate aging, hundreds of 1000s of years to actually affect the environment is out the window at this point. Climate change is having an impact worse each year, in the last really since 2015, when things really started exacerbating real damages from storms, and others like droughts, exacerbating at a rate that we can't even wrap our heads over. And when you can't wrap your head around something, it's easier to ignore. The real estate market, Michael Berry was running around screaming that the subprime market was going to blow up Wall Street, people looked at him like chicken, the SEC cut off aid and the SEC still wound up investigating the hell out of them three years after he was right, because I think they were pissed that evening. So we're sitting in the same environment, right sit environment where we know exactly what's going to happen. And we're sticking your head in the sand because we don't want to acknowledge it. We don't want to take responsibility that we can do something about it and that those steps are Herculean, maybe you have to take dramatic steps and nobody wants to do that. Financially, we've been kicking the bubble can down the road since 2008. We've had hurt Grantham actually calls Greenspan, the worst person that's ever had its foot on the gas in the markets, and doesn't give Bernanke or Yellen much more credit. The E is shocked, actually, the lack of understanding of the prior bubbles has led to them to allow the chaos few bubbles that we've been at to play out and not support it with more complexity in East London. He says, we're in the worst bubble state right now that we've ever been in history of the markets. With the triple bubble he calls, and he isn't even at he's very big adamant about climate change. And he hasn't even braved me in the risks that climate change. So add that on to the markets. Were at another real estate bubble, great equity bubble and word, that bubble of interest yields been so low in huge quantities.
Unknown Speaker 33:45
So when the party is going on, who do you want to be the guy at the party that starts screaming, the cops are covered? We better stop or we're making too much noise and we want the parties raging. Nobody wants to be the party pooper and no one wants to listen to the party people give. Yeah. Well, it hasn't raged for
Gabe Rissman 34:08
for those that are listening, and are maybe buy into what you're saying right now or want to learn more that? What are some things that advisors should look into? What are solutions? What are the educational materials that they should begin with? I think that's you're saying education is number one. What would an advisor listening right now do in your
Unknown Speaker 34:33
recommendation? So easy tools that are all free? Our a channel hosts our ESG playbook, which we FSC are still available. We'll be adding new content that we did five sessions last year. Get CE credits for and it's free to watch just go to ra chattel look for ESG playbook. The great repricing conference is available through our website at 16 out was content from world leading experts and now suicide just on what we're facing, how to address it companies like federated traders like sports D. Really rich content you can watch for leisure. It's also free and available through our website. And the great repricing paper, which summarizes the conference to great degree is also available for free through our website, get urban wealth.com or get an asset.com. Either one gets you there. Those are great starting points alliancebernstein as an executive course that you can take on climate, the capital markets, which a few of us in the firm have been through, and it's a great course, they do a really good job at explaining the connection between climate and capital markets, right? And how we're already seeing a big impact and just people are just not paying attention to.
Gabe Rissman 35:54
Can you tell a couple of stories of clients that you have really great conversations with about climate risk? Is that people coming in with a thesis and hearing about your work in your speaking or what is it like when someone comes in they have this interest? How do you ease them into the conversation? If you could tell some stories about that, I think that'd be really helpful.
Unknown Speaker 36:14
First, this year, we've had a bunch of clients come in and are asked to claim itself to work at different universities. So it's a great target for us because we already work in universities. Now we're also addressing climate and or portfolios. So we've gotten a number of incoming clients because when we speak to clients, clients are, it's interesting. They're not that much ahead of advisors. But they don't have resistance to change. If they're meeting with an advisor, an advisor has to resist change, because he's running 100. coloreds portfolios one way. And were telling him that he should change our heart and do it another one. There's a huge discomfort bias that like this has been working great for since 2009. Why would I want to change I got all these capital gains that it's in the future. This example when a client comes in, and they're meeting with us, they're meeting with us, usually, because there's a dissatisfaction with the current advisor. And we give them a plethora of choices rather addressing these issues. Some clients, especially younger ones, are very adamant, they don't want to own fossil fuels. So we got a lot of depressor, Fossil Free portfolios. The great thing about our portfolios is that you can start out with these ESG, and then allow the clients to lay it on multiple restrictions that they will. So for other advisors that are listening, we've tried to make it as turnkey as possible, we can give you a portfolio of active managers that are running a great ESG portfolio. And then the client can say I want to add these six restrictions to that portfolio. And they're easily put in at the visors up to do anything they get waded out of the portfolio. So it's a really easy natural compensation. And certainly, we use your steak and half the last couple of years to help show the impact of the portfolio on making these decisions. And how can parents, you know, potentially to their current portfolio?
