Sustainable ESG Investing...Talks at GS with Big East Conference's Val Ackerman...US Dollar Weakness

[Goldman Sachs]( [BRIEFINGS] July 14, 2020 The Daily Check-In at Goldman Sachs Is ESG investing sustainable? With goals that always seem to be in flux and links to performance that appear uncertain, the sustainability of ESG isn’t a given, despite massive public interest. In a recent episode of The Daily Check-In, Goldman Sachs Senior Advisor [Steve Strongin]( shared his views on what will make ESG an enduring investment discipline. He says ESG managers need to identify companies and situations where ESG principles are creating real long-term advantages, as well as situations where doing good also means doing well in terms of corporate performance. He also talks about why anticipating ESG flash-points—things like the Black Lives Matter movement—is key to ESG’s success both as an investment and corporate strategy. “It's [about] looking for companies that think about tomorrow's problems—tomorrow's flash-points—and operate today as though tomorrow's values were already in place,” Strongin says. In other episodes of The Daily Check-In, Goldman Sachs Research’s [Amanda Lynam]( discussed how the relatively new asset class of private debt is faring during its first economic downturn, while [Jerry Revich]( weighed in on the risk of a slowdown in US public sector construction spending. From Goldman Sachs Asset Management, [Sung Cho]( co-lead of technology investing for the US Fundamental Equity team, explained how the tech investment landscape is expanding beyond the large mega-cap tech companies. For more Daily Check-In videos, [subscribe to our channel]( on YouTube. [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20at%20Goldman%20Sachs&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fthe-daily-check-in%2Findex.html) Talks at GS With Val Ackerman, Commissioner of the Big East Conference Above (L to R): Katie Koch of Goldman Sachs and Val Ackerman of the Big East Conference As Commissioner of the Big East Conference, Val Ackerman has spent the past few months navigating what the future of live sports looks like during a pandemic. “What would it take for game competition to safely resume? What is it going to look like to be on a basketball court or a soccer field? What do we do with referees? Importantly, what do we do about travel?...Until [a vaccine] happens, I think we just have to accept that anything that we do…is going to be accompanied by risks,” Ackerman said during a recent episode of Talks at GS. While much of her time lately has been devoted to these considerations, Ackerman also stressed the importance of approaching her role with an eye beyond the here-and-now of college sports. “One thing I learned from working for [former NBA commissioner] David Stern for 16 years is that you can be and should be more than a sports league,” said Ackerman, who became the WNBA's first president in 1996. “There are ways that the power of sports can be leveraged to do more and to do good. That was certainly David’s vision of the NBA.” Ackerman said, “And that’s kind of how I’ve approached my work at the Big East. What can we do more of and better in order to help our student athletes, help our schools and hopefully help the communities where we are operating?” [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS&body=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DzVXiek3E3Ug) Podcast: US Dollar Weakness The coronacrisis has had two almost contradictory effects on the US dollar, says Zach Pandl, Co-Head of Global Foreign Exchange, Interest Rates and Emerging Markets Strategy in Goldman Sachs Research. “On the one hand, [the crisis] raised the dollar’s value quite substantially,” Pandl says in the latest Exchanges at Goldman Sachs podcast. “The dollar kind of went straight up in markets during the big equity drawdown at the outset of the crisis. So it helped raise the dollar’s value further beyond where we started the year.” But then the Federal Reserve’s response, including its pledge to keep interest rates low, had the opposite effect, removing the attraction of higher interest rates relative to other markets that was a key factor holding up the dollar’s value in recent years. With that dynamic gone, the currency appears much more vulnerable to Pandl. “Our outlook for the dollar would be that the fundamentals for the US currency look pretty poor,” he says. “Valuations are high, and you have a kind of classic recipe for sustained weakness. So we would be fairly negative on the dollar, especially if the global economy has a fairly robust recovery over the next few quarters.” Listen to the podcast on [Apple Podcasts]( or [YouTube](. [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Podcast%3A%20U.S.%20Dollar%20Weakness&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpodcasts%2Fepisodes%2F07-07-2020-zach-pandl.html) Briefly…on Building a More Sustainable Supply Chain Consumer packaged food companies are changing the way they source raw ingredients to help reduce their environmental and social impact. Goldman Sachs Research’s Jason English spoke with Mary Jane Melendez, General Mills’ Chief Sustainability and Social Impact Officer, Christine Montenegro McGrath, Mondelez’s Chief of Global Impact, and Kate Rebernak, Founder and CEO of FrameworkESG, to discuss how consumer food companies are shaking up their supply chains. What follows is an edited excerpt of their conversation from Goldman Sachs’ inaugural Global Consumer ESG Conference, held virtually last month. Jason English: Kate, since you advise companies on their ESG strategies, can you set the stage and share how companies’ approaches are evolving? Kate Rebernak: As more companies recognize ESG as a source of value, their stakeholders are becoming more sophisticated in their understanding of how sustainability factors can impact overall value. As a result, companies are trying to be more specific about making the connections between sustainability practices and the company’s data, vision and goals. Things have evolved because stakeholders are clearer in what they want to see from companies. Jason English: How is the focus on sustainability playing out in Mondelez and General Mills? Christine Montenegro McGrath: I would start out by saying that most successful companies