Episode 136: Nili Gilbert, The David Rockefeller Fund and Synergos
Today's guest is Nili Gilbert, Investment Committee Chair of the David Rockefeller Fund and Synergos.
Nili is a professional investor managing billions of dollars in the market for institutional asset owners. After graduating from Harvard, Nili started working at the non-profit Synergos. Synergos was focusing on strengthening local community foundations in Africa, South America, and Southeast Asia, with the hope that a blossoming financial sector would have positive social impacts on progress. She went on to get an MBA from Columbia Business School. She has worked as a Senior Director and Analyst at Investco Quantitative Strategies and co-founded Matarin Capital Management. She is a Co-Chair and Life Member of the Term Member Advisory Committee on the Council on Foreign Relations as well as a Young Global Leader on the World Economic Forum.
Nili and I have a fascinating discussion in today's episode about ESG, impact investing, and climate pledge signals across the market. She walks me through her background in finance and philanthropy as well as her role at the David Rockefeller Fund and Synergos.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded November 20th, 2020.
In Today's episode, we cover:
Nili's finance and philanthropic background
Matarin Capital Management, their approach and what sets them apart from other impact investing firms
The David Rockefeller Fund and Synergos
Responsible and impact investing
ESG investing
Mission-aligned investing
Process for choosing which companies to invest in
How ESG has changed for the last 15 years
Greenwashing
Green growth and what it means
The tension between incremental progress and sweeping change
Billionaires and climate philanthropy
What role the government should play in the energy transition
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Jason Jacobs: Hey everyone, Jason here. Before we get going, I just want to take a moment to give a quick shout out to the new paid membership option that we recently rolled out. This option is meant for people that have been getting value from the podcast and want to enable us to keep producing it in a more sustained way. It's also for people that want extra stuff, such as bonus content, a Slack room that's vibrant and filled with people tackling climate change from a wide range of backgrounds and perspectives, as well as a host of programming and events that get organized in the Slack room. We also have a virtual town hall once a month, where you can get a preview of what's to come and provide feedback and input on our direction. We'll be adding more membership benefits over time. If you want to learn more, just go to the website, myclimatejourney.co, and if you're already a member, thank you so much for your support. Enjoy the show.
Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Nili Gilbert, Co-Founder and until recently Portfolio Manager of Matarin Capital with responsibility for hedge fund and long-only equity strategies. Nili also chairs the Investment Committees of the Board of Directors of both Synergos and the David Rockefeller Fund. Nili has an interesting background in that she started her career on the non-profit side, then went on to have an extremely successful career in finance, and along the way had roles of increasing responsibility on the philanthropic side as well.
It was fascinating to learn about Nili's career journey thus far, how purpose and values have driven her at every phase along the way, how she infused those values into her financial career and the firm that she co-founded, Matarin Capital and what that firm did to infuse those values into a firm and serving clients that hold their feet to the fire with market-based return expectations. We also have a great discussion about philanthropy, and where we are with that, where it needs to go, what's some of the highest leverage things are that philanthropy can do, and of course, how these two worlds tie back to the future of capitalism, GDP growth, Western nations, developing countries, climate change, and what kind of world we are leaving for our kids and our kids' kids. I really enjoyed this one and I hope you do too. Nili Gilbert, welcome to the show.
Nili Gilbert: Hey, it's great to be here. Thank you.
Jason Jacobs: It's great to have you. And I must say, although it's only the audio that shows up for our listeners, I can see you and you've got quite the view behind you.
Nili Gilbert: [Laughs] That's right. We've made a little COVID escape from New York City for the winter to a tiny fishing village in Jamaica.
Jason Jacobs: Amazing. Well, I have managed to escape from my main house to my bedroom for this discussion. So-
Nili Gilbert: [Laughs]
Jason Jacobs: ... escaping my kids, which is not quite the same kind of escape, but I'll take it.
Nili Gilbert: Speaking of journeys. [Laughs]
Jason Jacobs: [Laughs] But yeah, no, it's awesome to have you, and there's so much to cover. It's a little hard to put you in a box because you've spent so much time kind of growing up in finance. And then of course, you've done this important foundation work as well with the Rockefeller Foundation and really, I mean, it'd be great just to kind of get into your brain and learn more about your story and also just the work that you've done, that you're planning to do, and how you think about this big thorny existential systems level problem that we're both so passionate about working to address.
