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The Numbers Guys
Gordon Hagart, 34
Head of ESG Risk Management, Future Fund
Science and finance are more alike than one would initially think. "I see many similarities between my studies and what I now do for a living. In the Earth Sciences, one uses incomplete evidence to reconstruct the distant past. In finance, we face similarly imperfect data and large uncertainties when trying to predict the future," says Hagart, who obtained both his undergraduate and master's degrees in geophysics. It is with that scientific eye that Hagart approaches his work at the Future Fund Management Agency—which manages roughly $93 billion of sovereign wealth on behalf of the Australian government—in an effort to better understand how environmental, social, and governance (ESG) issues affect investment risks and returns. "I study the physical impacts of environmental issues and regulatory changes such as 'polluter pays' legislation. On the social side of things it's about understanding how companies' relationships with suppliers, customers, regulators, society at large, and how they manage their human capital affects the bottom line. That can be a source of substantial financial risk and opportunity for long-term investors," he says animatedly. This complex dynamic may sound fascinating and at the same time give you a slight headache, but for Hagart, this is the stuff he thrives on and loses sleep over. "We need to create an environment where agents are motivated to act as if the long term mattered and as if the capital entrusted to them was their own. Why? Simple—better returns for beneficiaries," he concludes.
The Numbers Guys: We're not saying they're nerdy...okay we are. Maybe just a little. But let's be clear: This is a good thing. When, in one sense, fund executives can feel themselves interacting with asset managers and servicers that may not have their best interest at heart (think the Goldman Sachs resignation letter in The New York Times, or numerous transition management teams), it pays to have people on staff who can truly parse techno-speak and figure out what is really being pitched. So here's to the nerds.