Keep Moving Forward

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Welcome to Women and Wealth, I'm Betta Kirr, Co-head in Investment Strategies at Bernstein, and this podcast aims to educate and inspire women to make the right choices for their wealth.

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Responsible investing was one of the breakout stars of 2020. Just some stats to get us started here. Investors poured almost one hundred billion dollars into responsible and ESG fund mandates last year. In our own client base, we've seen more and more of our clients asking us for responsible investing strategies and something I found personally and is supported by the facts as well, that a higher percentage of women are drawn to investing through responsible strategies.

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Women are focused on investing in their values and having a positive impact on society and the environment. Of course, it's a gross overgeneralization, but we do see those trends playing out in our own client base and really around the world. And at the same time, I'm really excited at AB in particular that we've had more and more women assuming key leadership positions throughout the firm and in particular in the responsible investing space.

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So with that intro, here we are in March of 2021. And I am here with Valerie Grant, who is the portfolio manager for a responsible US equity. Thank you for joining me, Valerie. Oh, it's great to be here. Beata, thank you for having me. It's such a pleasure.

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Valerie and I have worked closely for many years and I've seen Valerie's rise throughout the organization and the influence of responsible investing really continue to grow. So this is a fun personal conversation highlighting one of our great female leaders as much as we're going to be highlighting the responsible investing concept. So we think this is a great month during Women's History Month to be talking about all of this.

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So first, let's start with your pathway to getting here, Valerie. You recently won a really big award which we'll come back to and talk about. But one of the things we noted in your award was a little bit of history in your roots and how your roots led to perhaps your focus on responsible investing. So what am I talking about? Well, I heard that you worked at Ben and Jerry's, so tell us more about your early years and how you got here. Working at Ben and Jerry's was really a seminal experience.

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I came out of Harvard Business School in 1994 and was drawn to the company because of its social mission. And in addition, they had just recruited a new CEO and it was someone that I had known from my earlier days at McKinsey. So I joined the company really eyes wide open to make an impact, but also to learn more about what it really means to run a company with a double bottom line.

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And I would say that what I took away from that experience is an understanding of both the opportunities as well as some of the risks of managing a company with that focus. So as an example, Ben and Jerry's had a policy at the time of donating twelve and a half percent of pre-tax profit to its corporate foundation, which was a great aspiration in terms of wanting to make an impact on the local community. But what it did mean at times was that when we needed to reinvest in the business for growth, we didn't always have the financial flexibility to do so.

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So again, there was a benefit, but then there was a cost. Another example would be the compensation structure, which is something we focus on a lot and responsible US equity executive compensation. And at the time, the founders of Ben and Jerry's really felt that there should be no more than a ten times difference between the highest paid executive and the lowest paid worker. Again, it's a noble aspiration, but what it meant was that as the company grew over time, it became increasingly difficult to attract top talent. So again, benefits and risks.

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And that's how we look at companies today for the responsible US equities portfolio. But that's an interesting experience. So it's a grounding experience in the day to day of what it means to work for a company with this type of social mission. Interesting observations about some of the pros and cons of that. Let's fast-forward, how many years have you now been with us at AB, Valerie? About fifteen years. And you started at AB

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doing what? I started at AB as a buyside analyst, actually as a short specialist. So I was really focused on looking for companies that were overvalued, not undervalued. And then over time, my career transitioned to more of the long only strategies focused initially on small and mid-cap equities and then large cap equities. And then ultimately the position that I hold today as a portfolio manager. I've had

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a very broad range of experience coming into this role, which is really exciting. And I think it's interesting that you said you started on the short side, shorting has been in the news lately at the time of our recording with the situation around GameStop and other heavily shorted stocks. So now on responsible US, this is, for those that are listening, really core US separately managed equity strategy for investors that tell us, I am interested in responsible investing and I want to achieve more than just measuring risk and return.

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Let me first ask you, Valerie, when investors ask us what do you measure, how do you measure impact in Re-USE, which is what we call it for short? We measure impact at the portfolio level and at the stock level. So at the portfolio level we are really focused on climate change, as one would expect.

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So we scrutinize the carbon footprint of the portfolio and we measure that a couple of different ways using various data sets that we have available to us. So we look at the CO2 equivalent emissions per dollar of sales, as well as the CO2 equivalent emissions per dollar invested. Right.

