A sustainable resolve

David Maywald

11 minute read

David Maywald is a highly experienced fund manager and infrastructure investor. An ANU College of Business and Economics (CBE) alumnus, he is currently a Non-Executive Director at SolarShare Canberra and is an expert contributor to the Australian Sustainable Finance Initiative.

In this interview, David discusses the momentum of sustainable investment and how his degree from The Australian National University (ANU) prepared him for his career.

Q. Can you tell us about your career path and what led you to the role you're in today?

While studying accounting, finance and economics at CBE I realised that the areas of investment and capital markets would suit my personal strengths and talents. I moved to Sydney to take up a graduate rotation role with a large investment manager, which was the perfect introduction to the field. Working for national and global fund managers gave me exposure to fixed income, currency and real estate.  However, I was consistently motivated to do equity research and analysis on global stocks – it’s competitive, there’s travel involved, it broadens your network and you get paid to learn.                                                                                                                         

After several years, I developed stock-picking and timing intuition, which was needed to progress to portfolio management. Having worked in larger companies, I felt drawn to smaller teams that were at an earlier stage of development. Start-ups are engaging and energising, with everyone working closely together towards a shared goal. Of the two start-ups that I joined, one was a miss, but the second was a clean hit. I joined the second start-up in the very early months, and happily contributed for almost fourteen years.

Q. Do you have any advice for students or alumni who would like to specialise in sustainable investment?

The fields of Environmental, Social and Governance (ESG) and Responsible Investing have grown tremendously during the last several years. There are and will be many work, business and research opportunities in this area, so get on-board. If you’re keen to contribute at an investment manager or service provider, then hone your skills and experience so that you can deliver value for clients. Look for problems that you can solve, and solutions that you can provide. Learn from innovative people and companies. It’s a fast-moving space, and best practice is being re-invented continuously.

If you’re coming from an asset-owner or academic perspective, then network intensively and work collaboratively with your peers and across the industry. A wonderful aspect of sustainable investment is that people openly share and work with one another, much more so than in banking or traditional funds management, because we’re all in this together. 

The lack of standardisation and consistency has slowed the development of sustainability as a field. But, policymakers, academics and the industry are all responding to this.

Q. How do you see ESG disclosure evolving over time, from the patchwork of voluntary and mandatory reporting at present? 

There’s a lack of standardisation and consistency, which has slowed the development of sustainability as a field. Policymakers, academics and industry are all responding to this. Voluntary disclosures and commitments will become mandatory in many cases going forwards, as laws, regulations, listing rules and accounting standards catch-up with the current best practices.

The European Union is pushing forward with their Taxonomy of Sustainable Finance, and there’s a harmonisation initiative at the Network for Greening the Financial System, which includes leading central banks.

Inconsistent sustainability reporting and data gaps provide an opportunity for investigative research and smart businesses. There is innovative, quantitative big data and qualitative, bottom-up service providers, who are adding significant value for their clients. Carbon Delta, Trucost, Vigeo Eiris, Oekom Research and the ESG ratings business from RobecoSAM have all recently been hoovered up by the large sustainability research houses. However, other start-ups will follow on their heels, disrupting the sector and providing new value for clients.

Q. What industries are playing a leading role in ESG and sustainable investments?

My two decades in the investment industry have had a theme of global listed infrastructure running through it. It was my exposure to the utility, transport and energy sectors, as well as the infrastructure concessions, which really propelled my development. Many of these companies produce large greenhouse gas emissions, have assets where the users produce large emissions, are closely tied to regulation, and have a large social footprint. Therefore, infrastructure was an ideal springboard to become a leader in ESG and sustainable investment.

Other sectors of interest include real estate, both Australian and global, where there are many leaders. In addition, technology, which avoids some of the legacy ESG risks while reinventing themselves with renewable energy sourcing and disruption of existing markets or creation of new markets. The finance and investment industries are rapidly embracing sustainability, with the European Union being the clear leader. Keep an eye-out for the Australian Sustainable Finance Roadmap, to be published in 2020. 

Old approaches were static, standard and backward-looking. Whereas the modern focus has moved towards dynamic, context-specific, granular and forward-looking perspective.

Q. What are the most attractive employment and research opportunities that present themselves in sustainable investments?

Asset owners have been bulking-up their capacity in this space for a few years, industry funds in particular. Sitting at the apex of the investment industry, they will largely influence the speed and path for sustainable investment in practice. In response to market demand, there are many new funds and investment managers being set-up to capitalise on the growth. I see a lot of innovation happening at start-ups and smaller companies. There are institutional constraints inside larger investment managers (and asset owners), which are a significant headwind for fully embracing the opportunities. BlackRock got a lot of media coverage for emphasising sustainable investing in January 2020, not because they were early and far from it, but because they are huge – valued at US$7 trillion in assets. There are massive research opportunities in this space. Sustainability disclosures and ESG ratings have been around for more than two decades, providing a rich data set. However, the voluntary or inconsistent nature of much of this data means that there’s a lot of scope to add value through analysis. Old approaches were static, standard, backward-looking and often framed as checklists. Whereas the modern focus has moved towards dynamic, context-specific, granular and forward-looking perspectives, including scenario analysis.

Engage with the Principles for Responsible Investment (academic network and annual research conference), CFA Institute (Financial Analysts Journal and Research Foundation), Responsible Investment Association Australasia (contributing to the biennial survey for the Global Sustainable Investment Alliance), and really tap into alumni across the investment and finance industries.

Q. How did your degree at ANU prepare you for your career? 

In retrospect, I was really fortunate to have studied a Bachelor of Economics at the same time as Commerce at ANU. My interest in economics was sparked by my dad, who studied Political Science at ANU during the 1970s. To my mind, economics has a much broader and universal lens compared to Accounting and Finance majors. The utility of a good or service to an individual consumer is unique and non-financial, and economics has a long history with externalities or ’spill over effects’. The three fields of economics, accounting and finance really complemented and reinforced each other. Working with many different investment professionals during the first half a dozen years out of university was extremely valuable, especially for developing softer skills, as was the CFA Institute, and my studies helped prepare me for these experiences.

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