Nili Gilbert: You called it, Jason. Um, I'm really passionate about system level, thinking about climate and kind of all of our global goals. How are we going to achieve them? And then for me as an investor, what is going to be the role of traditional investment capital as well as philanthropic capital in trying to achieve that? You know, it's questions like, what is our role as owners? How as a society are we pricing things? Which projects get to get funded and which don't, and what are our baselines? What are our standards by which we compare ourselves?
You know, this question around the world probably needs new benchmarks. Beating the old benchmarks is probably not good enough. And so for me, when it comes to system level thinking it's actually really helpful to look across sectors, not just the private sector for myself as an investor and business person, but to civil society, to the philanthropic sector, and, and hopefully increasingly, uh, for us in the US also looking back to the public sector to play a role and figure out how we can all work in partnership.
Jason Jacobs: Well, before we get too far down the path, one thing I'm super curious about is your finance path and your purpose path. What order did those come about and when, and how, and why did they first start to intersect?
Nili Gilbert: So, you're right. Today I'm this professional investor who's managed billions of dollars in the market for institutional asset owners, but actually I started my journey in civil society and the nonprofit sector. I was one of those kids when I grew up-
Jason Jacobs: I like how finance is not civil society, by the way. [Laughs]
Nili Gilbert: [Laughs] Some kinds of finance can, it should be, [Laughs]. But other parts could be quite uncivil, I guess. So when I was in college, I graduated from Harvard in '99 and you know how some colleges, they have the kids who at some point start putting on their business suits and go down for their interviews at Goldman Sachs. I was-
Jason Jacobs: I remember that. I was '98 and I remember those kids doing their eye banking and consulting-
Nili Gilbert: Yeah.
Jason Jacobs: ... and I, I was definitely not doing that.
Nili Gilbert: Me either.
Jason Jacobs: [Laughs]
Nili Gilbert: I was [crosstalk 00:06:23] interviewing for the Peace Corps and thinking about the future of society and how are we going to do this. I had studied economics in college, but I studied the relationship between how economic progress and market developments over time affect our societies and our culture, and in turn how our society and our culture can affect market and economics. And so when I graduated from college, I didn't end up joining the Peace Corps, I was lucky to be hired by a non-profit organization in New York called the Synergos Institute, which at the time was focused on strengthening local community foundations in countries, in Africa, South America, and Southeast Asia with the philosophy that by strengthening the local financing sector, that you could have a positive impact on social progress.
And when I was working at Synergos, we would have all these conversations with donors essentially about what the value of that kind of work should be, like what's the value of strengthening grassroots organizations and communities? And what I found was that the donors had like a really outsize voice in getting to say, who got money, how much money, who should it be. Oftentimes the donors were people in finance, and oftentimes there was little diversity among the community.
So after a little while I started asking myself these really tough questions about who gets to say what is a value in our society and how do we say exactly how much value things are worth, and how do people like me and us and our community at Synergos, how can we have a larger voice in that conversation? So I went back to the, the founder of Synergos, an amazing woman, a leader and dear friend named Peggy Dulany, and I said, " Do you think it would be crazy if I myself went into finance to try to become an investor to answer these questions about how we put prices on things, but to bring our values to play in that conversation?" And that was the beginning of a road that I'm still on now almost 20 years later.
Jason Jacobs: And so that path in finance, did you join firms that had an explicit social purpose, or did you try to infuse that into firms that had more of a market-based perspective purely?
Nili Gilbert: For all impact investing and responsible investing industry that is more mature now didn't really exist in the way that it does today back then, you know, almost 20 years ago. As a matter of fact, when I went to Columbia Business School, I had to design an independent study to study how you could take account of environmental and social issues in an investment practice. They didn't even have a course about it. The term ESG, environmental, social, and governance investing wasn't even coined until 2005 by Forbes, and this was 2002.
And so I was lucky to join a firm that had a focus on quantitative investing in which the practice was to talk about the world, talk about what makes a great company, talk about what makes a great investment, and then to take that understanding and find ways to build it into formal systems, literally through code and quantitative formulas. And that was a great platform for beginning to think about how to formally integrate concerns about environmental and social issues into a formal investment process, but it wasn't at my first job at Invesco Quantitative Strategies that we had the chance to do that. The market just wasn't mature enough. It was not until I left with some colleagues and started our own firm, that we really had the chance to begin to advance these practices in a formal way in our business.
