Transcript

Julia: Hello. My name is Julia Streets, and welcome to the podcast series StreetsTalksTo. In each episode, I interview leaders from some of the most influential firms, bodies and initiatives in the financial services industry. We explore what’s at the very forefront of innovation and change, we think about the challenges facing firms and the industry at large, and we uncover the opportunities that exist, both today and as we look ahead. Right now, every firm, every client, is looking to achieve two things, growth and/or transformation. And as a business, we help firms with three key offerings, campaigns, content and coaching, because we never forget the human in the mix. We hope you enjoy the series, which you can find on all good podcast channels, and all the episodes are listed on our website, streetsconsulting.com. And you can find the episodes using the hashtag #StreetsTalksTo. So thank you for listening, and welcome to StreetsTalksTo Net Purpose.

Net Purpose has a crystal clear purpose, to make capitalism more sustainable. Its platform collects thousands of data points to accurately map corporate performance against global sustainability goals, ultimately measuring outcomes and also financial materiality. So for context, it powers the world’s most sophisticated, sustainable and impact investors, and at some scale, supporting clients with more than $15 trillion in assets under management and backed by leading investors, such as ETF partners, Illuminate Financial, even Jim O’Neill, the former chair of Goldman Sachs Asset Management, so Net Purpose has a clear mission, to mobilise trillions of dollars to achieve sustainable development goals, and it couldn’t be a better time for this interview, at the end of last year, Net Purpose announced the acquisition of the Sustainable Development Investments Asset Owner Platform, or SDI AOP, what a way to end the year.

I’m delighted to be joined today by Sam Duncan, who is the founder and the CEO, former head of impact at Leapfrog Investments. She served on the investment banking team at Goldman Sachs, and helped define the standards for sustainable and impact investing, the Global Impact Investing Network, the UN Principles for Responsible Investment, B Lab, and the World Economic Forum. Sam, hello, how are you?

Sam: Hello, Julia. I’m really well, thank you. Thank you so much for having me.

Julia: It’s such a joy to have you on, because it feels to me like not only are you building quite the business, as I was explaining, at some scale, but it’s also at a really interesting time, where I would argue that some of the geopolitical narrative doesn’t necessarily agree with your intention. So let’s start with Net Purpose, why are you building what you’re building?

Sam: In a nutshell, we do have a crystal clear mission, and that is to make capitalism more sustainable. And the why we’re building what we’re building really comes from a couple of factors, but most fundamentally, as an investor myself, having started at Goldman Sachs and used the financial data infrastructure to think about profit and measuring financial returns, it was always crystal clear to me, even early in my career as an analyst, that the companies we invest in literally build the world, and they are not only focused on shareholder returns, but they’re focused on value for their customers, value for their employees, and much more than what we measure in the net profit type equation.

We started Net Purpose to try to quantify those other social and environmental factors, and we encapsulate that in this concept of Net Purpose, with the ambition that we could get to a point where investors can factor social and environmental considerations as rigorously as they currently consider financial returns. And this idea was born through, I guess, decades working in traditional capital markets, as well as sustainable and impact investing. And as a company that’s about seven years old now, we have worked with investors who are very committed to understanding more about their portfolio and their impact on the world, in addition to optimising for financial returns.

Julia: When I talk to you, I always get this real sense that your clients really want to understand the granular detail, combined with this bigger intention of galvanising and changing the world at the same time, at some scale and some impact. Talk to us a bit about the deal, the acquisition at the end of last year, what impact has that had on your business and what was the purpose behind that?

Sam: I mean, it’s worth maybe putting the acquisition in context of what you just said, which I think is a good point, that our clients are ultimately managing the money of their clients. And I think with capital markets today, a large portion of that capital is actually owned by high-net-worth individuals, pension fund earners, like me and my mum and my dad, and they all care about the world that they live in. And so, they’re asking their fund managers to think about social and environmental performance alongside financial return.

The acquisition that we made last year was a coming together really of two organisations with a very common mission, and actually a very common purpose. We had essentially, both SDI AOP and Net Purpose, built a data set and a methodology for classifying companies and their contributions to these sustainable development goals. And ultimately, we just decided why should we build alongside each other, let’s come together, let’s join forces, to try to accelerate sustainable investing, and provide clarity to the market on what is and isn’t sustainable to try to consolidate methodologies, and make it cleaner and more simple for investors to use and understand.

