I’m an Engineer.
For individuals like me who’ve worked in and around the capital markets for 30-plus years, the development of the tools we use has moved at a breathtaking pace. While developing new ways to predict future value, newer, faster tools have led to both opportunities and challenges. We must integrate these new approaches into our day-to-day work to continue to create wealth for the investors who rely on our skill.I love tools. I love using tools to fix things. In particular, I love tools that work well. Tools that get the job done. From fire, to moveable type, to steam engines, and even the internet — throughout the millennia, our human community has leapt forward when we’ve discovered new tools and learned to use them well. Our ability to create tools allows us to imagine a better future and our confidence in that ability allows us to revel in the uniquely human experience of hope. That confidence can also lead to hubris, as any classics scholar will attest. Our faith in our abilities must always be tempered by the magnitude of the problem we are working to solve.
The evolution of the tools we use has allowed us to revolutionize the way we think about value. As an engineer, I am convinced that the investors who learn to combine tools–particularly those related to expanding computational capacity and data feeds developing around corporate environmental, social and governance (ESG) metrics — will be the investors who discover new sources of value creation. Along the way, these investors will be well-positioned to create wealth while helping to “fix” the 21st century’s most intractable problems.
My first real career was as a chemical engineer, a discipline similar to the investment business in its goal to optimize flows. At the risk of oversimplifying and/or inciting a “flame war” on the Twitter feed of the American Institute of Chemical Engineers (AIChE), a ChemE’s job is to ensure that fluids flow properly to optimize production of a particular product. Using abstract-but-measurable concepts of time, temperature and pressure, and accurate concentrations, the ChemE designs an efficient system to profitably produce products that can be sold in the marketplace. When something goes wrong, the engineer combines her experience and problem-solving ability to propose and test solutions. When tools change, through technological innovation, both challenges and opportunities arise as the system adjusts. The best companies manage the challenges and exploit the opportunities.
My second career was in investment management. My approach always had a value bias. Where were the embedded opportunities that others didn’t see? What were the challenges that some companies were best positioned to address? My interests, given my training, led me to opportunities that best used emerging tools on systems that already existed. As an engineer I knew how to use tools to fix problems. I always believed that this approach would allow me to create just a little more value for my clients than my colleagues
For the last eight years, I’ve served as the executive director of the Interfaith Center on Corporate Responsibility (ICCR), the nation’s oldest and largest coalition of active shareholders. ICCR is a coalition of 300 institutional investors who practice active ownership, otherwise known as shareholder advocacy. The coalition is composed of faith-based organizations, asset management companies, pension funds, unions, foundations, and colleges and universities that collectively represent well over $100 billion in assets under management. For over four decades, ICCR members have called upon the world’s most powerful companies to build a more just and sustainable world. Through corporate engagement that takes the form of real-time dialogues with corporate management and, when necessary, filing shareholder proposals for consideration by all shareholders during annual meetings, ICCR members have had a demonstrable influence on corporate policies and practices.could. Over time, this approach served both me and my clients quite well.
One might ask, is there is any thread that links these job descriptions? Are engineering, investment management and shareholder advocacy milestones along a rational career path or simply indicators that the writer is fickle and/or cannot hold a job?
I would argue each role depends on a framework that uses information and available tools to predict future results. In the case of the engineer, using chemical and mechanical systems to efficiently and profitably produce products. In the case of the investment manager, using micro and macro data and analytical models to maximize returns and minimize risk. But what about the faith-consistent investor, working to integrate environmental, social and governance (ESG) criteria in her investment analysis? What are the problems she is trying to solve and how can insights gleaned through corporate engagement help? Can one make the case that investors ignore the additional information embedded in ESG reporting at their peril and that of their clients? Can one make the case that in combining tools to allow a wider range of inputs, the savvier investors exploit the opportunity to see value and better predict future wealth creation? Can one argue that companies who integrate ESG metrics into their management framework will lead their sectors in innovation and profitability; perhaps solving important societal problems and creating more value for their shareholders along the way?
Through the lens of my eclectic career, I would argue the answer is a resounding yes.
I am, after all, an engineer.
Laura Berry is the Executive Director of the Interfaith Center for Corporate Responsibility (ICCR), following a 17-year career as a Large Cap Value Portfolio Manager. She began her career as a Chemical Engineer.