Fintech on Friday: How tech-fuelled transparency can help shine a light on ESG

Having formed a start-up bringing more transparency to portfolios of investors in workplace pensions, in terms of environmental, social and governance (ESG) stewardship, digital entrepreneur Georgia Stewart is keen to spread the word to the wider investment community, including private banks and family offices.

Ms Stewart’s introduction to ESG investing came as a student at Cambridge University, where she joined a group campaigning for a more sustainable approach to the university’s £6bn ($8.2bn) endowment fund. For three years, together with fellow activists from Positive Investment Cambridge, Ms Stewart spent nights scouring investment portfolios for evidence of positions in fossil fuel and tobacco stocks.

“We wanted to encourage the university to understand where its endowment was invested, what funds we held and which stocks are within those funds, so that we could be more pro-active shareholders,” she recalls. As a Natural Sciences student, she was appalled that the university’s investment managers could theoretically vote against climate change resolutions.

For the first year, Ms Stewart felt out of her depth, surrounded by PhD students conducting research on intricacies of portfolio structuring. But after summer internships with sustainable investment teams at fund managers Liontrust and Jupiter, she gradually built up her own credentials, spotting gaps in the ESG market.

“When I was at Jupiter, people would email, asking: ‘Why are you invested in Whole Foods, when they sell unsustainable beefburgers?’ Those questions showed us underlying investors are interested in which companies their fund managers are invested in and what they are doing about sustainability issues.”

She also noticed a lack of digitalisation and disconnect between fund managers and clients. “Asset managers are operating very separately to most of their clients,” she notes. “While our company is based on user feedback, that is not happening so much in the asset management space.”

Following a campaign uniting chief investment officers of the largest university endowments to put pressure on US oil giants around preventing climate change, and a final-year E-Tech module focused on “starting up a sustainable business”, at the Judge Business School, Ms Stewart felt ready to take the plunge.

Now, as CEO of Tumelo, she works closely with Legal & General Investment Management (LGIM) on ethical stewardship. “Our technology connects with their platform, giving scheme members access through Tumelo, allowing them to see which companies they have inside their pension pot,” she says.

This gives investors a window on how LGIM is voting on key issues like climate change and gender. Pension scheme members are shown the arguments for and against a typical company shareholders’ vote on ethical issues and asked their opinions about which position LGIM should take. The opinions are then filtered through to the stewardship team. 

Tumelo is also looking to become more engaged with the private banking community, where a new generation of potential clients is seen as an attractive target. “We are having conversations now about how our tools can help empower high net worth individuals and their advisers,” she says. “We want to create more transparency into where their money is going and give them a stronger voice on these issues. People with a larger amount of assets can also have a larger impact.”

 So far, she has detected a reluctance among private banks to engage with start-ups, but believes this will soon change, with Covid providing a catalyst for a more digital approach.

“The large insurance providers and pensions we work with have been really supportive, but we haven’t had that much interaction yet with the private banking space, which is something we want to focus on. There is a lack of digitalisation there, and we would like to be one of the companies that can change that.”