We talk with Rolando Morillo, Senior Vice President and Portfolio Manager of Thematic Investment Strategies at Rockefeller Capital Managment. We talk about how investors can value, and invest in the Blue Economy, and how this can help drive conservation of the Ocean. We discuss the metrics used to value the health of our oceans and how improving them can drive opportunity for both investment and ocean restoration.

Disclosures:

The information presented herein are for educational purposes only. The views and opinions are the views and opinions of the senior investment professionals of Rockefeller Asset Management as of the date of the podcast and may differ from or conflict with those of other divisions within Rockefeller Capital Management. Certain information provided has been obtained from or are based on sourced believed by Rockefeller Capital Management to be reliable, but Rockefeller Capital Management makes no representation as to their accuracy or completeness. Actual events or results may differ materially from those reflected or contemplated herein. Although the information provide is carefully reviewed, Rockefeller Capital Management cannot be held responsible for any direct or incidental loss resulting from apply any of the information provide.

Forward-looking statements are inherently uncertain, as future events may differ materially from those reflected, and past performance is not a guarantee of future performance.

The information herein does not constitute an offer to sell or a solicitation of an offer to buy interests in any Rockefeller Capital Management investment vehicle or product or service. Although the information provided is carefully reviewed, Rockefeller Capital Management is not responsible for any direct or incidental loss resulting from applying any of the information provided.

Rockefeller Capital Management is the marketing name for Rockefeller Capital Management L.P. and its affiliates. Investment advisory, asset management and fiduciary activities are performed by the following affiliates of Rockefeller Capital Management: Rockefeller & Co. LLC, Rockefeller Trust Company, N.A. and The Rockefeller Trust Company (Delaware), as the case may be. Rockefeller Asset Management is a division of Rockefeller & Co. LLC.

Wai-Shin Chan joins us to discuss the complexities of advancing sustainability and managing climate risk across Asia. As Sustainability Advisor to Metis ESG, Director of Research at Asia Research and Engagement, and former Global Head of ESG Research at HSBC, Wai-Shin brings deep expertise to the conversation.

We explore:

• The challenges of sustainability in a region with diverse cultures, languages, and legal systems

• Where Asian markets are leading on climate action

• Key areas where progress is still needed

Tune in for insights on ESG trends and climate risk in one of the world’s most dynamic regions.

We talked with Helen Neal, Founder and CEO of HN Communications, a sustainability communications company that helps companies effectively navigate a complicated sustainability landscape. We discuss greenwashing, greenhushing and how companies can best tell their sustainability story.

In Episode 21 of Sustainability in Motion, Matt Orsagh and Maria Maisuradze speak with Jo Paisley, President of the GARP Risk Institute, about the evolving landscape of sustainability risk in the financial sector. With deep experience from the Bank of England to HSBC, Jo brings a unique lens on how financial professionals can better prepare for climate and nature-related challenges.

We cover:

• Jo’s journey from economist and regulator to sustainability thought leader
• What GARP and the GARP Risk Institute are doing to advance risk literacy in sustainability
• Key findings from their Nature Risk Management surveys—what’s shifting in how institutions assess and respond to nature-based risks
• Common misconceptions in the industry around sustainability risks and how to bridge the knowledge gap
• The most pressing sustainability risks on the horizon for the financial sector—and how to manage them effectively

At ED4S, we believe that understanding and managing sustainability risks is no longer optional—it’s essential. That’s why we design company- and role-specific sustainability training programs that are efficient, relevant, and outcome-driven. Our goal is to close critical knowledge gaps and empower professionals to take meaningful action—without wasting time on generic content.