Julia: When we think about the classification, but also the clarification, but it is also at some scale and some impact as well. What were your hopes and your dreams as you were coming together, as you said, rather than do it individually, come together and change the world, which I definitely feel is what you’re doing, but talk to us about the aspiration of what’s coming down the track.

Sam: Both companies have a classification system that helps investors assess whether a company is or isn’t sustainable across thousands of listed companies, which includes investing in the equity of those companies and debt fixed income markets. Our ambition for this year is to bring together the two companies and the client base, and to continue to double down on improving the product to help investors think about sustainable performance. We are integrating the data sets, which means in Q1 this year, we’ll be launching our first integrated data set on the energy theme, which is obviously very topical, given the climate objectives of most investors, and energy is one of the largest sectors that has a role to play in helping us achieve a net-zero transition.

And then, throughout the rest of the year, we’ll be deep diving on other themes, like healthcare on the social side, nature/circular economy themes, which is also very topical. And then, there’s a host of other themes that we cover under the banner of sustainability, including financial inclusion, affordable housing, water, for example, which fits under nature, but it’s somewhat different to waste. And we’re essentially doubling down on these sustainable themes to integrate the methodologies. But at the same time, what’s really exciting about this acquisition is we’re also integrating the dataset into major platforms so more investors can get access to the data. We are a tech and data company. We also call ourselves DaaS, data-as-a-service, but that involves SaaS, software-as-a-service, as well as data acquisition. And so, most of what we do is collecting clean data and stream that to investors through major platform integrations, and that’s the other thing that we’ll be investing in in 2026.

Julia: So it’ll be through an API that people can then easily integrate into their workflows as well?

Sam:  Yes, exactly. It’s already available by API, but we will be integrating with some of the larger platform providers, more to come soon when those are finalised, so that other investors can more easily access the data.

Julia: And that’s really interesting, because one of the things I was thinking about before the interview was when you think about those different development goals, there’s quite a spread and there’s quite a breadth. When we think about actually those themes that people are really focused on, you’ve talked about energy, you’ve talked about waste, you’ve talked about also thinking about the circular economy, really fascinating right now, and so therefore, people might naturally put you in a bucket of this is financial data. And granted, it is, as you say, data-as-a-service, software-as-a-service, it’s a tech company, but all of this deeply, deeply matters as people are focusing on those major themes that are never going to go anywhere. I mean, they are absolutely on the table of the UN, that’s the reason why they’re called the UN statements, and therefore why you matter today and why you matter tomorrow. I guess if there were a call to action to the industry to engage with you around some of those themes, how would you want to see that evolving?

Sam: Every investment and every investor has an impact, because every company has an impact on the planet. Whether you look at it or you don’t, that is fact. Every company uses natural resources, every company employs human capital, and so every company has an impact. If you’re an investor that wants to measurably improve your sustainability or have a positive impact, then you have a data set here that can support you to rigorously measure your performance and compare yourself to other investors, just like you do your financial performance, which I always find fascinating about this space, because I think we sometimes get stuck in these acronyms of sustainability and ESG and E and S and all of the complexity, but ultimately, we need to make that as simple as measuring your financial performance and comparing that to another fund manager, measuring your sustainable performance and comparing that to another fund manager. That’s for the sustainable and impact classified products.

For traditional products that don’t today incorporate sustainable considerations, you’re still having an impact. So over time, when we see pricing come in on things like carbon emissions, we can expect that to have financial consequences for any investor. And so, we believe that all investors should be measuring their sustainability alongside their financial performance, even if they’re not marketing a sustainable fund, they should know the trade-offs they’re generating, because there’s a risk in not doing that, and down the line, you’re exposed to other taxes or other financial consequences of not optimising your sustainable performance.

Julia: It’s fascinating hearing you talk about that, because that’s the very core of what everybody talks about every day, benchmarking, classification, the ability to forecast and predict, the deep-seated analysis of actually where your risks are, but also where your opportunity… This is absolutely the core of what everybody’s thinking about. It is central and essential to every investment manager and every CFO in every organisation, this is why everybody’s 100% thinking about, which is fascinating, because in my mind, it pivots the conversation slightly away from the rhetoric of how people feel about the climate conversation right now. And of course, different people have different opinions. Can I ask you just for your view on… We’ve obviously touched on it in the discussion, but when you hear people talk about, “Well, we should be deprioritising some of this focus in favor of other conversations about opportunity elsewhere,” what are your thoughts on that?