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Which allows us to compare our portfolio to the broad market. Secondly, we look at corporate governance and here we've developed a proprietary measure called the Board Effectiveness Index, which gives us an indication of the board's capabilities to oversee management and their strategies. So it includes things like the level of independence on the board, the structure of the various committees, the diversity on the board of directors, etc. So it's a very robust indicator that we've developed internally and we use it on the team. And then we look at different indicators of social performance.

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And the main one that we focus on right now is diversity, equity, and inclusion, both at the board level and at the enterprise level. At the board level, we have measures of gender diversity on the board and we also have at the company level a measure of LGBTQ equity practices. We are developing better data sets that measure racial and ethnic diversity at the enterprise level.

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Unfortunately, the reporting there is very inconsistent, but getting better. So expect to see us to have more disclosure over time in that area. And then in addition to that, Beata, we look at every single company and we say, OK, well, how does this company make money? Basically, what is the industry or the sector it's in and how does it generate cash flow?

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And what do we think are the most important environmental, social, and governance issues for this specific company? Because we want to make sure that we're not just looking at it at a high level, but really looking at the stock-specific issues on a forward-looking basis, because our view is that we want to invest in companies, not only those that are performing well, but also those that can improve from where they are going forward.

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We work together in the development and creation of Re-USE and thinking about these metrics, and I'm thrilled to have seen its growth and really evolution in our private client business in terms of adoption. I think at the time we always felt we wanted metrics to measure each component of ESG. And what's so great about what you've just said, Valerie, is how not static they are. Right. So the concept has applied, but what you can measure and how frequently you can measure will change. Like you recently added the LGBTQ+ criteria.

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I was thrilled to hear you say that more companies are going to be disclosing more information about their demographics. So we will continue to further and evolve these metrics over time. Absolutely. More companies are disclosing and and more information will be available.

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So this is Women and Wealth so let's talk about the women and wealth angle of this data. Talk to me about what you're seeing in female representation, both on boards and executive teams and how that's translating to your perspective and holdings over time and Re-USE. Well, I am happy to report that things are actually getting better. I know it doesn't always feel that way. I know sometimes you're in the thick of it. You know, Betta and I have our catch-up calls, we're like, well, is it just getting better or worse, and in fact, it's getting better.

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I saw a great stat today about the companies that went public last year and only one of them did not have a female member on their board. That is a huge change from prior years when if you looked at all the history of companies going public, you didn't have any female representation on the boards effectively. With our board effectiveness index, we looked at the trend for the gender diversity on boards of directors, and it's actually improving among small, mid and large cap companies.

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So things are moving in the right direction and that's without major regulatory mandates in the US in other countries, they are pursuing that. But in the US, this is largely voluntary, so that's moving in the right direction. And then in the Re-USE portfolio, I'm happy to report that nine of our CEOs are women. How many holdings do you have in total? We have about 70. So that's a lot. Nine out of seven is a lot. Exactly. Exactly. Which is higher than the market overall. Obviously, we'd love to see that number be, you know, 50 percent right over time, but it'll take us a while to get there.

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And, you know, I've been very pleased with the female CEOs that we have. I mean, we just added a stock to the portfolio, Otis Elevator, though, it's an industrial company, almost a household name, really. If you go into any office building, chances are the elevator was made by Otis and it's being served, serviced by Otis. Well, who knew the person who runs that business as a woman? The CEO is female and she's doing an excellent job. I'm also thrilled with Citigroup's appointment of Jane Fraser as CEO.

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I actually went to business school with Jane and know her personally. She is fantastic. I'm sure she'll do a great job at Citi. And so I was literally like jumping up and down, screaming, you know, happiness, you know, when she was appointed CEO of Citi. And I'm really hopeful that she'll do great things not just at Citi, but really as a trailblazer in financial services more broadly. Oh, so that's so great, Valerie.

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It's really important to step back and say progress is happening because we were recording this at a time where we also have to recognize that the pandemic has set women back in a pretty extraordinary way. There's been a lot of conversation around this she-cession and this term of how many women are dropping out of the workforce and will we lose the progress that's been made.

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So I think we have to keep a very close eye on that and those trends and see how companies are supporting women at work and what optionality people have for returning with more flexible working environments, with the hopes that one day we get back to normal and kids are back in school and childcare is available. But it's so great to hear you say that in terms of the metrics you're seeing and the progress that's been made both in the boardroom and in the executive ranks. So that's, that's great.

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Well, let's pivot from talking about Responsible US to really talking about your own career journey and highlighting that.