In this eye-opening episode, we unpack the quiet crisis in corporate governance: how boardrooms are often shaped by personal networks over real skills, leaving major ESG blind spots at the top. Guest Matt Moscardi, Co-founder of Free Float Analytics, joins us to explore signals that companies send by backtracking on their commitment and why treating investment stewardship as a cost center may be a costly mistake. We dive into the DEI backlash, flip-flopping climate commitments, and how surface-level sustainability reports (complete with curated optics) reveal more about a company’s culture than they realize. Plus, what makes a great sustainability analyst? It's not just the data—it’s the curiosity, context, and ability to challenge the narrative. Perfect for anyone building ESG skills, delivering corporate sustainability training, or decoding the signals behind the statements.

We talk with Victoria Hurth, a Pracademic (practitioner and academic) to help define and describe a well-being economy. We discuss how to get to a wellbeing economy from our current state, and what companies and investors need to do to move in that direction.

We talk about the issue of income inequality and why understanding income inequality is important for investors. We discuss the causes of inequality, the ways that inequality impacts our economy and investments. Listeners can learn ways to measure income inequality, and how to integrate inequality analysis and analysis of other systemic issues into the investment process. 

In this episode, Matt, Maria, and Nawar reflect on their 2024 sustainability predictions and look ahead to what’s coming in 2025. They discuss the ESG backlash, evolving sustainability regulations, and key trends shaping the future. Tune in as they analyze past forecasts and make bold predictions for the year ahead! 🎙️🌍

In this episode of the Sustainability in Motion podcast, hosts Matt Orsagh and Maria Maisuradze engage in an insightful discussion with William Burckart, CEO of the Investment Integration Project (TIIP), which helps investors integrate systems thinking in the investment process. The conversation explores the transformative concept of systems-level investing, a forward-thinking approach that integrates financial, social, environmental, and economic systems to address systemic risks such as climate change, inequality, and resource scarcity.

Key highlights include:

• Introduction to Systems-Level Thinking: Bill explains the shift from traditional investment strategies to a holistic approach aimed at mitigating root causes of systemic risks rather than their symptoms.
• Practical Applications: Examples such as large-scale infrastructure projects and innovative asset allocation strategies that address interconnected societal and environmental challenges.
• Bridging Theory and Practice: How tools, techniques, and collaboration across sectors can help investors influence broader systemic change.
• Building Executive Buy-In: Practical advice for sustainability professionals on initiating and sustaining meaningful organizational change through systemic thinking.

The episode underscores the importance of aligning financial investments with long-term sustainability goals, making it a must-listen for anyone interested in advancing responsible investing and fostering resilience across global systems.

Episode Overview: In this episode, Matt Orsagh and Nawar Alsaadi of ED4S sit down with Jon Lukomnik, a leading figure in sustainable finance and co-author of Moving Beyond Modern Portfolio Theory. Jon explores the limitations of Modern Portfolio Theory (MPT) in addressing long-term, systemic risks like climate change, highlighting the evolution toward "system-level investing."

Key Takeaways:

1. Limitations of MPT:

   • MPT is designed for idiosyncratic risk (individual asset variance) but fails to account for systemic risks, which cannot be diversified away. Lukomnik notes that while MPT focuses on market-relative risk, it overlooks larger economic and environmental factors that affect the entire market.

2. System-Level Investing:

   • Lukomnik advocates for a shift towards system-level investing, where investors engage in strategies to mitigate systemic risks like climate change, inequality, and biodiversity loss. This approach involves collaborative stewardship and policy engagement to reduce overall portfolio risk.

3. Collaboration and Collective Action:

   • Collaborative efforts, such as Climate Action 100+, enhance the impact of investors on global issues. Though the free-rider problem exists, Lukomnik observes that collective initiatives are crucial in addressing systemic challenges.

4. Practical Approaches:

   • Practical tools for system-level investors include investment enhancements (e.g., climate-aligned private equity and infrastructure projects), stewardship, policy advocacy, and setting clear boundaries for ESG targets. Engaging with policymakers and stakeholders strengthens the collective response to systemic risks.

5. The Role of Policy:

   • Effective systemic risk mitigation requires a synergy between investors, policy, and NGOs. Policy is critical in shaping sustainable practices, yet investor engagement and capital flow remain vital in driving actionable change.