Sam: As part of the acquisition, given we’ve already talked about it, the SDI AOP was founded by four of the largest asset allocators in the world, including two here in Europe, APG and PGGM in the Netherlands, BCI in Canada, and AustralianSuper, which is Australia’s largest superannuation fund in Australia and an anchor for the APAC markets. I think what you can take from the transaction itself is that those organisations are doubling down on the topic of sustainability, and certainly sitting here in Europe, I sense that. I don’t think that that topic is going away. Even if we look at SFDR regulation and UK SDR regulation, you still have a very significant pool of assets that is sitting in sustainable funds, and quite sophisticated portfolio managers thinking about their financial performance and how that compares to their sustainable performance, and really diving deep on the data to measure both rigorously.

Having said that, it’s definitely the case that we do have waves in this space, and they typically align with market volatility, and in this case, absolutely, Trump in the US and a push towards fossil fuels, we can’t say that that’s in the direction of clean energy. But I think what’s interesting geopolitically is I don’t think that means the whole world is of that same view. It means that we are having different localised theses or strategies, depending on the markets that you’re sitting in.

Julia: And of course, this is a term in office, that if we’re taking the longer term view, which of course, many of your investment clients are taking, then you can see where this begins to interact and where the interplay sits.

Sam: Exactly. And I think as an investor, typically, you invest with a strategy, and if you think about the strategy for sustainable investing, it’s anchored on the thesis and the fact that, for example, we have destroyed 60% of natural resources and biodiversity. It’s a horrible fact, and even if you don’t care about, quote-unquote, “sustainability,” you’ve got to think that it doesn’t add up. If we continue to destroy the rest of the 40%, where are we going to generate any economic output or product or food? So those long-term views typically inform an investment strategy, and it’s not often advisable to change your strategy every time the market changes, because then you’re volatility trading. But these longer-term strategies exist, and they’re based on facts and longer-term trends that we do believe will impact the value of assets, as well as interplay with the impact on the planet and the people that live on it.

Julia: And of course, there, we talk about the next generation, we talk about succession, and that is the true meaning of sustainability. It is very, very cool, which is fantastic. I’m going to ask you a slightly weird question now, but I have to ask you, because this is the world you inhabit, what’s your favorite piece of regulation?

Sam: I love this question.

Julia: It’s always one of my favourites.

Sam: So I’m going to be a little contrarian, but I’m going to keep it focused on sustainability. I actually admired SFDR, which was the EU regulation, the Sustainable Financial Disclosure Regulation, which has now got a version two, which is coming back in line with SDR, which I also admire. But it was very hard to implement, but it definitely set a high standard on classifying what is and isn’t sustainable, which is actually aligned in a way with the way we do it at Net Purpose technically, which we could get into in a geeky chat. I admire that high bar that they set, and I admire the ability to be open to market movements in other geographies, and then seek to align and take stock of what did and didn’t work, which they’ve done with 2.0, which came out last year.

I also admire, and I’m going to sound like a regulatory geek here, because that’s kind of what our space is, but I really admire the UK, because I think the UK with SDR, the Sustainability Disclosure Requirements and Regulation, has anchored on exactly… They’ve really understood the sustainable investing landscape. They’ve segmented strategies into sustainability impact, sustainability improvers and sustainability focus, and then a mixed category of all of those things. But I think, a) classifying the market that way is very clear and accurate, in my opinion. b) they’ve anchored on outcomes as the requirement for investors to measure performance of their sustainability objectives. So you can’t just say, “I’m a sustainability-focused fund,” you actually have to have a strategy and then measure your progress on that performance.

And then, finally, I respect the fact that they have categorically classified the improvers category, because in today’s world, it’s very ambitious and rosy to think that everyone can be an impact investor and invest in these cool companies that are 100% positively impacting the world. But the reality is, across a diversified portfolio, maybe 15% of businesses or revenue generated is in that positive category, and maybe 7% or 8% is in a negative category, like don’t invest in coal or oil, for example. But the reality is the rest of the 75%, 80% is “in transition,” quote-unquote, which means as an investor, you’ve got to back companies and support them to transition, their energy supply, the way they use waste, the way they, for example, package their products and spread plastics around the world or don’t spread plastics around the world. It’s going to require capital to make those shifts. And the SDR regulation, I think, is the first that recognise this improvers category, and the EU has now followed with their transition category, to help investors think about backing transition and improvement year-on-year instead of needing to be good today.

