May 02, 2016

Building Investment Strategies for the Next Generation: BNY Mellon Live@ New York University

Kristen Fontaine and Anna Kearney

Kristen Fontaine and Anna Kearney presenting on carbon efficiency and social finance to NYU’s Net Impact club.

Anna Kearney, director of social finance at BNY Mellon, and Kristen Fontaine, vice president and portfolio specialist at Mellon Capital Management, spoke to New York University’s (NYU) Net Impact Club in early March about their experiences building socially and environmentally conscious programs, investment solutions and career paths.

Kearney shared that as of three years ago, BNY Mellon was focused primarily on excelling at implementing Corporate Social Responsibility practices such as minimizing risk, increasing workplace diversity and being as carbon efficient as possible, among other efforts. Then, the board of directors challenged them to look at a longer-term picture, leading to the company’s focus on social finance – investment activity with a financial return and including a positive social or environmental impact.

While Kearney worked to build the social finance program, Fontaine’s team at Mellon Capital was tasked with creating strategies that capitalized on this chance to contribute to global social and environmental well-being through financial investments. Their first effort resulted in an environmental, social and governance (ESG) strategy for a veteran client. According to Fontaine:

“The Carbon Efficiency Strategy presents a new level of complexity because you can’t rely on the typical benchmarks for success,” she said. “More and more, though, we are seeing environmental and social factors become considerations in a company’s balance sheet.”

In fact, that’s how Mellon Capital entered the impact investing space in the first place. A client, the McKnight Foundation, seeking to align the endowment investment options with their foundation’s mission, approached the firm about creating an impact investing strategy that they, and other organizations, could use to make a difference globally.

“When McKnight approached us with their other strategy partners, Mercer and Imprint Capital, they knew they wanted to make an impact and have a voice, but they needed guidance on how to do that in a way that made sense through their investments,” Fontaine said. “The result of this project, ten months later became the Carbon Efficiency Strategy.”

The time commitment began to pay off when Fontaine started to see the mindset of the firm shift as excitement about this new approach to investing grew amongst colleagues and clients alike. According to Fontaine, ESG has long been an established tenet of Newton Investment Management and is finding an audience amongst BNY Mellon’s other investment boutiques, such as Mellon Capital, too.

“Interest is broadening as individual investors and asset owners become more socially conscious and municipal governments take ESG into consideration as part of their pension funds’ investment policies.”

There’s a lot of work ahead still, however, and Fontaine made it a point to emphasize the importance of the millennial generation in pushing similar efforts forward in the future:

“The group in this room is about to eclipse previous generations as one of the largest working generations. You will be the biggest drivers of change in the next decade and our efforts now are in part preparation for all of you to join the workforce,” she said.

Kearney echoed these sentiments as well by challenging the students to bring unconventional solutions to the table in their careers in finance.  An informal survey of the room revealed that these NYU students are passionate about water issues, education, empowering women and girls – and would consider making investment decisions and trade-offs for impact in the future.

“There is a lot of reevaluation coming in financial services,” she said. “What got the sector here today won’t get it where it’s going next. There are major shifts coming in the industry that will be a major opportunity for your generation.”

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Colleen Krieger
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