Jason Jacobs: So when you left to start that firm, what was similar about it to other, say firms that you admired from the traditional finance world, and then what did you set out to do explicitly differently than that?
Nili Gilbert: Well, one thing that I think is really important is that our approach remained very traditional. What we really were able to do over time was to take understanding about kind of the long-term for capital, thinking about the types of risks and opportunities that environmental and social issues provide, and then to translate that into the language, lens and tools of a traditional investment process from the voices and platform of a traditional investment firm.
And we felt like that was important because oftentimes, especially here in the US, you'll find investors who feel like impact investing or environmental social investing is kind of soft or maybe less serious, and they worry that it could impact their returns. And so part of our theory of change is that by taking this thinking through the lens and from the brand of a traditional asset manager, that we would be able to help mainstream these concepts. And so the ways in which we were similar to other traditional asset management firms was kind of like an engine to advance the ways in which we were different.
Jason Jacobs: And what are some examples of some ways that you are different that you put into practice over the course of the firm's life?
Nili Gilbert: So we would think about these issues around environmental investing kind of in the same way that we would think about traditional, what you might think of more traditional financial issues. Although I would argue that environmental issues are very financially material over the intermediate and long-term. So for example, we're always thinking about how to generate returns and how to manage risks. There's a lot of work to do in terms of environmental risk management as an investor. For example, we put in place tools to help us avoid insurance companies that were overly exposed to hurricane risk, tools to help parse out company's exposures to different types of power production, like coal and other fossil fuels, independent power producers.
But we also found that we could identify positive opportunities to add value for clients on the return side, not just risk avoidance or risk mitigation. For example, we found that by investing in companies that are making the choices to achieve long-term progress towards sustainability, right? So they're greening their property, plant and equipment, maybe they're diversifying their board, they're investing in the communities where they want to do business for the long run. That by investing in companies that are making the choices to deliver long-term progress towards sustainability, that we can also add value on the return side.
Over half of our clients, believe it or not, would also ask us to screen out companies that were not in line with their values. For example, companies are in the business of coal or guns or private prisons, right? So over half of our companies would ask us to screen out companies that they didn't want to be in business with. You know, and then another huge piece is not in how you build your portfolios, but how you engage with the companies that you own. Something that we call active ownership.
So we would collaborate with other investors to encourage corporations to begin to disclose their climate emissions, their water use, their use of forests, and most recently to encourage companies to make net-zero targets, to align their corporate emissions with the one and a half degree change in climate that scientists have told us that we need to achieve. So it really a number of different ways in which you can express your view about climate risks and opportunities in your portfolios.
Jason Jacobs: And given that you were, at least as you've described it, a traditional firm that in many ways, but that then incorporated these values, how did that translate when it came to selecting which clients to work with? Did you look for clients that cared about these issues or was it strictly about alpha? And then how did you position yourselves relative to your competitors and were these values part of that discussion, or was it more strictly performance and returns based?
Nili Gilbert: I would say that because we were positioning our climate and environmental and social goals as part of a more traditional investment framework that we remained able to have conversations with clients of all stripes, right? I wouldn't say that we pigeon hold ourselves in any way in terms of the types of people that we would speak with, and that was nice because oftentimes we'd be able to educate our clients and prospects about these ways of thinking and these practices inside of a traditional process.
That being said over time, we were proud to gain a strong reputation for formally integrating this type of thinking into our portfolios, and our networks began to evolve in that direction as well. It's interesting sometimes as an entrepreneur, you're usually doing, and I know, you know this because you were an entrepreneur too, you're usually doing so many different things and you're putting them out there and, you know, eventually the market will tell you what it cares about and what it most values in what you're doing and what I've found, especially in recent years, that the, the market is very keen on engaging with me about as a leader is the work that we've been doing on environmental and social issues.
Jason Jacobs: And you mentioned that, that when you started, it was before the term ESG even existed, and so now that ESG is coming into its own and getting much more established, how did your firms philosophies and the philosophies of ESG track? Are they directly aligned or, or did they go in different directions in some ways?
Nili Gilbert: Well, I think there's a lot of different flavors of ESG today, and that many of them have merit, but not every firm will do every kind. But one thing that I think does matter in this era where a lot of the growth, a lot of the asset gathering in my industry has actually come from responsible investment strategies, that one key differentiator, even as, you know, different approaches will vary is the firms themselves, right.
