Conversations with members of the Harvard and Radcliffe Class of 1992.
Hosted by Will Bachman.

Episode: 74

Jean-Jacques Barrow, Sustainability Within Asset Management

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Show notes

“Climate change is a matter now of extreme urgency.  Our failure to act is a failure of imagination but recent developments suggest the pace is picking up. Within asset management, climate change and specifically carbon emissions are central factors within the broader sustainability/ESG approach.

Finance is a key conduit and asset managers now need to assess the climate risk within their investments.   The need to extract this information from the companies in which they invest will not only create greater transparency in terms of disclosing climate risk but it also  will force change on companies who are not making the necessary adjustments.” Jean-Jacques Barrow

Jean-Jacques Barrow, a member of the Harvard and Radcliffe class of 1992, shares his journey since graduating from Harvard. He began his career as an English major and moved to Paris for a four-month contract as an editorial assistant with the International Herald Tribune, which has since been rebranded the International New York Times. He learned about how journalism functions and how it is required that one serves their time on the periphery and provinces. One of his tasks was transcribing key data from the Bloomberg terminal for the financial section, so he began educating himself about the world of finance. After this position ended, he moved back to Geneva during a recession and took many jobs, including working at a construction work removal company. He eventually secured a job as an editor at Capital International, one of the world’s largest asset managers where his job was to take minutes and write reports on investment meetings. 


Working in Swiss Private Banking

He was initially impatient to secure an opportunity in the investment industry, but eventually landed a job at Swiss private banking. The Swiss private banking industry was built around tax evasion and tax optimization, but over the last 20-25 years, the industry has changed due to pressures from the European Union and the US following many scandals. The industry has become more regulated, open, and legitimate, with a focus on decoding assets and legitimate tax optimization. He believes that the key driver for change in the industry is the pressure from the US around undeclared funds from people who had not survived the Second World War, particularly Jewish, deposited in Switzerland. This pressure has led to a shift in the industry’s focus on decoding assets and legitimate tax optimization.

Jean-Jacques shares what he learned about tax evasion when he moved to the investment desk and started his apprenticeship, knowing very little and learning on the job. He worked for Bankers Trust, which was a pivotal moment in his career, but it ended up collapsing due to the Russia bond crisis and Korea’s aggressive approach. He learned the basis of implementation and focused on discretionary portfolio management. His experience in private banking was interesting, and he talks about the many interesting developments he witnessed. He was also involved in the world of events and geopolitical forces.  He later moved to the Royal Bank of Canada, where he was assigned to the French Canadian market and North American markets. However, due to the Canadian bank’s regulated status, there was limited investment content based in Switzerland. 


Investment Management, Social Entrepreneurship, and Microfinance

Jean-Jacques decided to pivot towards investment management and pursued an executive MBA at INSEAD. He became interested in social entrepreneurship and microfinance. After graduating, he found himself in the midst of a potential slowdown in 2008, which was a challenging time for job opportunities. He found a disconnect between what microfinance was supposed to be and the reality. However, the initial concept has evolved, and he was inspired by the business model developed by Bangladeshi economist Muhammad Yunus, who aimed to help the poor with micro loans.


Sustainable Investing as a Growing Trend

JJ talks about sustainable investing as a growing trend in the financial sector. This shift has been driven by the changing regulatory environment in Europe, which is becoming more strict about financial reporting on portfolio content. The screening process has evolved, with companies now actively screening companies within sensitive sectors, such as the extraction industry and energy banking. The process has also been refined, with a global climate 2035 portfolio focused on names and companies related to fighting climate change. This  approach is a reaction to the increasing regulatory environment in Europe, which is becoming more strict about financial reporting on portfolio content. He talks about investing in secondary markets and how investing in companies with technology can help support the emergence of technology in the mainstream. However, when investing in secondary markets, the capacity to generate changes may be muted. The regulators are pushing companies to be more explicit about their environmental risks and more detailed about the externalities they generate. This will drive change, if companies are not open about their environmental risk, they may face punishment from shareholders and public challenges in general meetings. In Switzerland, the collapse of a major Swiss bank, Credit Suisse, was a prime example of how minority shareholders pushed companies to exit investment banking to stop funding fossil fuels. This has led to the closure of investment banks and the need for companies to be more transparent about their environmental risks.


ESG Investing and Shareholder Power

Jean-Jacques mentions the importance of ESG investing and its potential to drive change in the energy sector. He explains that ESG investing has outperformed the broader market over the last five years, with a natural quality bias and exposure to tech. However, the recent increase in enthusiasm for this style of investing in 2022 has led to delays in good intentions. He discusses the evolution of ESG investing in Europe, with companies realizing that stricter regulations will require more disclosure of information. This has led to companies realizing they need to be more open or push back. The energy sector is experiencing a shift towards clean energy from companies like Macau and BP, and moving towards electric generation and grid technologies. Despite the pessimistic mood in Europe, he believes there are reasons to be hopeful about the scale of investment and deployment. He points out that banks can add value by engaging and challenging major companies to change their remuneration policies and CEOs. He also emphasizes the importance of shareholder cooperation and the power of shareholders to influence corporate behavior. He cites the example of a company that failed to listen to dissenting shareholders, but he believes that if shareholders work together, they can make a significant difference in the industry. 


The ESG Scorecard and How it Works

JJ explains that analysts typically have a scorecard across ESG, with different industries having different weights. For example, in the mining industry, the environmental side is higher, and there are subset segments in terms of water usage, pollution risk, and other externalities. To have an ESG rating, a company must meet a certain score. The industry has a lot of topsy-turvy stuff going on, and some analysts don’t consider Tesla to be eligible because of the GE and Tesla, the government side is diabolical, and Exxon has extraordinarily good governance. Companies with good ESG attract good talent, draw upon a broader pool of talented individuals, and have better employer loyalty. The urgency around emissions has led to a sense of urgency in engagement in company response, investment, fairs, exchanges, and industry discussions. He  explains that he played his cards differently in his first job at Capitol International by keeping his big mouth shut and being less confrontational. He learned to respect rules and respect rules in the American corporate environment, and he learned to source his views from different areas. He also appreciates that he has a different educational and career route, having attended Harvard and a level of intellectual curiosity. He emphasizes the importance of going off the intellectual print, orthodoxy, and looking beyond traditional sources. He advises interns and juniors to listen to other reports and sources, as it helps him understand viewpoints from classmates in different areas and doing different things.


