The ESG Crunch with Jessica Pilz, Fiera Capital

Welcome to ‘The ESG Crunch’ with Tom Allport, a Q&A focused on Sustainability & ESG in the Built Environment.

This Q&A series is an opportunity for our Lead ESG & Sustainability Consultant, Tom Allport to discuss all things Environmental, Social, and Governance (ESG) with some of the leading players and decision-makers in the space. Each week we will ask burning questions centered around the critical role of ESG in shaping business strategies, fostering sustainable innovation, and driving societal impact. This series will provide a platform to share insight into how these leaders are integrating ESG principles into their organisations, navigating challenges, and advice for aspiring entrepreneurs looking to join the ESG & Sustainability industry.

This week we have been in touch with Jessica Pilz, Head of Sustainable Investing, Private Markets at Fiera Capital.

Fiera Capital Corporation is an independent asset management firm with a growing global presence and approximately C$164.2 billion in AUM as of June 30, 2023. We deliver customized multi-asset solutions across public and private market asset classes to institutional, financial intermediary and private wealth clients across North America, Europe and key markets in Asia. We strive to be at the forefront of investment-management science and we are passionate about creating sustainable wealth for clients.

At Fiera Capital, we recognize that the investment landscape is constantly evolving. Our teams collaborate and seek to draw on the global industry’s most innovative and diverse offerings to craft strategies that meet the needs of every client, anywhere in the world. We have the ambition to extend our reach globally and the determination to provide the best solutions with excellence.

As a public company, we seek to adhere to the highest governance and risk management standards and operate with transparency and integrity to create value for our customers and our shareholders over the long term.

How did you find yourself working in the ESG & Sustainability space?

I studied a Bachelor of Science in Property Studies at the University of Cape Town. In my Honours year (equivalent to Masters in the UK), I wrote my thesis on Green Buildings in the South African property market; an incredibly nascent concept at the time. I started my career in asset management, managing a portfolio of retail shopping centres in underserviced townships across South Africa and became the portfolio’s ‘green champion’. I decided to focus solely on sustainability and moved to the UK at the end of 2011 to take on a role with MSCI Real Estate (then IPD). This is where I truly found my passion for the subject and have not left the space since (except to have my children), working in other roles including consultancy, real estate finance and now back to investment management.

What does your role at Fiera Capital entail?

I lead Fiera Capital’s global sustainable investing strategy across private markets, alongside and working closely with asset class specialists in each strategy (Agriculture, Infrastructure, Private Credit, Private Equity, Real Estate and Timber), to ensure a consistent, purpose-led and proactive approach to ESG considerations. I focus on supporting our investment teams, providing transparency to our clients, and ensuring that Fiera Capital complies with applicable regulations.

Could you share some insights into the ESG & Sustainability priorities at Fiera Capital?

Of all systematic risks, we believe that climate change remains one of the single greatest challenges of our time – therefore, a top priority for most in the industry.

Whilst climate mitigation, the drive to reduce and avoid carbon emissions, has been a key focus in recent years, climate change adaptation is gaining increased attention, perhaps a result of key discussions at COP27. Climate mitigation should remain a priority, but it is imperative that we build strategies that focus on adapting to the changes we are already seeing due to climate change.

Another theme gaining momentum is nature and biodiversity, which investment managers will need to dedicate more resources to in the future. The decline of nature and biodiversity has been quietly living in the shadow of its twin crisis, climate change, for some time now. However, in the build-up to and following COP15 in Montreal at the end of last year, it has emerged as a key area of focus for many investors, who will be expecting their managers to start delivering nature-positive outcomes.

There is an urgent call to reverse the decline of nature – not only because of its contribution to the global economy (think of food systems, where 99% of our food comes from healthy soils) but also because the recovery of the natural world is crucial for fighting climate change. Decarbonization and the natural world are not separate challenges; they are inextricably linked – we can’t resolve one crisis without considering the other.