You know, as I said, I've been doing this for a long time. There are a lot of newcomers to the table, and I just noticed that in many cases, you'll find firms that are offering the products, but not necessarily walking the walk in terms of their own business, their own practices, their own values, and, you know, it's kind of like this phenomenon that people call greenwashing. It's so a really big differentiator in today's market. In addition to the different types of strategies, is the firms themselves. We call it the fifth pillar for us. We call it at Matarin is who you are in the world. Like, are you doing philanthropy? Have you researched your firms own use of resources? Do you have diversity to using your time and thought leadership to try to advance the whole industry's practices or just to better yourselves? I think that that's becoming one of the biggest differentiators in this space among different companies.
Jason Jacobs: So, if you were to evaluate that wide landscape of firms that do have ESG products, what are the criteria that you would use to look at to determine which ones are serious and which ones might be more greenwashing or, or whatever words you want to use to describe it?
Nili Gilbert: There's certainly different depths of how much ESG is considered when it's integrated into the process. You know, it could be very light, kind of an afterthought on top of a broader process that's been developed over years, that's thinking about very different things. One thing I think about is something that I call deep ESG integration, where the environmental, social and governance issues are really a part of how the investments get selected, how they get weighted. You know, it's really a driver of the process itself, not an afterthought. I also think it's interesting when you'll see a firm that has a so-called flagship product and then like a little small ESG version on the side, but it's like, you know, the, the poor, sad sibling, you know, [laughs] under, living in the cupboard under the stairs. [Laughs]
Jason Jacobs: Like the, the, uh, the fat-free, sugar-free version of the food that you love? [laughs]
Nili Gilbert: Right. You know, it's like if, if you're doing deep ESG integration and you have the philosophical belief that you can add value for your clients, that you can mitigate risk, that you're doing better for the world, why would you not also add that to your flagship products?
Jason Jacobs: Well, that brings up an interesting question then. Do you think ESG should be a category or should it just be infused into everything across the financial services sector?
Nili Gilbert: I believe that it will eventually be infused into everything across the financial services sector. And, and for me, that's because of my understanding of what our job is as an investors, which is like in a way we're almost like futurists, right? We need to figure out where we think that the world is going, where we think that interesting opportunities will be created, risks that we need to be avoiding or managing. The, we need to figure out how to take that into account in our investments.
And I really believe that these issues, especially climate are going to be such serious drivers of the world and opportunity set that is to come, that if you're really doing your job as an investor, that you've kind of got to take it into account. Even if you look at recent investment performance across different kinds of strategies, you can see that this is starting to become material in terms of return and risk management. And so that time for that reason I believe will come where this just becomes part and parcel of how you do this job well.
Jason Jacobs: So is your marking certain products as dedicated ESG products in the interim harmful or helpful to catalyze that transition where ultimately ESG goes away?
Nili Gilbert: I actually think it's helpful because it starts to set standards and helps to mitigate this concern of greenwashing that I was talking about where there are products that are kind of not really serious, not really doing the work, are able to command the same labels as the ones that are quite good. So I look for example at the European Union where they are setting out an entire tech- taxonomy and rule book standards for what really can be called a responsible or an ESG investment, and then that forces then industry to get in line and take those standards that have been laid out more seriously and for those that don't comply, you're kind of out of the game.
And so this, this clarity is also helpful for asset owners, right, for clients on the other side of the table who are trying to figure out which ESG strategies to invest in, because to the extent that there is a lack of standards that allows for a certain amount of a lack of quality, right, and a great dispersion across what's being offered, it may become so confusing that it keeps people from getting involved at all. So the push for more standardization, more coordination, and not only in terms of what we can call an ESG product, but in terms of the data that we have available to evaluate these things, all of this helps to institutionalize and mainstream the system.
Jason Jacobs: Now, a related question that I think about is when you see these companies, it could be an Amazon, it could be a BlackRock, you know, somebody like a big formidable player in whatever industry they sit in who, who comes out with some proclamation that has the word climate in it, right? Inevitably when they do that, there'll be half the people, maybe it's not 50/50, but there'll be some portion of people that cheerlead, and there'll be another portion of people that take out the pitchforks and, and say like, "We don't want to hear that because of this and that, and this, and it should have been this, and it should've been that, and you should have done these other things." Right?