Gabe Rissman 38:22
It's funny that you mentioned the fossil fuels. We did an analysis recently of all the screens that people looked at on your stake. All of the metrics, we have over 100 metrics, and people are looking at and applying the fossil fuel metric and screen 60% More than any other screen? No, it's really wild. There's probably 10 or so metrics that are really popular ones that are all at a particular level of and fossil fuel exposure is on a level on its own.
Unknown Speaker 38:51
Yeah, and we'll look at they've had a great year past 12 months, but their tenure performance has been terrible. It's also one of the bad examples in ESG is that people either say performance has been great because of the ESG, which is not true performance has been good because it's overweighted growth tack and it's underweighted fossil fuels. That's the reason most indexes to ESG have had outperformance has nothing to do with the fact that it's ESG helps for the very long term, potentially pick companies that have a better value proposition. But you can't track short term performance and tide tickets to. But fossil fuel reduction as a long term play it seems like a really smart investment. Everyone is pretty much in agreement every country, whether they're acting fast enough or not so long story, but they're all pretty much in agreement that if we burn fossil fuels that are in the ground, we're going to burn the whole planet There's not much disagreement about that anymore. There was five years ago. But that really has been waded out. There's one or two scientists that excellent still has on the books like, argue differently, but but pretty much everyone's in agreement that we can't let the stuff that's in the ground, get mined and processed. And we've got to do something about that. And that's all being valued on the balance sheets of all these fossil fuel companies. So if you draw a line in the sand, even if it's five years or more, or 10 years from now, and stop being willing to value that on the balance sheets, you're here to see a crash in the price of pretty much every fossil fuel company says, I'm not sure why anyone would want to own it. And that's not even a values compensation. That's a valid you compensation to need. There's no value in the future price of fossil fuel costs, based on the risks that we're facing, that we have to address, and that there's more and more of an appetite every day to us. So the Supreme Court just recently overturned the Biden administration's allowance of mining in the Gulf of Mexico, drove it so that mining and drilling of Mexico record overturn it specifically for risks due to global warming, climate change, not and yet, so you have a Supreme Court decision that overturned about the Trump administration, I did illustrations, drilling pieces that were approved in the Gulf of Mexico, were in a whole new world right now. We like to say we're at an intersection where people care more about the investments and products that they're buying. Regulation risk is higher than it's ever been, we have an SEC, it's very pro addressing climate change. The European Commission of this RV is already 10 years ahead of us and Apple, we're following makan steps behind them. litigation risk is at an all time high. There's over 2100 International lawsuits against fossil fuel companies in the court systems right now. And they're losing them on a pretty consistent basis. At the moment, so we've got, and then we have fiscal risks are looking worse every year, we're breaking heat records every year, we're breaking storm damage records every year, we're breaking drought records every year. So we've got these four convergences that are all happening the same exact time to think that's not going to affect pricing the market is it's just ignored.
Gabe Rissman 42:33
You are leading into my last question, I will want to ask you your thoughts on the future of ESG, where it's headed over the next couple of years. Before that I do want to take a step kind of all the way back to the very beginning. So you dedicate a lot of your time and your energy to raising funds and awareness for autism. How do you think about that? And how does that translate into the way that you look at investments? Are you talking to any fund managers about things on the shareholder engagement side? Are you ever talking to companies about their policies? Or does it play into where you're thinking about? How does that connect the the work that you do outside with your investment side to?
Unknown Speaker 43:16
Look, I think climate change first and social justice, racial justice issues. Second, when we think about issues that we have to face as a player that because of my work in autism, we get a lot of investment companies much more on the private side, but also on the American Disabilities ETFs that there's one or two out the marketplace right now that people are trying to bring to the market, and activist issues around bringing more people with disabilities into the marketplace. I have an adult son with autism. Unfortunately, he's not at the degree that he could work anywhere, unfortunately, but have lots of friends that have kids that need help adjusting it to the workforce. There are some great companies doing great work Google, it's been great work on. It's more on the Asperger's side of the autism spectrum. But they found is an incredible ability of these kids to sit all day. It's a little computer mind through data that the average human being does not have the mental capacity for him to pay attention for. We're starting to see more and more that being addressed. But I can't say I've tied it directly into my best at this point. But it's certainly something on the private market side that people look at.