With ESG being so broad across industry and so nuanced within Real Estate, what specific focus do you and your team have?

To achieve our global vision, we established an ESG strategy that centres on three pillars, each with key focus areas:

Responsible: We strive to operate responsibly and to positively impact our planet, people and communities [Focus Areas: Planet, People and Communities]

Resilient: We maintain a resilient and innovative business and address global challenges like climate change through effective governance, planning and systems [Focus Areas: Climate, Governance]

Engaged: We believe a collaborative and inclusive approach is necessary to achieve our ESG goals, as well as those of our stakeholders [Collaboration and Transparency]

What unique challenges and opportunities do you see with ESG in the UK compared to other global regions?

 I’d say that the challenges relate mainly to the amount of regulation, disclosure and reporting requirements – in particular, as a result of Brexit, we’re having to rewrite policies that are UK specific (e.g. SFDR / SDR). This adds another layer of complexity, in addition to the already complex and dynamic nature of ESG, which is constantly evolving. Yet, the opportunities are vast given the amount of investor interest in sustainable and impact investing – this extends well beyond integration and into areas like proptech that support the transition to a low carbon economy, as well as nature and biodiversity.

Globally there is a skills talent gap in the ESG & Sustainability Real Estate sector, what skills are particularly important when developing and implementing the Fiera Capital’s ESG Strategy?

I have three P’s that I look for:

• Passion – ESG can be a challenging, demanding and overwhelming space to work in; passion for the subject is critical and it can’t be taught.
• People skills – I always say that I’m essentially an internal consultant. If anyone is going to drive change and have an impact, it’s imperative to build trust, respect and rapport with key stakeholders (especially internal ones) so that they come along the journey with you.
• Patience and perseverance – As mentioned, ESG is a challenging and complex area to work in. It’s also common to see different opinions toward these considerations within the same business. Changing regulatory landscapes, strategic priorities, investor sentiment etc. can all cause delays in implementing initiatives and seeing change – one has to remain patient in the face of this and continue to persevere.

How have your client’s ESG & Sustainability needs and priorities changed in the last 12-18 months?

I would say that they have just become more specific. For example, previously we (as an investment manager) would be asked to provide feedback on broad, high-level ESG considerations. We have now moved toward more detailed reporting focused on emissions data, exposure to climate risk (and what proportion of assets have a mitigation plan in place), progress against NZC targets etc.

What challenges and opportunities does Fiera Capital have with ESG & Sustainability?

I would say our greatest opportunities stem from the nature of our business, which is entrepreneurial. This approach, as well as the size of our business and the expertise of our people, sits at the heart of our business and places us well to respond quickly to opportunities that arise in the market. It also allows us to explore exciting and creative solutions to tackling risks like climate and the decline in nature. The challenges we face are most likely similar to everyone in the market – a fragmented policy and regulatory landscape, a Government that continually backtracks on their commitments, differing levels of maturity toward ESG across geographies and the sheer volume of ESG considerations to stay on top of.

How have you found the market in 2023?

Anticlimactic – it’s been a combination of hopeful optimism and expected disappointment. I think no one has wanted to voice the deprioritisation of ESG in light of market uncertainty – but it’s definitely been there. Unlike the GFC, when the ‘green’ agenda took a serious backseat, we haven’t seen this – but there has been a clear shift of focus on financial return over ESG considerations (unless one is looking at impact investments).

Finally, what advice would you give to aspiring ESG & Sustainability talent in today’s market?

• Reach out to people who have been working in this space for a while to understand how it has evolved over time; or better yet, find a mentor in this space.
• Build a network – you never know when your connections will support your career development and visa versa. Get involved with industry organisations and attend events in person even if it feels awkward.
• Don’t give up – it’s a hugely rewarding space to work in, despite the challenges. I find so much purpose in what I do, which is hugely helpful when I’m feeling overwhelmed or despondent about the direction of travel.