Sustainable investing star Kathryn McDonald

Kathryn McDonald is Head of Sustainable Investing at AXA Rosenberg Investment Management in Silicon Valley. With a deep knowledge of equity investing she has over 2 decades of experience in the asset management industry. Her natural curiosity and ability to consider investments from many perspectives, have lead to a stellar career with roles across the globe.

An art enthusiast who is passionate about sustainability, in this week’s Success Story, Kathryn shares how environmental, social and governance (ESG) factors are the relatively untapped investment super powers that have the potential to transform  financial markets and the corporates which participate within while significantly enhance investor returns.

“From a very early age, I was always interested in investing and economics, although I wouldn’t have called it that. It was only after I went to university and was really formally exposed to economics I thought ok, this is what I really want to do with my life,” recalls Kathryn.

Finishing her MBA, she spent 4 years with Barra, a risk modelling company, as a consultant.

“That was a great early entry into the world of investing and the world of risk management. From there, things naturally migrated towards investment management.”

Starting with AXA in 1999, she’s seen an enormous amount of change in investments markets during her time with the company.

“Over the years I’ve had a whole variety of roles, including being head of investments for Australian and New Zealand.”

“Now my focus is entirely on what we call sustainable investing. When we talk about sustainable investing in the equity market, we’re typically talking about integrating ideas around environmental, social and governance (ESG).” Kathryn explains.

“These are concepts we believe are important if we want to have a robust understanding of a company.”

“Our motivation as a firm, is really around this idea that environmental, social and governance information is material economic information. Knowing some of this might cause me to change my belief as to what the fair value of the share price is.”

“We’re also very interested in this idea that people vote with their dollars about what’s important. We can choose to push capital in the directions we think are important, not just as investors but important to us as a society.”

“As a sustainable investing person, I think it’s enormously gratifying to see more and more people voting with their dollars.”

The global nature of Kathryn’s role, dealing with teams across multiple time zones poses one of her biggest daily hurdles.

“A big challenge is simply organisation,” she says.

“Keeping track of what needs doing, keeping track of what is a burning emergency vs what can wait, I think that’s always a challenge.”

Carving out time for long-horizon projects is also tough in a hectic workplace when her day can quickly be consumed answering emails and putting out fires.

“I use a technique that involves turning off email and turning off newsfeed. I’m the type of person who, if I see a blinking light in the corner of the screen or if I see a new email come in, it’s very difficult for me not to immediately click on that thing, no matter what it is.”

“Just turning off email, turning off the Bloomberg scroll, is enormously important. Just saying to yourself, I am committed for this day or this week, here’s the reading I want to get done which I think is absolutely critical and here’s the writing I want to get done.”

“These are two things, for me at least, that need to be done in an environment of relative quiet,” says Kathryn.

When it comes to downtime, art and horse riding are Kathryn’s go-to activities to switch off and recharge.

“Art is a very personal thing that I have always had with me and will always have with me. Independent of a husband, or children or work situation, this is my personal thing and I find it deeply rewarding.”

“I ride horses and find horseback riding a couple of times a week is a physical activity that’s just difficult enough that you have to pay attention to it. You can’t be thinking about what’s gone on at the office.”

“Really anything that truly forces you to be engaged and present in the moment. It serves as a little bit of a break that will be energising enough for the next day to go back to the office and say ok, I’m here now and I feel like I’ve got some energy.”

She’s built her career around equity markets, but Kathryn says her smartest investment move isn’t one to do with a particular stock.

“The best investment I’ve made is an investment in education. That sounds a little bit corny to say but it’s absolutely the truth. I mean not just that I went to university, that I went to graduate school, but I think it’s a lifelong commitment.”

“This idea of being interested in the world and really pushing yourself to try and answer and explore questions on your own. I think that being an educated person is more than just having a certificate from college.”

“I’m a person who is actively engaged with my world and that takes effort. At the end of the day when you’ve done a hard day’s work, most of us want to go home and just flop on the couch and watch The Real Housewives or something.” says Kathryn.

“I think it’s important that we continue throughout our lives to push ourselves to do different and better and more.”

Listen to this week’s full episode on iTunes.