Influential Courses and Professors at Harvard

JJ discusses his time at Harvard and the two key takeaways he learned from his time there. He highlights the expository writing course he took as a freshman year and the masters swimming course, which he found to be a valuable source of learning. He also highlights the importance of being clear, concise, and succinct in his daily work, especially when dealing with an audience not necessarily in English. These two key takeaways have shaped his future, particularly in terms of his interests and the core curriculum. He mentions the Behavioral Biology and Evolution courses, as well professor Neil Wilson and professor Raymond Siever’s class on geology, which exposed him to the world’s cycles of physical life and the impact of man on the planet. 


Recommended Reads:

Saving the Plant without the Bullshit, Assaad Rarrock. Don’t let the title put you off, this is good starting point.

How the World Really Works, Vaclav Smil Makes clear the scope of the transition. Great reality check and myth buster. 

Petroleum Papers. Geoff Dembicki  The role of energy companies in the current climate debate. I would not be long oil stocks…

Learning to Die in the Anthropocene, Ray Scranton Bleak but an eye opener on the worst case scenario.

Five Times Faster. Simon Sharpe. The author is active within government, policy making and the COP meetings. Very insightful, and great primer on why we are where we are. There is still time but we need to move five times faster.


Useful Sources:

Bloomberg Green, MSCI ESG. In terms of sustainability disclosure,  ISSB has launched  IFRS Sustainability Disclosure Standard (S1 General disclosures, S2 Climate related).



02:16 The start of his career in finance

09:11 Pursuing a career in social entrepreneurship and micro finance

18:09 The evolution of sustainable investing

21:09 How sustainable investing makes a difference

25:51 ESG reporting requirements

27:42 The current state of the energy sector

30:55 How banks can add value to their shareholders

37:40 The ESG scorecard




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92-74. JeanJacquesBarrow


Jean Jacques Barrow, Will Bachman


Will Bachman  00:01

Hello, and welcome to the 90 T report conversations with members of the Harvard and Radcliffe class of 1992. I’m your host will Bachman. And I’m glad to be here today with John Jacques Barrow. JJ, welcome to the show.


Jean-Jacques Barrow  00:16

Well, thanks very much for having me. Well, I’m looking forward to this.


Will Bachman  00:19

So JJ, tell me about your journey since graduating from Harvard.


Jean Jacques Barrow  00:25

Okay, so Well, God seems a bit of a strong word, because the process looking back has been somewhat haphazard. But I’ve had time to reflect I guess there is a there is a passage that suggests to things in my life, I actually finished in 93, I took time off at various stages during my undergraduate career, mainly to learn some language skills. So I ended up finishing 1993 added quite a few of my good friends from the class of 92. So obviously, I feel a connection with 92, hence my presence today. So after graduating, I did not have a particularly specific career plan, I was an English major, and open minded about where that would take me. And my first job was a gig in Paris. So I moved, I was based on data system, but I moved to Paris on graduation. It’s been a lively summer exploring the city, I was able to get a position as an editorial assistant at the International Herald Tribune, which has now been rebranded the International New York Times. So that was an interesting eye opener. I was I learned a lot about how journalism functions and basically understood that if you want to make your way in a newspaper, you have to serve your time and in on the periphery and in the provinces. I also discovered that as an editorial, a lot of the input usually gets ignored by the journalist. But it was a learning experience. And one of the key things I encountered when I was at the Herald Tribune in Paris was there was a Bloomberg terminal in the office. And one of my daily tasks was transcribing some key data’s interest rates, LIBOR, so forth. So that could be updated on a regular basis in the financial section of the newspaper. Another I had a bit of time on my hands, I started playing around with, with the Bloomberg and sort of educating myself about the world of finance. But it was very much early days. I then moved back to to Geneva, once my four month internship and ended in Paris as medical. And then I landed engineer at a time of quite significant recession, so not much in the way of economic opportunities. So soldiered around, did a variety of odd jobs, construction work removal removal work, and that was actually quite a useful little job because it has had the summit and during some enduring legacy, Matt, I can move pretty quickly whether a piece of furniture can go through the door not as useful when it comes to moving houses. But in the end, over time, as the economy improves, I was able to secure a job as an as an editor at Capital, International. Capital International, is probably one of the biggest companies people haven’t heard of. It’s probably the scale of fidelity, one of the world’s biggest asset managers. And my job there was to take minutes, and to write reports on the investment meetings. And I’d always tell my, my junior staff and people who joined the company, taking minutes is an excellent school, pay attention, you hear from your elders. And it’s a great way to learn to learn a skill and obviously, coming from a humanities background, I think so in English, the world of finance was a nuance in it. And that was the beginning of something that has now been my career for almost 30 years.


Will Bachman  03:43

Well walk us through that. So you start out taking taking minutes, let’s let’s play it forward.