Gabe Rissman 44:43
I didn't know about Google's program, is there some sort of benchmark or industry standard or others doing that? Similarly,
Unknown Speaker 44:51
a lot of tech companies are doing it the past couple of years. So you can Google it. You'll find it well worth it. But but you can Google it and find out A lot of information bout a lot of these programs. But you're seeing a lot of tech companies, a lot of very bright, smart tech people have self identified as having Asperger's. It just seems to be a very unique ability to look at math and technology from a different mindset. For those that don't understand. There's lots of varied ways that people on the autism spectrum, think differently or perceive the world differently. That if they're social enough to work and function, makes them exceptional at certain jobs and tests. In America, we've always had a problem pigeonholing somebody into a test, we've come out of the 60s with a mindset of you couldn't be any better. That's not really true. I can't be a ballerina, so that they better wait. Where do you draw the line on that, we do not do a pretty good job in this country of identifying a child's kind of hand helping them with a pair, not saying you have to be. But saying your skills lie here, here's the eight paths that would probably really suit your developmental skills and your exceptional abilities. And we just don't do that in our education system, we want lots of average workers who can just go out in the workforce and not be exceptional, don't reward except should be reward average. So they have a broken system, unfortunately, and autism is at such a high rate at its worst thing, to some degree, we look at that system. And that's why a lot of tech companies, I think, are looking at even dropping college requirements and doing their own education programs, you've seen a bunch of companies talk about their way down where they would take kids right out of high school grade to your education programs on campus for them. There's a lot of really valid reasons for that. Not building up a four year debt at an Ivy League school, to not really come with what skills to the job that you are going to doesn't make a whole lot of sense these days.
Gabe Rissman 47:27
Yeah, that that frame and what you're talking about right now, tech companies putting together programs, I think more and more people are seeing corporations touch our daily lives a lot more, not just seeing it, it's happening, more and more is becoming more of the standard more of the norm. I would love to hear how you think things will change in the corporate landscape in the ESG investing landscape. In the next one to five years. What do you think the world will look like?
Unknown Speaker 48:00
I think corporations already trying to address issues that our government has had a failure to be able to address because it's too much bipartisanship. So I think you'll see corporations take I think they play a huge role behind the scenes, I think they're realizing that they're wasting a lot of money, trying to lobby for impact, and that they can directly address impact by being stronger on the boards and all the activism they do around the companies they own and certainly very thing. As much as I think Blackrock has issues with a lot of the product they put out there, I think it's been instrumental driving a lot of that because of his annual seal letter, if what he said the future of the market space is so I certainly applaud him for that. I wish he had funds that actually represented what he was saying. So I'm in an alignment of that, but it's a start. So I think you'll see more and more that I think companies are realizing that play to everyone doesn't work anymore. And you're seeing companies come out on all sides. And you're seeing companies be boycotted for making the wrong decision. So I think there's going to be a lot more engagement between society and corporates. They drive the world. They've been doing it behind the scenes for years because they lobby fund everything that the government does. Anyway. So I think bypassing though had a much more direct investor consumer corporate dialogues. And I think the consumer is waking up to realize especially younger people, that they can have a much bigger influence than they can. As much as Macintosh will argue that yeah, they change. It's always been I don't know if you've had this in economics, but we always had the chewing gum example. But if everybody stopped chewing gum tomorrow, get about six months old chewing gum company to be able to bid Since consumers and investors both have a lot of power, and I think they're waking up to that power, so I think you'll see a dramatic shift. And I think ESD will be gone as a term that will just be like diligence. Do your due diligence. Yeah, it's let me see what your diligence it's, it includes all the data that we get our hands on, which is the ESG. So I think that will end but I think climate investing social justice, investing will drive and dominate the market. That's why I think ESG will just be table stakes in five years.
Gabe Rissman 50:43
I love it. Jeff, thank you so much for joining me today. I want to end my roommate in college was a ballet dancer so I can send over some Catholics. That's
Unknown Speaker 50:54
awesome. Thanks, Dave. I appreciate that.
Gabe Rissman 50:58
Weekend and talk soon. Thanks, guys. Take care