today are creating value for the world at large, in addition to their own business, so understanding what’s material for your business and the broader impact you can have is essential. Part of that is being consumer-centric and understanding that consumers are increasingly aware of the connection that their choices have on the environment and their own well-being. At Mondelez, since we’re one of the world’s largest buyers of cocoa, it’s critical to have a strong supply of cocoa and be able to drive systemic change through our sustainability programs. Through our Cocoa Life program, for example, we’re able to help the farmers we source ingredients from, as well as the communities that we buy from. At the same time, we need to drive change in broader ways by working with governments and industry players. Some of these complex challenges are just too great for any one company to solve, so we also need to share best practices and knowledge, and build scale. Mary Jane Melendez: Consumers expect brands to be a force for good. For us, it’s really about thinking about how we can activate our operations in a way that builds both business and planetary resilience. Given the impact of climate change and extreme weather events on our business, it’s critical for us to look up and down our supply chain. We also work with the farmers who grow our key ingredients—such as oats—to ensure that we’re sustainably sourcing those ingredients. As a food company, our business very much depends on the health and well-being of Mother Nature. Jason English: What types of companies have been most active in ESG and how has investor interest evolved? Kate Rebernak: What I’ve seen is that the heavily regulated businesses—for example, oil and gas, mining, and cement manufacturing—got a head start on implementing ESG strategies because they needed the social license to operate. And there has been greater engagement from the investor community. Five years ago, institutional investors weren’t as interested in doing a deep dive on ESG. Now all of them are. We’re also seeing greater engagement from companies’ senior leadership—if they’re not driving the strategies themselves, then they are actively supporting them. And this interest is across all sectors. Jason English: Mary Jane and Christine, can you talk about some of the supply chain initiatives that you’re engaged in at your companies? Mary Jane Melendez: At General Mills, one of the areas we’re focused on is regenerative agriculture, which uses a holistic, principles-based approach to farming and ranching that seeks to strengthen both the ecosystem and community resilience. It’s one of many levers that farmers can use to address planetary health. We’re currently running a pilot with 46 farmers—who are responsible for more than 50,000 acres—who will be applying principles of regenerative agriculture on their land over a three- to five-year period. The pilot is already showing strong results. In the first year, farmers have been able to spend less on synthetic inputs, such as fertilizers and pesticides, and instead are reinvesting more money into cover crops for their lands. By minimizing soil disturbance and maximizing crop diversity, famers can not only improve soil health, but also improve biodiversity and water quality on their farms—while creating more economic resiliency for their communities. Christine Montenegro McGrath: We know that about 60% of our CO2 emissions come from our ingredients, so we have several initiatives focused on increasing the sustainability of our supply chain. The Cocoa Life program I mentioned earlier was launched in 2012 with the goal of helping farmers grow more cocoa on less land, while also providing them with access to sustainable farming practices, financing and training. We’re now working with more than 175,000 farmers and about 60% of the cocoa volume for our chocolate—which is used in products such as Cadbury and Toblerone—is currently sourced through the program; our target is 100% by 2025. Today, we’re working with farmers to ensure that the way the cocoa is grown is helping to solve deforestation on the ground while also helping to provide more income to the women in these communities, who typically do about 40% of the work on the cocoa farms. Another one of our initiatives, Harmony Wheat, works with farmers to ensure that wheat is grown in a way that promotes soil health and biodiversity, while also helping farmers to cultivate the bees and wildflowers on their farms that are so important to the long-term health of the environment. Jason English: What, if any, changes to the ESG dialogue discussion do you think will result from COVID-19? Kate Rebernak: In past crises, we would typically see companies dial back their attention to ESG issues. But we’re not seeing that right now. Because of the pandemic and the protests over racial injustice, companies are realizing that they need to continue to address social issues in ways that are both authentic and meaningful. Company leaders will need to build structures internally and throughout their value chains to insulate the business against some of the environmental impacts and create resilience. There are also expectations that company leaders need to speak out on issues, engage with policymakers and address issues such as paid sick leave, healthcare issues and pay equity. ESG concerns aren’t going away and, in fact, are interconnected with many of the issues we’re seeing right now. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20Building%20a%20More%20Sustainable%20Supply%20Chain&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Bloomberg - July 10 [Goldman Sachs Says Markets Are Trading on Economic Fundamentals]( (7:08) CNBC - July 9 [Markets looking ahead to 2021 and beyond, strategist says]( (2:11) Axios - July 9 [Wall Street giants plan more active role in climate fight]( Bloomberg - July 8 [Womenomics Pioneer Tells Bosses to Nurture Female Talent]( American Banker - July 8 [Inside Goldman’s New Corporate Banking Portal]( CNBC - July 6 [There’s ‘very clearly’ been a rise in retail participation in Asia’s markets: Goldman Sachs]( (3:27) Hedge Fund Alert - July 1 [Goldman Goes Digital for Cap-Intro Service]( [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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