And so on the one hand, this incremental progress, you don't want to pat them on the back when they're not doing the real stuff. Right? But on the other, if anytime they try to do anything, all they do is get crapped on. Then nobody's going to, there's no incentive for anyone to do anything ever. So how do you reconcile that, and how, how do you think about that tension?
Nili Gilbert: I think that the debate is healthy. There's a lot that we've got to figure out over the course of the next years. We don't have a lot of time. There's a need for a lot of creativity and innovation, and I believe in the power of constructive debate in getting ideas into their best form. That being said, what concerns me the most is when I see unhelpful arguments among actors who all want the same thing and should be rowing in the same direction. That can lead to paralysis, it can be a waste of time.
You know, what we really need to be doing is finding, yes, ways to have civil discourse and debate that will be productive, but to be able to work in partnership. And you know what? If I'm really convinced that, uh, X is the best way to achieve our goals and you really believe that it Z, more power to you, like let's figure out how we can help each other and both thrive. Let's hope A, B, C, D, E all the way through X and Z all get done, you know, and that some portion of those approaches will be the ones that we need.
Jason Jacobs: I mean, it's kind of a related question. We haven't really touched on the philanthropic side of your, uh, work, which of course I would love to. But if you look at, take a billionaire who, you know, like when, when Bezos says here's $10 billion for, you know, for climate, right? Well, that $10 billion for climate it, philanthropically, that's a big percentage increase in the total dollars that are earmarked for climate and that's a big deal, but then a bunch of people come out and say, well, but philanthropy is not the answer, it's just a band-aid because ultimately we need to fix the system, and as long as the system is like printing billionaires, right, as inequity continues to increase, then no amount of philanthropy can help us out of this pickle. So given how much you've done in the philanthropic world, I'd love to get your perspective on that.
Nili Gilbert: Yeah. So, you know, one part of the critique that I hear you bringing up just has to do with the heavy load that the philanthropic sector has had to bear in recent years in, in my opinion in the absence of leadership right from the public sector where, you know, not just philanthropists, but also businesses have been stepping up in new ways to figure out how to help solve our long-term problems, which I think ultimately is going to be a positive because what we really need is for all sectors to be getting into action in figuring out that unique added value that they have to bring to the table.
But another aspect of the critique that you bring up has to do with income inequality, social issues at the intersection of our environmental goals, and at the end of the day comes down to broader thinking about whole systems change. Uh, the truth is the climate change isn't the only challenge that we have ahead of us, right? We have so many goals around inequality, racial justice, other types of environmental issues outside of climate like bio-diversity, you know. So really just a whole systems change that we need to go through.
I think that to the extent that we stop looking at these problems as individual problems or individual battles kind of siloing them, and that we start to really try to conceive of the system as a whole and understand the interconnectedness between these challenges and goals, and sometimes how if you push on solving something in one area, you push up a new problem in another area. So like really to be able to think about the total scheme of causes and effects, that this is necessary for how we win today.
Another reason for that is that at this point, I don't think we're really in a position to say, oh, sorry, inequality and social justice. You have to go wait on the back burner while we figure out climate change, right, for the next 30 years. It's not going to happen. The system itself cannot hold. And so we really need to start figuring out how to walk and chew gum at the same time. But to me, if billionaires are giving away their money, $10 billion at a time, you know, that does sound like a leveler.
Jason Jacobs: And we probably should have done this in reverse order, but we talked about your finance journey and incorporating the, the more, you know, principled and values-driven approach into the traditional finance world. How did your philanthropic journey come about and when and how and why did that start? And was that a completely separate and distinct from the financial and values-driven financial journey that you were on or took one grow out of the other?
Nili Gilbert: It started out as feeling really separate and distinct. I remember having one moment years ago where I really appreciated, you know how when you're like at a cocktail party or something and you have to introduce yourself, people ask you what you do, and I would have this like two-
Jason Jacobs: [inaudible 00:31:36] podcast. [crosstalk 00:31:37] podcasts, right?
Nili Gilbert: [crosstalk 00:31:41] podcast, you know. [laughs]
Jason Jacobs: [Laughs]
Nili Gilbert: Although we don't have any cocktails, which was, uh, was a big [crosstalk 00:31:44].
Jason Jacobs: [crosstalk 00:31:44]. We're at Zoom but it's, you know, it might add a nice element to, to, to the podcast.