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So I want to let our listeners know that last fall you were honored as the 2020 North America Industry Leader Award recipient, and you got that from 100 Women in Finance, which is really a fabulous organization and very much acknowledging how you've been a trailblazer yourself in the world of ESG investing. You had a beautiful acceptance speech with incredible nods to your parents. I loved listening to it and hearing about your history.

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And one of the things you said in that speech was that the path to becoming a PM has not been a straight line. There's been ups and downs along the way. And you may have had some moments where you thought about giving up, but then you called on other women at AB, I'm assuming, for guidance and perspective. So tell me more about that. As I think about the path to where I am today, there were definitely valleys and peaks, and so, in the valleys, there were times when I felt incredibly isolated.

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There really aren't that many women in this business. And then women of color is an even smaller minority. And there were times where you just need someone to talk to, to literally say, look, this is the situation I'm trying to manage through. Can you help me get some perspective on this? And so there are a number of women at AllianceBernstein through our Women's Leadership Council who have been tremendously helpful in my career, but also through 100 Women in Finance.

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You know, sometimes you have to call somebody and say, look, meet me around the corner at the Four Seasons. Let's sit down... Four Seasons sounds nice! Let's have a cocktail...  And but honestly, honestly, that's really, you know, what your friends and colleagues across the industry will do for you. They'll say, OK, Valerie, you know, I was in a similar situation two years ago. So here, here are three ways I think you could manage this.

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And let's, let's brainstorm. And then you get some perspective. Right, because oftentimes what you need is perspective. And for someone to say, you know, let's take the long view. Here's how you can move forward and you pivot and then you look up a few years later and, you know, whatever the setback was is a distant memory. Right. And you keep moving forward, which is absolutely critical. You keep moving forward. I saw a great quote today from Sara Blakely, the founder of Spanx. She's awesome on social media.

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And one of the things she said was, she has a mug with an arrow on it. And there's a quote about how an arrow only moves forward once you have pulled it back, and that oftentimes those obstacles that set you back in the here and now and in the today are going to launch that arrow forward with a trajectory and momentum that is bigger and faster than it was before, but you have to hit that obstacle. That arrow has to come back.

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I thought, I don't know what you think about that analogy, but I thought that was right on. I love it. It's so true. Not a straight line. So true, Beata. Yeah. It's not a straight line. And it's great to hear you've had these networks of women and other peers that are available to help you brainstorm. Those obstacles are there for everybody. And it's just a question of when, not if. And if you think about that arrow moving forward, I think, like you said, the long view. You also have a leadership role in the Black Employee Resource Group here at Bernstein.

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And clearly representation matters. It has always mattered.

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But I think we also have to acknowledge we have so much work to do here, not just at AllianceBernstein, really in the whole industry, frankly, broadly speaking. So tell me more about your mentorship and your efforts to develop young women both inside the Black Employee Resource Group and otherwise, really, especially with women in finance? Sure, yeah. I actually co-founded the Black Employee Resource Group a number of years ago.

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Gosh, I think it was in 2008, 2009. Something like that, has been, it's been a while. And while I'm not currently leading the organization, I definitely take an ongoing interest in developing talent at the firm. You know, you have to sort of pave the way and lift as you climb, you know, as the saying goes.

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So there are a couple of women that I advise, women and young people of color. And I also mentor and coach white males and other junior folks across the firm, because I just believe that this is really an apprenticeship business. It's so important that senior folks take an interest in developing talent. Over time, it's really rewarding to see people grow and flourish. It absolutely makes a difference and it's very gratifying. Yeah.

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And I recently spoke to a group of amazing women who were all interested in going into finance in undergrad. If you had to give advice to women coming out of college today about the finance industry, do you have some tips or ideas for them?

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I would say that it's very important to find your place, but to find your place in a part of the organization where your impact is strategic and valuable to the company's overall success. I do distinguish and I try to advise young women to got to stay on the front lines, so to speak, stay on the front lines, let that guide your career, and don't be deterred by the fact that you may be the only or one of a few at your level as you progress.

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Just keep going. Keep going. And if there's no one more senior than you in your particular role, who is a woman or a person of color, just keep going because you may have to be the first. And that's fine. It's totally fine.

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Your mentors don't necessarily have to look like you. Your mentors and your sponsors don't necessarily have to be other women. They don't necessarily have to be other people of color. They just have to be someone who's willing to basically support you and support your career and see the potential that you bring to the organization. And so, so those are the types of things that I share with the folks that I, that I mentor. Yeah.