Jean Jacques Barrow  03:51

So capital was really interesting, because their way they were a big player, they had huge amounts of AUM, they were very influential their shareholders. And in fact, looking back in history, if it hadn’t been for capital, Murdoch would probably have gone bankrupt and never made the move into television. You can have mixed views about that particular outcome. But capital was a big player, myself at capital at a time I was quite a foolish player, and that I fail to recognize the long term opportunity that I would have had if I played my cards right. And I was sort of itching to get into the investment game, a little bit impatient. That’s that’s the nature of use. And then I tried to engineer a job where I’d be more directly involved in the day to day investment management side of things. So in retrospect, that was probably not a good call, but I was able to do some interesting trouble before I moved on to my next job. And now I started working in, in private banking, Swiss private banking. I don’t know how much you know, or don’t know about Swiss private banking or how much the audience knows or don’t know about that area, but it is is a sector which is associated with a fair amount of judgment, myths, some misunderstanding, but also justified degree of skepticism and quite a lot of questions asked about that sector. And at the time, Swiss banking was really private banking was really built around. Let’s call it what it was tax evasion. Now they use tax optimization that the landscape changed. But at the time, it really was about feeding in non declared assets into Switzerland, in order to avoid paying taxes on them. So that was the nature of the business. But over the last 20, or 25 years that I spent in private banking, industry has changed, mainly due to pressures from the European Union and the US variety of scandals, the time to go into them, there’ll be a significant transformation of the industry for good, I believe, because the smell, the smell of sulfur that was associated with that particular industry has has has dissipated over time. So it’s now much more regulated, much more open, much more legitimate business. And as I said, it builds more around the decode assets and legitimate tax optimization, but the early years where it was still in transition, and it was an eye opener about the way in which Switzerland tried to operate on its own rules. So country have a long history of doing its own thing, its own time and neutral. But at some point, you cannot operate a model. And then when you’re surrounded by countries who are economically much more powerful, and able to exert pressure. And also I think will be the key, the key driver for change was the pressure from the US around the undeclared funds from people who had not survived the Second World War, many Jewish deposited in Switzerland, and that was a major scandal that really shook the industry and help to transfer transform it for the good.


Will Bachman  06:52

So you said it was an eye opening experience opened our eyes a little bit, you know, tell me a little bit of, you know, obviously, in a sanitized way about, you know, tax evasion, and what it was like, in the early days, when you got into private Swiss banking, you know, give us some sanitized customer examples of what people were doing,


Jean Jacques Barrow  07:14

I, I moved to the investment desk. And so my insights are limited on the potential skullduggery that may have occurred elsewhere. The basic operating model was that clients would put their money in Switzerland, to avoid paying taxes and avoid having to declare assets. And as a result, they went to, to insistence on the quality of their returns. So it was a pretty, it was a win win for the Swiss bank, so didn’t have to do a whole lot in order to secure assets, and to secure the fidelity of clients. But again, over time that that eroded, that advantage disappeared. And obviously the focus of the last few decades, as it should have been from the onset, and has been on delivering performance. So I moved in, on the investment desk. And in that capacity, I started my, my apprenticeship, unlike a doctor or an engineer, or you can go into finance, knowing very little, and learning on the job. And I picked it up that way. And I had my first the first bank I worked for was not particularly satisfying a lot of good people, I had initially been working for less. And on the back of that I was able to secure a move at Bankers Trust. And that was a pivotal moment, because Bankers Trust in the late 90s was a really exciting place to work. Bankers Trust, you may recall, ended up collapsing on the back of the Russia bond crisis. And Korea was a bit too aggressive, you know, by the standards of the investment bank at the time, but it were truly pioneering. And that’s really where I learned my craft, I had a great mentor, really bright, bright boss taught me a lot. I learned the basis of implementation, and I then put my focus to what I’ve been doing on and off since then, which is discretionary portfolio management.


Will Bachman  09:08

Okay, tell us more about that. So bring us up to the so


Jean Jacques Barrow  09:11

that’s, that’s, that’s invest in managing for private clients, and working in a collective structure. And initially, I was implementing the ideas of others. And then over time, I started to have a voice on the different committees started to run different models, as I learned more as I progressed in different companies. So that was a very, very interesting time. It meant that I was a bystander witnesses to a lot of interesting developments. And also, I mean, if I if you ask me in my day to day by now, because I’m still active in Portfolio Management, maybe with a high degree of responsibility. I basically pay to read newspapers and pay attention to what’s happening in the world. So there is a sense of engagement with events and there’s a sense of always being on the lookout for for how societies evolving how geopolitical forces are changing. So it’s a very exciting backdrop over and above the intellectually challenging content that you have within the finance sector. So it was a it was a great, it was a great learning experience, I progressed quite nicely. And I achieved different levels of seniority moved to different, different company following my boss went to five years to Barclays. And then I followed another colleague, to more senior position, the Royal Bank of Canada, was heading a team. And they saw that I was good in client engagement, that I was good at selling products that I was good at defending what we’re doing in our investment models. And they decided to make me in a relationship managers and put me on the sales side. So within private banking, you really have a dichotomy between product specialists, whether it’s investments, traders, advisors, and portfolio managers, and so forth. And then you have the front end, the private bankers, if you will, relationship managers whose job is to go out there and bring in assets. And obviously, it’s through them there are the internal client of the portfolio manager. So I got some fun experience, which I think has served me well now. But intellectually, I found being relationship managers, somewhat frustrating. With interesting trouble, I was assigned, I was working at the Royal Bank of Canada at that point, I was assigned the French Canadian market and North American markets, I got to travel back to the US quite often, which was good to catch up with old friends. But because it was a Canadian bank regulated bike, by the Canadian obits, trading body for the stock exchange, there was not a whole lot we could do based in Switzerland. So unless I was able to set up some institutional arrangements, there wasn’t much in the way of sort of investment content. So that was a little bit frustrating. So this was a this was around the mid 22,007 2008. And I was trying to get a sort of an exit strategy, because I did not want to stay in relationship management, I didn’t want to stay in sales, I did two years of it. But it really wasn’t for me. So I really wanted to move back to, to, to investment management in some form, as I’ve previously been doing it. So at that point, I decided to do a career break, go back to university or go back to school to get an executive MBA. So I went to INSEAD. And there my plan was to try and pivot towards, towards perhaps a more interest or an emerging aspect of finance, which was social entrepreneurship. You know, things other than just the the traditional investment management I’ve been doing until now. So I got quite curious about microfinance. I wrote my my paper, my thesis, if you will, on that subject. And after I graduated from my MBA, like when I graduated in the early 90s, I landed myself in the midst of another big potential slowdown in 2008 2009 was not a great time to be looking for jobs because the financial system was on the verge of collapse. So I started interviewing and started looking for positions, especially within microfinance. And that proved to be a little bit frustrating because there was such a mismatch between what these companies were putting out as their ambitions, and the amount of fees they were making from the business. So this is a business model, developed by the Bangladeshi economist Yunus, Muhammad Yunus to help the poor with micro loans to help pull people out of poverty through loans. And this is something I’d studied intently from, from my final paper for my MBA, and I was hoping to move into this space. And when I encountered people in this space, I realized that it wasn’t what it was made out to be. And since then, I gather the industry has changed a fair amount. And now we speak more about inclusive banking and, and extending credit for for entrepreneurship. Because the danger with microfinance is people realize is that a lot of it ended up covering consumer consumer spending, as opposed to investing in future businesses. So having tried to move into this space, on the back of what I what had interested me most during my MBA program, I realized that it was just this particular area, we’re not going to work out. And after six months struggle to find find gainful employment, I happen to be to find a position in the company where I still am now 1415 years later, and that has been a really transformational moment. And I think if looking back at what I wanted to achieve when I went back to see my my masters, I ended up indirectly by luck finding myself in an environment And where I could move to something which right now everybody’s thinking about, which is sustainable investing ESG investing and a lot of different words. But I joined the bank Saracen Bank, which was a pioneer in this field. And that was a key moment because I finally landed in an area which combines both traditional finance was a lot of forward thinking initiatives. And 1000 Bank, which was based in Basel started this off in the late 80s, so they were really one of the pioneers of ESG investing. I don’t know if you know much about the history of how we’ve moved towards the time ESG approach. But back back back in the 80s, and 90s, this was not something that was widely widely practiced. There was there was Sri, socially responsible, responsible investing. And the charging made some quite dramatic transformations. And this is driven by events in the city of Basel where the bank was hacked, headquartered. In the mid 80s 86, I believe it was, the Rhine was on fire, there was a chemical spillage in one of the big pharmaceutical chemical plants on the side of the brain. And this was, this was a massive ecological disaster. And back in the 80s, those were the those were the headlines were mainly a big, big chemical leaks and spillages, you may recall Bhopal in India. Carbide, there were other incidents. And of course, the other the other headline aspect within the environment was Chernobyl, Three Mile Island. So back then the issue of the of the environment was really, through those those specific areas. We were not yet talking about climate change, we were not yet talking about the current challenges that in which we are now operating. So I entered the bank, which, within the world of finance had a reputation for being a pioneer. And over the last 14 odd years, I’ve been developing my knowledge about sustainable investing. And if I were to point toward a sort of expression of a midlife crisis, it is in my becoming an extremely militant advocate for mesh measures and liens, and choices within the financial sector to help accelerate the process. So that we can stay below that threshold of 1.5 or two degrees, as set out by the Paris Climate Accord. So from being a somewhat haphazard slalom. As I sort of associate or pinboard my way through my financial career, I end up getting a job where I was able to bring a lot of conviction and learn a lot. And I think we’re in an era where we have a lot of relevance in the current environment.