Nili Gilbert: [Laughs] And I would find that I would have to introduce myself in two separate parts, right? Like I'm a professional investor and this is the way in which I invest. And also I really care about the world, and here's what I'm doing over here. And people might find that surprising because they don't see finance as civil, but lately I think that, that's been changing a lot and that these worlds are converging for a number of important reasons, but the way that I got onto this philanthropic path, it goes back to that non-profit in New York where I started working when I graduated from college.
When I went to the founder, Peggy Dulany and I said, "Do you think it would be crazy if I go back to business school to try to help with our goals from the finance sector?" She said that systemic change requires allies in every sector and finance is one where we don't have enough, and if you would go, go over the bridge or into the private sector as a finance person, I, and Synergos will always be with you. And lo and behold, I went back to business school and shortly after I graduated, she invited me back to join the board of Synergos. Uh, I was only 25 or 26 years old at the time.
Jason Jacobs: Amazing.
Nili Gilbert: And shortly thereafter, I became the chair of the organization's investment committee. And it was through that investment committee [chairbeingship 00:33:25] that I first had the chance to be able to engage with Mission-Aligned Investing as it's called, because Synergos is an organization that has always had a commitment to this. You know, we started years ago saying we want to just 20 to 30% of our assets to be mission-aligned, and today, just this year, we made a pledge to align our entire investment portfolio with a net-zero goal, so now going all the way up, essentially through that lens to a 100%, you know, and it's been a long and educational journey of always wanting to figure out how can we get closer and closer to the center of that target.
Jason Jacobs: Did you have to compromise on your return expectations in order to make that transition?
Nili Gilbert: No. From the start we've always called out and said that we believe that we should be able to earn a market rate returns similar to other endowments with this approach, and if anything, at this point, we believe that we should be able to do better by leaning in to the broad climate transition that we know that the whole economy has to go through and trying to avoid the worst outcomes.
Jason Jacobs: And so it sounds like that was the start, and then tell me a bit about how that philanthropic journey has evolved and then what you've been doing most recently in that regard.
Nili Gilbert: Sure. So I'd say another really big step was a couple of years ago when I had the chance to join the board of the David Rockefeller Fund and become the Investment Committee chair of that organization as well. The David Rockefeller Fund is a donor in the climate space, and by the time I joined, had already divested from fossil fuels. And so all of a sudden I had the opportunity to engage in a much deeper way in this conversation specifically around climate finance and investment. But the thing is, you know, it was really interesting, the Rockefeller family as you know, inherited it, it's well from standard oil from the fossil fuel industry, and so divestment is a very important signal and decision for the David Rockefeller Fund and some other family institutions as well to go through.
But when we really took a look at it, we realized that even with divestment, that our total portfolio was still not anywhere in line with the climate pathway that the whole economy needs to go through. Still just under a four degree outcome for change in climate temperature is what would be achieved if our portfolio were the whole world portfolio. So the way that we think about it is at least like we can take care of our own house and make sure that our portfolio is aligned with the organization's overall goals.
And so in November, the board approved for our investment committee to align that total portfolio with a net-zero path. We made a net-zero pledge, and then August became, just this past August, became the first foundation in the world to join the UN-convened Net-Zero Asset Owner Alliance, which is about 30 organizations representing $5 trillion in capital that are all working together to demonstrates how to achieve a net-zero path with our assets. One thing that was really cool after the David Rockefeller Fund made this pledge was that some other foundations and endowed non-profits started reaching out to us and saying, "How did you do that? Like, how can we do that too?" Including Synergos where I'd been the long time investing committee chair.
Jason Jacobs: This is, this is like a movie script. Like, uh, you know-
Nili Gilbert: [laughs]
Jason Jacobs: ... it's like everything just ties up neatly in a bow at the Nili story.
Nili Gilbert: [Laughs]
Jason Jacobs: [Laughs]
Nili Gilbert: You know, I heard someone once say that when you're on the right path, it will open more easily ahead of you. That's how I feel about this. Like, it is time. Like we all need to figure out what we can do to help out. So people see, if they see that you're doing something good, they will, they may try to support it and be a part of it. So, yeah. So shortly thereafter, Synergos and another Rockefeller family organization, the Stone Barns Center for Sustainable Agriculture had joined the David Rockefeller Fund with our advisor Rockefeller Capital Management to all work together under a common umbrella to demonstrate what this net zero-path can look like for mission-driven organizations like ours. And we think that our path as mission-driven organizations will be unique, special, and useful in its own way to the broader ecosystem.