Julia: Because this is quite a journey. I mean, as you say, for all the reasons you were just explaining. I mean, when I was hosting the energy podcast around COP, talking to so many organisations about the journey of transformation, having two, three, five-year scenario timeframes, if not more, and I love the fact that it’s actually going… Actually, we can also see and learn from the best by seeing those improvers, and then to look at those businesses and say, “Let’s get curious about how do they do it, how do they do it, and also what’s difficult,” because… That’s where it feels, if it’s fair to say, that the attitude of regulation is very much in step with the reality of what industry is trying to do and willing to reflect and evolve. It’s fascinating, really fascinating.

Sam: I was going to say, I think it resonates also with people. I mean, I run a business, and I can tell you that we’re never perfect. We fail, we learn, we fail, and that’s how we get better. So I think it gives people the space to say, “I’m an improver. I’m not perfect today, but I can do something.” Whereas the rhetoric before used to be you had to be either in the positive or the negative category, and there’s no definition for everyone, which is most of – in the middle – so now, we have a classification for that, and I think it’s going to create really interesting strategies that can back companies that improve over time, and really interesting measurement approaches so you can track that year-on-year progression.

Julia: And it is fascinating hearing you talk about that, because that’s the alignment of organisations going through change, regulators who appreciate that journey of change, the need for classification and benchmarking clarity to drive that change, at a time when I think leaders are operating businesses almost… You might describe it in the gray, because there are so many variables that are constantly changing. So this needs to be able to anchor business around what we know to be true. Of course, that’s where you very much come in with the data, the classification, the themes that we talked about, with a longer term horizon of what great success looks like, and to play a part in getting that clarity and confidence to deliver the returns, that’s ultimately what everybody’s intending to do.

Let’s talk about Net Purpose again. So imagine, Sam, we’re sitting here, February 2027, what a thought, watching another year tick by, what does great success look like for you in 2026?

Sam: It’s a really exciting year ahead. If I think about success in one year, let alone five or 10, that is that more investors make this complicated topic of sustainability simple, and we are trying to do that through the simple classification of business activities to help any investor or CEO or CFO of a company understand whether their business is sustainable. And that simple metric that could become a standard for measuring sustainability, in my opinion, is the percentage of your business that is sustainable. If you know that 100% of your business is sustainable, you should feel pretty good about yourself and you’d be in a minority today. In addition, if you know that 2% of your business is sustainable, and then you can, in 2027, set your own objective to get to 5% sustainable and 7% sustainable, and then 20% in five years, that will make an enormous transformation en masse for the world, and present sustainable investors and all investors with more opportunities to allocate their capital towards those companies.

It’s a very exciting time for us, because with the acquisition, we’ve brought together large asset allocators, like the SDI founders, APG, PGGM, BCI and AustralianSuper, with a very committed client base from Net Purpose and SDI AOP, and some of the most sophisticated investors in the world running real strategies. And I will say our small part in this is that we’re a very committed, ambitious, high-energy team, building data, tech, customer success, to accelerate the transition by providing investors with facts they can actually use, and our plan is to create the standard for measuring sustainable performance.

Julia: Sam, I know how busy you are, because everything you’ve just described about bringing two organisations together is no mean feat. You’ve got a lot on your plate. I’m incredibly grateful. Let me just tell everybody how to find you. So if you’re keen to learn more about Net Purpose, you can go to their website, netpurpose.com, or follow, of course, them on LinkedIn. And Sam Duncan, founder and CEO of Net Purpose, thank you so much for being with us.

Sam: Thank you, Julia, so much for having me, and thanks to everyone for listening. If you are listening and want to learn more, you can find us at netpurpose.com. We exist to help you understand your sustainability, and we would love to be in touch.

Julia: I hope everybody’s enjoyed this episode. I certainly have. This has been StreetsTalksTo Net Purpose. Thank you for listening. Until next time, goodbye.

This episode of StreetsTalksTo was produced by Podshop on behalf of Streets Consulting Limited. At Streets Consulting, we are a strategic business development, marketing and communications consultancy, focused on helping financial services and technology clients around the world. Every client is focused on growth and transformation, and as FinTech PR specialists, we are there to help them every step of the way. We do this through our three Cs, campaigns, content and coaching, because we never forget the human in the mix. You can find this episode on streetsconsulting.com, and using the hashtag #StreetsTalksTo, and we can also be found on LinkedIn and on YouTube. Thanks for listening.