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And of course, everybody should focus on where their skills and talents are. I mean, your points are totally valid that there are less women in what you've described as the front lines. Of course, there's incredibly valuable roles in operations and in compliance and in legal and in marketing, and all of those functions, and people's talents may lay in those capacities. But if your talents could lay in the investment front or in the business development client relations front, I agree with you that that is where we are least represented. Least represented.

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OK, let's come back to your acceptance speech, because again, I thought it was so beautifully done and you talk about your parents and the values they instilled in you and your sisters. So can you just talk a little bit about that here, too? So let me share with everyone.

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My parents actually passed away last year in April of 2020, three weeks apart. While it was a devastating loss for our family, in the time that I've had to reflect, I've just come to appreciate all that they poured into us and their hopes and aspirations, I remember going through a box of memorabilia and seeing my old report cards, you know, my mother's, you know, letters she would write to the school saying, I want Valerie

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in the gifted and talented program, now just her own way of navigating and pushing us forward, because they were both mathematicians. They met basically in the math department in college at Savannah State University and went on to have careers in public service. My father, as a computer engineer at NASA, the National Aeronautics and Space Administration, and my mother in operations research at the Department of Defense.

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So a very unconventional career for a woman at that time. And what they instilled in my sisters and I was a focus on excellence, always doing your best, not putting any constraints on what you can accomplish, right. Because of your gender or ethnicity or anything else, basically to just go for it. And that really came through for each of us.

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And I'm very grateful, very grateful to them for that. The other thing which is interesting, and I think it relates to some of the other topics we may address, is on planning.

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I didn't know how much my parents had planned financially, and they weren't like aggressive investors, but they were fastidious about saving. And so they had all this money squirreled away. You know, I was like, wait a minute, what are those? They never told us. Right? And I said, wow, they really were thinking about not just themselves, but the future, their children and their grandchildren and, you know, future generations. And I think that's something that I learned from my parents as well. And I respect and thank them tremendously for that.

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Oh, it's so beautiful. And I'm so sorry for your loss last year. And I'm sure it was bittersweet to receive that award only a couple of months after their death. I know that was a very hard time in the spring, in the middle of a pandemic, no less than everything else going on.

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So let's wrap up with, you know, this concept that you just talked about, your parents planned and they planned for the future. And really you were impressed by that.

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I often ask my guests, when you think about funding your favorites, which is this idea about being intentional with financial decisions, prioritizing what's meaningful, since you mentioned that about your parents and of course, your daily life now is managing Responsible US. Other than that, how do you think about funding your favorites day to day? Or what were some of those lessons that you want to pass on to now, your family? The way I think about being intentional with my own finances is to really think about every aspect, how I spend and where I spend my money.

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I'm very thoughtful and conscious about that. I'm a conscious consumer, which is part of a broader trend. But I would say that I practice that in my own life. I am very conscious about philanthropy. I have always set aside a certain amount of money every year to give to causes that are important to me. And I really sit and think, OK, well, what are the issues that are important?

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What are the organizations doing great work. And let me give and give generously to them. And then, of course, you know, having that long-term focus in terms of planning not only for my own financial security and my family's financial security, but thinking about future generations, I now have a son, I'm going to give away my age and people going to say, well, how did that happen? Don't worry about how it happened. I have a two and a half year old son and he's an absolute joy. But, you know, we were focused on him, you know, focused on him, that next generation and beyond.

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And so those are the ways I think about being very intentional as I think about my financial future and how I approach my finances. Every aspect. It sounds like you've nailed it, Valerie. Conscious consumerism, values oriented philanthropy and day to day managing Responsible US.

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Valerie, thanks so much for your time today. It's been just fabulous to sit down with you and have this honest conversation. I just want to thank you, Betta, for having me on and thank you also for being a champion as well, you know, for women at AllianceBernstein, I know that you are very vocal as well. And the fact that you lead this podcast is a testament to that. Kudos to you. And thanks, everybody, for listening. My pleasure. Thanks again, everybody.

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If you enjoyed the podcast and haven't subscribed to our show, please go to Apple Podcasts, Google Play, Spotify or wherever you listen to subscribe and rate us. You can also find us on Twitter at BernsteinPWM or find me, Betta Kirr, on LinkedIn. Bernstein: Making money meaningful for individuals, families, and foundations for over 50 years. Visit us at Bernstein.com.