Will Bachman  17:48

Yeah, so tell me a little bit more about the, just unpack that, for me sustainable investing? Are you kind of, you know, kind of running a portfolio investing in companies or more like making loans to companies that do sustainable kind of work? What what give me a bit more sense about your about your role? What you’re sure,


Jean Jacques Barrow  18:09

because it’s a fair question, because it’s changing a lot. And we’re in debt. Legislation is changing, the rules are changing. But basically, if you look at how sustainable investment has evolved in the last two decades, in the past, the onus was on, clients were willing to sacrifice return for ethical content, you would exclude certain areas, you would say, no tobacco, or armaments. You include her in sectors because you did not want to see your portfolio polluted by coming to which you are comfortable. And in a sense, you are willing to sacrifice returns for clarity of content and purpose. And that was the way the old ways as sort of a screening process where you will exclude bad companies. And then over time, the system got a little bit more refined, because you started recognize that obviously, if we’re going to operate in a capitalistic system, we do still have to rely across the board on many sectors. So you need to start screening, especially within the most sensitive sectors for those companies, which are the most forward looking and which have the best practices, which are the least damaging. So obviously, for us the most the areas of greatest vulnerability are the extraction industry, energy banking, those are the riskiest areas. And that’s where we screen now most most actively, most thoroughly to ensure that the right names stay in the portfolio and the wrong way names do not land in it. So it’s a screening process. We have a matrix, that’s a proprietary rating, some Sarazin. And now, it serves us to in the construction of portfolios, and basically we have an independent team that establishes where we can invest. They don’t give a biocell recommendation on securities and one particular issue is They just tell us where we can or cannot go. And over time, our processes become more refined. And now we have started to launch much more specific equity models, which focus entirely, we have a global climate 2035 portfolio, which is only about names and companies, which are related to fighting climate change, whether it’s by their own transformation, they’re gonna stay on that below two degrees pathway or innovation, and bringing the technology technological solutions that will enable us to get there. So that’s the strictest expression of it. And it’s also a reaction to the regulatory environment in Europe, which is becoming much stricter now about financial reporting on the content of your portfolio. So you can’t just go around claiming to be a green asset manager of having an ESG approach, you really have to demonstrate that you will filtering and analyzing companies, lest you be accused of greenwashing, which, as we have seen over the last few years, can have quite dramatic financial consequences. For companies who get exposed for doing that, we saw a lot of companies rebranding traditional funds without changing the content. So the process is becoming much stricter. And I think the long term, I know, the long term ambition of the regulatory authorities is to force change through the asset management industry. So asset management industry, whether it’s pension plans, whether it’s banks, whether it’s insurance companies across the board, or sovereign funds, they will drive change by virtue of what they choose to buy or not to buy.