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Transcript:

Hello, everyone! Welcome to the Sustainability in Motion podcast, brought to you by ED4S. Our focus is on the fast-moving world of sustainability, helping the business community better understand and navigate the environmental and sustainability challenges we face. I'm Matt Orsagh, Chief Content Officer at ED4S.

And I’m Nawar Alsaadi, Founder and CEO of Kanata Advisors and Senior Advisor to ED4S. Today, we’re excited to bring you a thought-provoking conversation with someone we’ve been fortunate to know for many years: Jon Lukomnik.

Jon has had a distinguished career in the financial world. He’s a former investment advisor for New York City’s pension fund, co-founder of the International Corporate Governance Network (ICGN), and an adjunct professor and Brennenmeyer Fellow at Columbia University. He’s also the co-author of several books on corporate governance and finance, including his latest: Moving Beyond Modern Portfolio Theory, which we’ll dive into today.

Jon, welcome to the podcast!

Jon Lukomnik: Thank you! It’s a pleasure to be here.

Matt Orsagh: Let’s start with your 2021 book, Moving Beyond Modern Portfolio Theory, co-authored with James Hawley. In it, you discuss the limitations of MPT in addressing long-term systemic risks like climate change. Could you elaborate on these limitations?

Jon Lukomnik: Certainly. While MPT is a powerful tool for constructing portfolios with the best risk-adjusted returns based on existing market data, it has critical limitations.

First, it assumes market levels are exogenous, meaning it doesn't account for the factors that influence the overall health of the market, such as systemic risks. Studies show that 75% to 94% of variability in total returns comes from the general price level of the market—something MPT doesn’t address.

Second, MPT focuses on idiosyncratic risks—risks specific to individual securities or sectors—and manages them through diversification. However, it does not address systemic risks, like climate change or inequality, which affect the entire market.

Lastly, MPT's reliance on historical data and static assumptions can disconnect it from the real-world dynamics that drive long-term value and risk. As a result, it falls short in guiding investors on how to address risks and opportunities arising from systemic changes.

Nawar Alsaadi: Building on that, Jon, it seems like MPT encourages investors to focus on what they can control, even though what they can’t control—systemic risks—has a far greater impact on portfolio performance. This leads us to system-level investing. How does it differ from traditional approaches, and why is it essential for tackling risks like climate change or inequality?

Jon: That’s a great question. System-level investing differs fundamentally from traditional approaches in its focus. Traditional investing, as framed by MPT, focuses on relative performance—comparing investments against the market or peers. In contrast, system-level investing looks at the broader picture, aiming to improve the overall health and performance of the market by mitigating systemic risks.

For example, climate change is a systemic risk that cannot be diversified away. It creates systemic vulnerabilities that ripple through the economy and financial markets. System-level investors recognize that addressing these risks in the real world—through stewardship, policy engagement, or collaborative action—can reduce systemic risks and improve portfolio performance over the long term.

System-level investing complements MPT by first addressing the underlying health of the market and then applying MPT’s tools to construct portfolios within a more stable and resilient market environment.

Matt: This is fascinating. Could you share some practical steps for investors looking to incorporate systemic thinking into their portfolios? Are there specific tools or frameworks available?

Jon: Certainly. Here are some key steps and tools:

1. Enhancing Existing Practices:

   • Stewardship: Move beyond company-specific issues to engage on system-wide challenges. For instance, participate in initiatives like Climate Action 100+ to drive collective action.
   • Thematic Investments: Focus on areas like renewable energy, green infrastructure, or climate solutions that align with system-level goals.
   • Policy Engagement: Work with policymakers to support regulations that mitigate systemic risks, such as carbon pricing or sustainability disclosure requirements.

2. Setting Goals and Boundaries:

   • Define clear investment beliefs that incorporate systemic risks. For example, PGGM, a Dutch pension fund, has adopted a “3D” approach: risk, return, and impact.
   • Align compensation structures with long-term, system-wide outcomes rather than short-term