So now we're kind of putting up a big neon sign saying to other institutions like ours, you know, you can do this, right? There's, there's something about this transition where we have to believe in the possible and to just be willing to take the leap and figure it out. Right? And so, you know, we hope that we'll continue to hear from more like-minded organizations that want to be a part of this path with us.
Jason Jacobs: I'm just curious, but in order to make that move, is it, is it as simple as like, "Oh, just, you know, divest from these few things over here and then shuffle those things around." Or is it more of like a fundamental rearchitecture? How much goes into that, just kind of practically in terms of transitioning the portfolio to reflect that goal and objective?
Nili Gilbert: It's a philosophical question in a way, as if all you want to do is get your own portfolio to net zero. You could probably do it through portfolio engineering. So just selling off the most carbon intensive assets, and then overlaying it with offsets, or you could even do it with swaps or derivatives, right? If all you need to do is hedge out the climate risk out of your own book. You could, you could really do it just through financial tools.
But for us, we are doing this because we want to be a part of the global decarbonisation path. So to just make changes inside of our own portfolios would not be satisfying. In order to be a part of the global decarbonisation path, what you need to do is actually to be willing to own for some time companies that are willing to decarbonize and to give them the long-term capital that they'll need to do that. And actually you know what? Not just the long-term capital, but the shareholder engagement, right? The way you're voting your proxies back to the active ownership that I was talking about earlier.
And so what we're talking about is for the public markets side of our portfolio to have kind of, at first to be willing outside of fossil fuels where we've already divested to engage with companies, to encourage them to get on this net-zero path with us, and to try to provide that support. If it doesn't work to have tools for escalation, right, to say, listen, this engagement isn't going well, we're escalating it, we're escalating it, and then at the end of the day, where we think that companies are ultimately not engageable to be willing to divest.
And then of course, it's not just about avoiding the worst outcomes. And we think that there's also a lot of opportunity in catalytic climate positive investments that would probably come more in the private market side of your portfolio. Could be in investing in companies, privately-owned companies that are creating innovative solutions in this space. It could be investing in offsets like natural sinks that will help to pull carbon back out of the atmosphere and those kinds of things.
Jason Jacobs: Even the US's role on the global landscape and given the current political polarization and dysfunctional democracy that we're currently living in, and I think also given kind of the dual hats that you have worn over the years, where on the one hand big finance seems like an, this is an overgeneralization. So maybe I'm misspeaking and feel free to correct me, but tends to be more anti-regulation and, you know, letting the market forces do their thing, and then on the other hand, on the philanthropic side, I think it more, you know, big government, social safety net, carrot and stick, and, you know, government really kind of stepping up to swing the big bat that it's got to, to bring about the kind of change that we need. So, so given those two worlds kind of colliding and kind of the state of the state as it relates to our democracy, what would be the most effective way for us to bring about the kind of change that we need and what should the role of government be or not be in that transition?
Nili Gilbert: I think when it comes to politics and that there's an under appreciation of the role that policy ideas can have in winning the hearts and minds of voters, I would be inspired to see the government paint a picture for a positive long-term future for our country, that every American can see themselves in. And I believe that the just transition will be a part of that. As we talk about climate, there's, uh, a huge conversation in there about jobs, good paying jobs, about rebuilding America, and that to me is, is a topic that has the potential to attract voters on both sides of the aisle.
I actually also have heard the financial services community starting to call for more regulation when it comes to issues like environmental and social investing, and that's because without regulation, there is a cacophony, a lack of standards and order that is actually unhelpful for doing business. So I testified at Congress last year at the House Financial Services Committee on a bill that would require the US securities and exchange commission to require the companies that they oversee to disclose specific standardized auditable data about their ESG practices, and that's something that I think many people in the financial services community would appreciate.
It's also not lost on me the amount of innovation that can be unleashed by government capital investment, especially in, in this space when it comes to the green transition. And I hear a lot of people in the finance community starting to think about how they might be able to engage in partnership with the government on that opportunity as a way of driving business and business results, not only as a way to help advance our national goals, which is also a big part of it. In a way I think that the challenges that we've been through and that we're still facing are causing everyone to become more socially-minded, more community-minded, and the business community is part of that as well.