Will Bachman  21:37

I’m sure you’ve explored the following question very deeply since this is your, your day to day. Question for you, is this sustainable investing, make a difference? So you can imagine having one fund that says, Okay, we’re going to only invest in you know, highly sustainable companies that are doing great stuff for climate change. And, but if they just don’t buy a certain stock, there may be other investors that are perfectly happy buying, you know, stocks, right. So


Jean Jacques Barrow  22:10

we saw that last year with the rebounding old industry, dirty stocks, energy stocks, it’s a very valid question. And one of the things I do in order to, you know, just to be to be credible, when I’m speaking to a wide variety of clients, I have many clients who are quite skeptical about about ESG, investing about his capacity to drive change, and you’re right, investing in secondary certainly not going to make a whole lot of difference. That said, I think there are areas where you can make a difference. First and foremost is to identify a company which had technology by buying the stock. By investing in the company, you help to support the emergence of that, that technology in the mainstream. So that’s, that’s the first obvious one. But obviously, when dropping into secondary markets, your capacity to to generate changes a little bit more muted. What we are seeing now is a lot more social engagement on the part of investors, shareholder investor engagement, by virtue of being a shareholder and representing your clients at general meetings, as you have the possibility to speak out. So that I think it can be a force for change. But it’s true that there is a very lively debate about the limits of sustainability. And that’s why I really insist on what the regulator’s are doing by placing this wedge via the asset management industry, they are going to force companies to start being a lot more explicit about their own environmental risks out there, and to be a lot more detailed about the externalities that they generate. So right now you get you get a lot of insights about the accounts about this, the balancing of the financial health of the company, but with the pressures on the asset management sector, you are going to start seeing companies tend to be much more detailed, and much more open about the externality. And I think that will drive change, because if you are not, we can now talk about the climate value at risk. So if you are not open, if you’re hiding environmental risk, you will be punished by your shareholders at this and then you will also be challenged publicly by by shareholders in general meetings if you’re not taking the necessary moves. We recently in Switzerland had the collapse of a major, a major Swiss bank credit Swiss. And over the last four or five years, you had a lot of minority shareholders, which were pushing the company to exit investment banking to stop funding fossil fuels. And these are loans that help to drive the company under will know better over the coming months and years about what exactly happened. Now that is an analysis on the way but those were key factors and I will also add that tdcc is not a sustainable bank, we were not allowed to invest in it. So also there is a clear benefit in terms of sustainable investing more than means you’re not allowed to buy into often become problematic investment blowouts. So I think that’s that too is a net gain.


Will Bachman  25:20

What sort of information and reporting? Do you give credibility to there’s a lot of these sorts of third party agencies now that will, you know, certify a company you know, in some companies are now requiring all of their suppliers to get certified by one of these ESD certifying agencies. What? Navigate that for us a bit.


Jean Jacques Barrow  25:51

So, I mean, obviously now there’s a lot more reporting requirements, there’s a lot more diving in, in so we have a sustainable sustainably team of analysts will engage with companies who will challenge him or issues will offer information and given spaces depending on the sector. So we are able to in house a lot of our research, and that’s one of the advantages. I’ve had been an early adopter, which Sarazen so doing this in 89. And then when the company was bought out by Safra Safford became tougher Saturday 2013 We’ve developed that capability. The other key factor and just to come back to your earlier question. I know there’s this debate about the validity of ESG investing and whether it’s a forced to change and the extent to which drive change. I spoke earlier about people willing to force forsake returns to have a clean portfolio over the last five years, for the last five years, ESG has outperformed the broader market. Now you could argue that ESG investing because it has a natural quality bias, which has a natural exposure to tech can have less exposure to the energy sector, it had a natural advantage, especially on the back of COVID. And on the back of the recent increase in two enthusiasm for this style of investing 2022 was a bit of a shock, because it seemed that we sort of were making progress. But on the back of events in the in Ukraine on the back of the need to find new energy sources, we started to have to delay a lot of good intentions. And as a result, value names, especially in the energy sector, commodity related names were the one area where you could make money last year. But I don’t think that discredit the overall process, overall evolution that I that I’m seeing when I go and speak to clients, especially institutional clients. Now, I would say almost half of the discussion is about the ESG method, methodology. Then we’ll talk about investment style, we will talk about asset allocation and so forth. But right now in Europe, ESG is really at the center of discussion, because I think people are just realizing that by stealth, these regulations will become stricter and tighter. And you will need to disclose a lot more information. So as a result, there’s been a wake catharsis, if you will, across across the sector, as as companies start to realize that they need to be much more open. Or they can push back. And I think that’s most evident. If you look at the energy sector, you have in Europe activity, a pivot towards clean energy from, you know, the likes of Macau, BP, and so forth, and moving towards electric generation towards Grid technologies. You know, they’re they’re diversifying their energy risk, and they’re calling themselves energy companies no longer petroleum companies, oil companies are energy companies. And then you have Exxon, which is saying that we’re going to need fossil fuels for another 4050 years, use our dividends for your investing in alternative energy. But we are going to stick with our plan because we think and there’s a fair amount of credibility in what they’re saying, because we just don’t know how long the transition will not because there’s so much uncertainty about the speed at which we can deploy, and also whether we will be able to meet the targets. But I was you know that we fixed ourselves in terms of staying within that one and a half two degree threshold. We have at the bank, we have put an oil price in 2015 was at $30. That’s, that’s stunning. We’re sticking our necks out. Who would you want to be holding energy stocks with an oil price at $30? A question and we may be heading towards a period and there’s been a fair amount of somewhat pollyannish. Reports on this but the speed at which the acceleration is taking place towards clean energy, the scale. You know, I think I think this year Gallup has a poll which they have which they run about the state of the world mood. And I think this is the this year is the most pessimistic we’ve been since they launched the poll and Nike. Now, obviously, there’s a war in Europe. As we’re seeing, each summer, an acceleration of forest fires right now in Hawaii, we saw record temperatures in Europe, so that there’s a sense of urgency. And it’s easy to despair. There’s also this tragedy of horizons for people of our generation, we probably will and certainly our parents generation, the impact will be less felt for our children is very different. So it’s, it’s a question of agency and personal exposure to what the consequences of non action will be. But there has been an acceleration. So despite this mood of pessimism, I think there’s reasons to be hopeful if you just look at the scale of investment, and the fact that we are now moving much faster in terms of deployment. So what I am doing, and what my bank is doing, is a small part of a much broader process. I recognize it has its limitations, certainly from a secondary market perspective, buying or selling shares. If you sell an exit a company, if you’re a large sovereign fund, and you decide to exit coal, and suddenly because of energy disruption, in the absence of natural gas in Europe, coal makes a comeback. Does that mean that you have to abandon that policy? Or that policy is ineffectual? Yeah, I see the debate. But where we can where banks asset managers will add value is in the way they engage with companies. We challenge the major and it will we our sustainability sustainability team in Switzerland challenge a major European major in the audit oil industry to change its its remuneration policy, and the way they had the CEO on the board of directors. And we said this is stopping you becoming a sustainable name, you will become a rated within and be one of the rare A rated names within the sector. If you operate it that change, and they changed, it seems a tokenistic thing, but shareholders if they get their act together can make a tremendous amount of difference. And I gave the example of what happens when you don’t listen to dissenting shareholders, we’ve had issues, despite you know, at the other end, in terms of cooperation across different asset managers, if they group their forces together, the power they have with their with their shares to influence corporate behavior, they can make a difference. What is unfortunate, and that’s the basic reality is that the issue of climate change, the issue of the environment has become deeply politicized. It should not be a political issue, but it has become that. And obviously that has weighed upon people’s willingness or unwillingness to invest in ESG. You have in the US, you know, there’s that even though living in the US you have companies which are states, which are banning ESG investing, which are making it an issue a very political issue or wedge issue. You know, this is woke investing, this is due Buddhism. And also they’re trying to set us up, set up ESG. Industry bank, whether it’s through investing or through innovation, as somewhat anti growth, it’s the reverse. It’s a huge growth opportunity. And you’re starting to see that with the inflation Reduction Act, the chip act in the US is going to be a huge, colossal investment, not just in the US, we have the green transformation in Europe. So when when I speak to clients, and I set out ESG drop doctrine, the the sort of methodology we set out as a starting point, obviously, I’m, I’m confronted to individuals who are completely indifferent. And so to some of my own colleagues within the bank, I meet people I speak to people and they say, I don’t care, I don’t care. I don’t believe in sustainability. And I’m like, Well, maybe you should change banks. You know, you don’t go you don’t order a vegan when you go to McDonald’s. So you’re here. If you’re in San Francisco, and this is our core value, this is what we represent. So I’m used to dealing with the naysayer, then what I love to deploy when I’m faced with the doubting Thomases is in the economic opportunity and and I use sources which are which are mainstream. McKinsey came out with a paper recently about the expectation that you know, by 2030, the whole value chain of sustainable investment and industrial change that requires 12 trillion 12 trillion in annual sales by 20. If we want to if we want to completely revisit our transportation, power, hydrogen, all the different components and industry and power generation, everything that we need to sustain our economic life. That is a huge economic opportunity. So you’re not forsaking growth, you’re not forsaking opportunity by going down the The the, this this route. And what I’ve been trying to do over the last few years is improve my understanding of sustainability, improve my understanding of the science behind it. And, you know, I’m trying to read on both sides, not just the echo chamber of what my bank generates in terms of research, we’re trying to get some realities about the push back. A guy who I love taught me so much is Vaclav Smil, who’s a Canadian, Czech Canadian chemist, I believe. And I think he’s that he will get favorite writer. He’s he influences gates, his knowledge of climate change. And this guide will explain how the world works. And he is somebody I try also to include to be not too pollyannish in my advocacy, and to show the scale of the challenge. It’s not easy to get to enact a change, because 80% of our energy comes from fossil fuels. And even if the alternative party is growing and growing at a phenomenal rate, overall energy demand continues to grow and will grow with demographic changes to come over over the next few decades. But but it’s the percentage that has been allocated to alternatives. Even though this challenge is so huge, at some point, with the natural feedback interest, as energy gets an alternate alternative energy gets cheaper, as, as fossil fuels become less competitive, we will be able to dislodge that energy incumbents, the way other forms of innovation have dislodge the dominant force in their sectors.


