BlueSky participated in FSI Deep Dive panel: How are artificial intelligence (AI) and big data changing the world of investing and does the help or impede the integration of ESG?

 

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Here is FSI’s recap of the event:  It’s Season 3 of the FSI Deep Dives and on November 7th, we gathered at the Deloitte Tower to discuss how AI and big data influence the integration of environmental, social, and governance (ESG) factors into investment analysis.

Our panelists were Bud Sturmak, Founder of BlueSky Investment Management, who joined us from New York to discuss their approach to investment analysis, Bouchra M’Zali, Professor with the Department of Strategy, Social and Environmental Responsibility at UQÀM, who discussed how AI is impacting her research in the field of social responsibility and sustainable development and Laure Fouin, Associate at McCarthy Tétrault and member of the FSI Board of Directors, who offered her perspective on fintech governance issues. The panel was moderated by Gildas Poissonnier, Senior Manager, Sustainability at Deloitte, also a member of the FSI Board of Directors.

Bud Sturmak started the conversation by describing BlueSky’s approach to integrating financial material ESG factors, which can vary across industries, into investment management decisions. There are challenges in using ESG data, most notably, the inconsistency of metrics across companies. Also, data is often backward looking and may not be a true reflection of a company’s current potential. Think of a spill or privacy breach in the past that has led to a tightening of operations and improved performance. Translating ESG data into measurable value creation allows investment managers to identify potential in companies that would have otherwise been overlooked with traditional approaches. Bud believes the BlueSky approach to assessing financial materiality will become more mainstream as investors see that considering ESG factors improves long-term performance and reduces business risk. As more data points become available, the challenge is to develop the right analytical approach and tools.


BlueSky Investment Management Announces Appointment of Grant Cleghorn as Head of Global Marketing

 

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New York, November 16, 2017

BlueSky Investment Management, LLC (“BlueSky”) announced the appointment of Grant Cleghorn as Partner and Head of Global Marketing. In his new role, Grant will oversee BlueSky sales and marketing including U.S. and International institutional asset owners, family offices and other intermediaries including bank and advisory platforms.

“Having had the privilege to serve on BlueSky’s Advisory Board since the firm’s inception, I have watched BlueSky evolve from a great concept to a true thought leader in ESG integration,” said Mr. Cleghorn.

Prior to joining BlueSky, Mr. Cleghorn was a Partner and Head of Institutional Marketing at Parnassus Investments, where he played a critical role in growing the firm’s AUM from $1 billion to over $15 billion over a six-year period.


BlueSky was recently featured in SASB’s ESG Integration Insights

 

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ESG Integration:  The Evolution of Value Investing

As value investors, we believe the key to long-term investment success is our ability to identify and purchase companies that trade at significant discounts to their intrinsic value and sell these investments when intrinsic value is realized. From our perspective, inte­gration of carefully selected and financially material ESG factors represents a significant opportunity to evolve and improve upon traditional value investing techniques. Our ESG integration approach broadens the pool of potential risks we seek to avoid while also identifying potential competitive advantages, enabling the evaluation of companies across a more complete set of material information to drive better investment decisions.


We are proud to have been a contributing author to the recently released book, "Sustainable Investing"

 
 

We are proud to have been a contributing author to the recently released book, Sustainable Investing.

Sustainable Investing brings the reader up to speed on trends playing out in each region and asset class, drawing on contributions from leading practitioners across the globe. Implications abound for financial professionals and other interested investors, as well as corporations seeking to understand future investment trends that will affect their shareholders’ thinking. Policymakers and other stakeholders also need to be aware of what is happening in order to understand how they can be most effective at helping implement and enable the changes arguably now required for economic and financial success.

Sustainable Investing represents an essential overview of sustainable investment practices that will be a valuable resource for students and scholars of sustainable banking and finance, as well as professionals and policymakers with an interest in this fast-moving field.


"ESG and the Future of Investing" White Paper

 

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A clear opportunity to drive alpha and better manage risk

Increasing corporate transparency and disclosure, combined with a growing research field that quantifies and measures corporate environmental, social and governance (ESG) data presents a clear opportunity for forward-thinking investors and portfolio managers to drive alpha and better manage risk in the 21st century.

Download the full white paper to learn more about this innovative approach to investing.


What happens when experienced value managers join forces with experts in ESG/sustainability?

Portfolio managers Ron Dornau and Chris Matyszewski met with the founding team of BlueSky Investment Management after reading a compelling description of the firm’s vision to combine value investing with environmental, social and governance (ESG) analysis. They were trained in value investing by Charles Brandes, who studied the value discipline under the tutelage of Benjamin Graham himself.  Ron and Chris had always evaluated management quality and assessed management’s ability to add value, though they never formally incorporated ESG into their process. After delving into BlueSky’s proof of concept, including the results of over eighteen months of proprietary ESG research as well as key academic studies on ESG, what they found was eye-opening. They were more than persuaded – and they joined as partners.  

BlueSky was founded on the simple concept that integrating value investing with ESG analysis can enhance performance and better manage risk. In short, this approach employs a wider lens that examines companies across a more complete set of material information in order to drive better investment decisions. Value investors seek a margin of safety by purchasing quality companies at attractive prices which protects their downside risk. BlueSky believes that ESG naturally fits with the value style of investing as it reinforces the margin of safety. From a risk management perspective, ESG helps portfolio managers avoid companies with excessive risks caused by poor ESG performance. However, ESG can also be used to assess business quality and identify companies that are creating value.  

While traditional financial metrics like free cash flow and return on invested capital (ROIC) can speak to business quality, ESG analysis can provide a broader measure of corporate quality that reveals how a company treats its employees, suppliers, customers, and the environment – factors which have been proven to be financially material. Hundreds of independent studies show that companies performing well on ESG measures also produce superior financial returns, exhibit a lower cost of capital, higher profitability and stronger share performance. Additionally, BlueSky’s proprietary research confirmed a strong correlation between corporate ESG performance and companies producing high ROIC. 

BlueSky has evolved traditional value investing through the careful integration of ESG, allowing a more complete and accurate assessment of risk and competitive positioning in today’s modern business landscape.