Jason Jacobs: What do you think of the phrase green growth?
Nili Gilbert: I don't think that the phrase green growth is an oxymoron at all. As a matter of fact, I believe that, uh, green transition can help us to get out of a deeper economic conundrum that economists have been considering for some time. You'll hear people talk about this phenomenon called secular stagnation, where it's just become much harder for our economy to deliver the rate of growth over the course of the past 10 or 20 years than it did in the century before, and a lot of that has to do with demographic trends, I believe it has to do with income inequality. It has to do with the fact that we've already grown so much, right? How do you continue to grow off of that kind of base? And that some of the paths of growth that we have considered in the past are no longer sustainable.
And so now here comes the climate transition and we realized that we've got to transition, our whole national economy, the whole global economy to be in line with a green future, and it unleashes a ton of new investments, right? It's going to unleash a ton of new innovation, innovation being one of the basic ingredients of long-term growth. It unleashes a ton of jobs. People get retrenched. Remember when we were talking about for years, what's going to be the future of work, are we going to get replaced by AI, right? Now we're talking about green jobs. Yes, it's true that we shouldn't continue to grow in the way that we did before, but it's also true that it was kind of not really working anyway. It's wonderful to have a new platform on which to imagine the future of a vibrant economy, you know, and hopefully society and planet too on the back of that.
Jason Jacobs: And the last topic that I wanted to cover is, is I guess, just bring it back around to you. You've had just this immense career in finance and an equally as impressive contributions on the philanthropic side, and we're around the same age where you are probably aware of your own mortality, but still have a lot of good years in front of you and a lot of really substantive experience and relationships and track record and, and reputation under your belt. So, and there's a lot of problems in the world and something tells me that you're not the type of person to slow down. So what are you thinking? What does the next decade and beyond look like for you?
Nili Gilbert: Well, it's a timely question because I've just moved on from my role as a co-founder and portfolio manager of Matarin Capital just over a decade after founding the firm. And a lot of it is because I'm obsessed with these questions of deep systemic change, you know, deep transition. I'm so excited about the amount of creativity that it will require, the amount of imagination, the amount of collaboration, and also the amount of bravery.
And so I'm really excited to be plugging in with opportunities that bring that out, and also that require partnerships, right? So no longer wearing two hats and finding two different ways to in- introduce yourself at cocktail parties, you know, but really to find ways to bring these strings together and weave them. It's this time in the world that's scary, were aware of the potential horrible future, but it's also a time that it's exciting because we know we've got to make changes and we know that we need to be creative and there's a lot of opportunity out there for folks to be a part of that, and I hope to be one of them.
Jason Jacobs: So will there ever be a day where we are casting votes for someone with your name at the ballot box?
Nili Gilbert: I don't know. I mean, you pointed to how disparate my sector in finance sometimes seems from the government and from public sector, but it's also a time where there's a need for a lot of service and the government when it works, when policy can be made, can make broad, sweeping changes all at once. So that's attractive, but it's not an area or a sector where I have a strong skillset. [laughs] So, [crosstalk 00:50:38].
Jason Jacobs: [crosstalk 00:50:38] never stopped you before, Nili. Now that I know your story, you can't even deny it. [Laughs]
Nili Gilbert: Doesn't stop a lot of people like our former president. [Laughs]
Jason Jacobs: [Laughs] Couldn't resist. Gosh. Well, this was such an amazing discussion and we've covered so much. Is, is there anything that I didn't ask that I should have or any parting words for our listeners?
Nili Gilbert: No, but I just hope that in our conversation that some of the listeners will find their own inspiration. We've all got things that we can do to help. We all have the potential for service. We all have unique experiences and insights and all of that is going to be needed for us to achieve our goals. We can do this, but it's a time where a number of people are going to have to stand up and be willing. So thank you for having me on your show. I'm a fan, I'm a listener, and so it's really an honor to have the chance to be with you. Thank you.
Jason Jacobs: Well, it was a huge honor for me to get to know you better and learn more about your story, and I have to say I'm on the edge of my seat waiting to see what you end up sinking your teeth into, and hopefully I, I can find a way to be a part of it in some small way, because I think whatever it will be, will be amazing.
Nili Gilbert: Thank you. Same here. That would be amazing. Thank you, Jason.
Jason Jacobs: Hey Nili, thanks so much. Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter at JayJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