Will Bachman  36:38

Within ESG, there are different there’s, you know, there’s a variety of, of dimensions to look at, right? So one of them is looking at carbon in particular. But there’s other things like just traditional regular old pollution, you know, polluting the air and the water was just chemicals, not carbon. And then there’s also how well, are you treating your workers? There’s Diversity, Equity and Inclusion type issues. There’s, you know, the governance of the company, sustainability of the supply chain, and so forth. So, how do you think about balancing all those? Is it like strictly focused on, you know, carbon reduction and decarbonisation? Or do you have some kind of formula? How do you think about these competing, not necessarily compete, but you know, different or disparate objectives under the ESG umbrella.


Jean Jacques Barrow  37:40

So basically, our our satanically, analysts will have a sort of scorecard across ESG. And different industries will have different weights. So for example, for the mining industry, the east side, the environmental side, will be much higher. And then there’ll be some subset segments in terms of water usage, pollution risk, and all the other externalities you may face. So obviously, we don’t analyze a telecoms company or a software company, the same way that we screen a play in the extraction industry. So there are a number of number of questions, if you will, as a questionnaire and you either tick the box, you don’t tick the box or you get a rating. And at the end, you need to get a certain score to have an ESG rating, and to be eligible for our universe. So I realized that in the industry, you have a lot of topsy turvy stuff going on. And some some some analysts have don’t consider Tesla to be eligible because the GE and Tesla, the government side is diabolical. Exxon has extraordinarily good governance on the back of the Exxon Valdez disaster back into the 80s. You know, they transform their internal rules to the highest, the most demanding standards. So they have a great G so as a result, you have many indices, which are signs which include exon, but if we test that it’s, it’s still a perfectible process. The way we played is, is we try and obviously we adapt the screening process to the industry. Right now the priority has to be the E part. And the environmental part inside the E part is emissions carbon emissions have to be the key priority. That doesn’t mean we need to sacrifice the essence of the G but I think you know that’s that’s the biggest driver but again, it depends. It depends on the industry. Now obviously companies with good SMG will attract good talent will probably draw upon a broader pool of talented individuals. So that too is important. You have good s you probably have lower turnover so if you have good G you have better you have better employer loyalty that these things also important. Government is also about the use that’s made it remuneration policies Word representation. It’s a broad range of factors that go in the urgency around emissions over the last few years means that maybe we’re having to sacrifice the s&t side a little bit more because of the urgency. And that’s also another reason why I’m a little bit more optimistic than I was. It’s just a sense of urgency that you now see in terms of engagement in terms of company response in terms of investment, fairs, exchanges, and industry discussions with other players, you know, there is a sense that we need to move fast on the on the east side. And then of course, there are all sorts of other secondary considerations, which are extremely important, whether it’s plastics, whether it’s a circular economy, whether it’s recycling, whether it’s, you know, but the key key key priority is getting our emissions down, that has to be the number one priority. But we must not sacrifice other values in order to achieve that.


Will Bachman  40:57

I wanted to ask you about a comment that you made from earlier in your career, when you were saying that, you know, in that first job that you had at Capitol International, you would say that you if you had played your cards, right, you know, things might have played out differently for you. Could you unpack that for us? How, how might you have played your cards in a different way?


Jean Jacques Barrow  41:22

By keeping my big mouth shut. By being a little less confrontational by being a little bit more to get more maturity, you know, there’s a way of getting things in, in the American corporate environment, as I learned at the time, which is you need to respect some rules and so forth. I just didn’t did not get along with my boss. At the time, I had two bosses. One was a great guy, a great mentor. The other one was a bit of a dick. And maybe I was a bit of a dig too. So yeah, so over time, you learn to choose your battles better, what is what greater my current job that Safa terrorism, we were bought out by the Sackler family. Brazilian family, they took over the bank Saturday in 2013, much more scale, to build on our ambitious and ambitious agenda. In this in this environment, I have with sort of the King fool in terms of my role in the Investment Committee, members Investment Committee, they like me, because I tend to have different views because I have a different background. So at this stage in my career, I’m, there’s a little bit more indulgence towards my my assertiveness and my big mouth, which totally is less appropriate to deploy when I was starting off, and very little about investment management. So yeah, and I think there’s also an appreciation that I’m forthright that I source my views from, from other areas that I have, I don’t have the same, same perspective as my some of my Swiss colleagues. And we’ve gone through different educational and career route. And that I have entirely to to to Harvard, Harvard is the thing that makes the difference is just the level of intellectual curiosity that was instilled in me to Harvard and which I’ve sustained since then. Meaning that why what I don’t have in terms of technical know how, and not in terms of not having an economics background, I’m more than make up because the fact that I, I read very different things from my colleagues, I source my information from different areas. And, you know, when I was I remember, back in the day when Enron happened, collapse of Enron, which at the time was one of the biggest corporate collapse scandals. We’ve had a few more since then. But that was that was that was that was fun scale. I remember reading, I used to subscribe to the nation back then the nation was talking about what was happening in and 123 years before it made it onto the pages of the Orthodox financial press, whether its financial times, or the, or the Wall Street Journal. So if you go off the intellectual print, orthodoxy, if you look beyond the traditional sources, if you start to source materials outside of the mainstream, and this is what I tell when I have interns, or when I have Junior, you guys joining the team, it’s important to be the FT it’s important to look at your Bloomberg to use the traditional tools that we have, but you know, try and source materials from different different parts of society. And in fact, it will, the time I’ve spent listening to all the other reports is exactly such a source. Because I’m hearing viewpoints from classmates who are in different areas and doing different things. And it really helps me to get a better understanding of the Zeitgeist and The spirit of the times how society is transforming not just within my own investment space, but in terms of the broader the broader community in terms of other players other other or other participants. So that that has been an extraordinary source of I wouldn’t say direct material, but terms of my own reflection in terms of sourcing materials. So think outside of the box and look towards non traditional sources for your information. I’m not saying you should be reading The Marx Marxist alternative press against some of your ideas. Right? You know, it’s, you need to you need to have to broaden your perspective, just to just to keep abreast of how things are changing. Yeah.


Will Bachman  45:30

Tell us a bit about your information diet, what what are your sources? You know, newsletters, podcasts books that you read, tell us a little bit about where you’re, what source of information you go to?


Jean Jacques Barrow  45:46

Um, yeah, so I read a, I read a three or four newspapers a day, which was part of my work time is that so yFT is always very reliable, a little bit more centrist, and other financial newspapers, their engagement on environmental issues is probably a little bit more pronounced than the most of the typical business press is a very strong Swiss press. well funded for the newspapers here, then then it’s magazines, I find Atlantic Monthly, a very good, very good publication, very good on science. And then it’s, it’s also just water is what I come across with the arts and arts and letters daily, which is a good summary of all newspapers with key articles. And then reading, obviously, because, you know, I’m making up for my own educational shortcomings, I realized, I know that I don’t know. So it’s really focusing on getting more of the scientific information, which I don’t actually have, so that I can understand a little bit better the science of climate change how the extent to which we can or cannot slow it down. So I mentioned Vaclav Smil, that’s a really good source, I highly recommend him as a writer. And then just this, there’s been a lot of really good recent publications because it’s current subject of debate, this climate change. So terms of risk, I do want to read some of the more provocative stuff. There’s a very interesting book by Roy Scranton I read recently called learning to die in the Anthropocene. That’s basically a book that’s preparing us for the worst case scenario. So that’s really at the extreme of climate change. But you know, you need to know what the worst case scenario entails. And then, you know, as a general minder, in terms of things I’ve read recently, this, don’t let the title put you off. But saving the planet without the bullshit by Assad was really taught me a lot. And the thing I got out of that book, and maybe people will challenge me on this, I don’t know if we have classmates who are in that petroleum energy industry, and who will speak at a later date in your 92 report cycle. But what has been extraordinary in terms of manipulation, if you will, and this is one of the points this books makes, and I’ve seen it in other publications. The whole focus now is on telling us as consumers what we need to change, you know, eat less meat. And I agree, avoids, fly that that makes sense to an extent, and so forth. And so the onus is really on us, the consumer to change our behavior, but we’re 15 20% of the problem. So, you know, if the hypothetical, but if we were to shut down all the big cement players or the power, or the or the energy refined, okay, we’d have, we’d have a collapse in economic activity, but emissions withdrawal, that’s for sure. I think there’s an Australian software billionaire who’s buying back record shares in a company just to shut down their coal, coal driven power plant. So that’s, you got the mean, that’s one way of enacting change. So it’s those sorts of publications, especially publications a little bit off the off the orthodoxy off the beaten track, where I try and learn things that basically things which challenge what we’re doing. Now, of course, I take some things with a pinch of salt. But I’m trying to get a broad range of viewpoints. And also, I mean, a book I read recently is the myth of greens, reinvesting there’s a lot of legitimate questions that are raised about how much change you can enact. There’s a lot of work that needs to be done on green bonds, in terms of in terms of rigor in terms of adherence to process, making sure that the money that’s going into green bond actually goes into a green project. I think the standards within the equity world are so much higher than within the bond world within Europe. So you know, it’s always keeping an open mind and it really does go back to the value of a liberal arts education. And I was sort of some you know, something in terms of my an interest I mean, I studied English, but I would I follow a lot of different courses. And I, you know, unlike University in Europe, where you will only have one or two subjects, this is a range of options is a vital part of my development, especially as it was so much learning on the job that occurred. For me within investment management, it behooves me to, to learn things over and above what I was learning in the day to day world office world, because there were gaps in my knowledge, and I needed to, to address those gaps if I was going to be credible, and look professional and knowledgeable when I’m dealing with clients.


Will Bachman  50:37

On this, I’d like to turn back to Harvard. Are there any courses or professors that you had at Harvard that continue to resonate with you?


Jean Jacques Barrow  50:49

I thought about this, because you’re sending us at the end of each of the discussions. The two biggest takeaways from my time at at Harvard, looking back, I think, was would be expository writing the course that we were all obliged to take freshman year. And then something I did at Harvard, which are the masters swimming, explaining the two very different things. But in terms of how they shaped the future, those were key ones. So expository writing, I had a very good, very good teaching fellow. She, you know, she was most of us in terms of when we were due to open discussions about what was not adequate, what was not clear what was not well argued, anonymously, but going through all the essays in the class, I found that was a really good exercise, obviously, I honed it because I was an English major. And when the papers are being graded English major, there’s an additional focus compared probably to other majors, or the concentrations on style and content. But that was a key, a key learners key learning vessel for me, just the importance of being clear, being concise, and succinct. And I also have to factor that in, in my day to day, even more so because I’m dealing with an audience, which is not necessarily English, mother tongue English. So I also need to shape that content to make sure everything I say is clear and accessible. So expository writing, I guess we will, at times frustrated by that freshman year, but I found that to be a really valuable source. And then the second thing was this massive swimming, that was something that really changed me because that became a really big part of my subsequent free time. In terms of training, that was really, really helpful. So those are the two key key takeaways in terms of what harvest legacy but then more specifically, when I was looking back at some of the classes that really opened my mind and planted a seed, which which later flourished, or I pursued my own interests. It was mainly within the the core curriculum that I was really stimulated. Behavioral, behavioral biology. I think we’ve nicknamed sex was an OK course. But it really opened my mind about evolution. In retrospect, I wish I had also I take a Neil Wilson class because I’ve really enjoyed his books. But that one, that one just and also compared to what we now know, the brain and what we had at the time that was looked at, we recycle brain, the user’s manual. And if we were to compare that with what technology now lets us know about how the brain functions, like, so much has changed in three years, without trying to deceive them. But the one that looking back in terms of what I now do as a job, and it was it was my worst grade, and it’s the one I suffered the most because I’ve limited physics and chemistry, subjects I gave, I stopped doing and when I was probably 13 was science science a was a tough one for English majors sciency changing surface of the Earth, I think was Professor Raymond Sega, tough, tough class for me, but that expose me to geology to how the world works for the poetry of how continents are formed the cycles of physical life as opposed to biological life. Guy was That was that was I mean, it was tough. But that really proved relevant because it was just the beginning of the discussion about man’s impact on the planet, you know, back in the 90s incipient phase of that debate, and now obviously, obviously, it’s a much more important and constant subject of discussion. So those those are looking back but it’s more the overall mix the blend the exposure to a different different variety of subjects the excitement, shopping period, that was was a great, great week because you just going in and out of different classes, confronted to many ideas, kind of attend all the courses. But you know, all these all these intellectual intense Since like, or introductions, you know, they plant a seed. So yeah, I look if I were to do it all over again I would there are so many classes I would take that I did not take, I will probably do a different nature. But if the overall outcome from the liberal arts education, the overall outcome for more than the torques outside of class and museum, everything you had at Harvard, which still nurtures me now in terms of my readings, my interest in the years my interest for architecture, my interest for learning, so that’s that would be my, my, my look back on that.


Will Bachman  55:38

JJ, for listeners who want to follow up with you find out what you’re doing reach out, what where would you point them online?


Jean Jacques Barrow  55:47

This and I’m, I’m a I’m a Tarot when it comes to all these platforms. But LinkedIn is good. I will be happy to provide a reading list of some of the best books that I’ve read on this subject. I also am happy to draw people’s attention to good platforms. As I mentioned, Bloomberg is very good on the subject of the foreign marriage involvement in environmental issues means that his his organization is making a big effort in that fun, so check out Bloomberg MSCI. There’s a lot out there. But please, if you are, if you are in areas related to what I’ve just outlined, my somewhat topsy turvy overview. Please reach out to me challenge me. And yeah, I also I look forward to learning more from other classmates. And then yeah, that’s yeah, that’s that’s that’s, that will probably be the best thing LinkedIn. Yeah.


Will Bachman  56:42

Fantastic. We will include your LinkedIn profile in the show notes. And JJ, if you do want to send me that list of recommended reading, we’ll include that list in the show notes as well, which would be amazing. I’d love to see it myself. And listeners, if you go to 92, you can get a full transcript of this episode. And every episode can also sign up for the newsletter, where I will let you know when each episode gets published. JJ has been great speaking with you. Thanks so much for being on the show.


Jean Jacques Barrow  57:12

Well, thank you so much, and when do you get interviewed?


Will Bachman  57:17

We will let everyone else go first. So we will get


Jean Jacques Barrow  57:22

that’s your Navy training. Right?


Will Bachman  57:24

That’s right. I’ll be in line someday. Alright, thanks so much for joining JD


Jean Jacques Barrow  57:29

Thank you, William. Be well