Transcript
Live from The Morning Star, sustainalytics backgammon closet. It's a super Dopey ESG game show. Wait. It was. Corporate theater Tuesday. You just did your corporate theater voice know. I'm just working. A few things out. Join us. Always by the quirky Matt mascardi. That's the new nickname for you. The quirky I'm not quirky. I'm CEO. Michael Gente. Do you know this, did you know that Michael jansey is the CEO? Saying analytics, you know that I did? I've met Michael jansi Well, I'm him today. He would not remember me. And he would tell I was what he liked being honored by us. Today I'm actually I don't know the man and I'm sure he's a fine gentleman. But I just want to be him today. I want to be the CEO of sustainable. I I'm not sure you do okay, but okay. Alright bonus. All right, I don't think he gets a bonus, does he? And today is Diet, Pepsi stain bag of materiality scented nuggets called December 1st today. Matt, we rummaged through our ESG game, closet, dusting off some Some games that I've kind of in the back. All right. Yeah. Before we get to this can I can I say something? Can I shamelessly plug us? Please, you don't do it enough. Well, I like this. I gotta start writing these down because you I know you want me to start some kind of boring blog that no one was, no one really? I do I want you to do something. Cos CEO, Brett Taylor, step down from Salesforce yesterday. CEO. Oh here's here's the headline. Salesforce employees say they're blind side by Brett Taylor's departure as Marc benioff. Marking off swears, he'll get him back. I mean, he's not gonna get back, but okay. 18 months ago, this happened again coca Keith block step down. You know why? You know, it's not blinded by this. Right here. Our data me that quirky. Let me tell you why. This is our own data. On the board of Salesforce Mark Benny off. Up. When when Keith block stepped down as co-ceo Marc benioff had 65% of the total influence on the board and the co-ceo Keith black only had 5% of the influence. Why would you stick around for that? Why do you go CEO anywhere? We have. Absolutely no, and then, okay, let me follow up before you say that Brad Taylor takes over and he only has five point, eight percent of influence. Why is anyone surprised that this man would want to have his own right company? What are we doing here? We, that's not a surprise. Know, is this not a surprise? Worse than not a surprise is who actually believed that these people are co-ceos of anything. Does anybody call up, Brett, Taylor and ask for something or do they is it? They're just waiting for marked to say what he thinks? I mean is this not a recipe to lose the second in command? You get you're killing your succession planning as it goes. Like, it's you remember when Deutsche Bank head coach CEOs and they have, or was it Credit? Suisse I'll just say, yes, I don't really remember one of the big European investment Banks said, cos CEOs, how did that work out? Have you ever thought about Cocina? Do we have any examples of where Coast CEOs of worked out? Can you think of one? If you want to know more about this, subscribe to our new product board saber metrics because we will tell you where the co-ceo structure is a nightmare and what and we will alert you where you should not be surprised. Yeah. All right, the audience agrees to do. They're going crazy for that idea. I just like that our data so smart, you know? Yeah, it is. All right, let's get to the shows. Okay, it's not dumb. It down with some. Oh, sorry. With some stupid. Game shows. I hate the game show music. I hate it. All right, you were talking about this. So I actually created this first game just for you. I quickly created rate the crazy founder CEO shit games. This is about Sam, bankman fried. I know it's not how you say his name, but come on. He's freed. We got a call. Sam bacon, fries, did you watch the interview? He looked a little freeze. He looked left, frazzled so forever. He's on our, he's on a Roadshow, he first, he talked to axios, then he had, he talked to some crypto video blogger. Now, he actually went to the New York Times dealbook Summit. And yeah, why? He's trying to explain himself and the so far, he's come up with some really great explanations for what happened. Well, I know the lawyers told him not to do this and he's like he said, lawyers don't know anything. He'll see, he also said he owes it to his stakeholders to explain what happened and then his explanation of what happened was. I don't know what happened. Okay, let's get to it quickly. Yeah, let's let's do it. Come on, let's play the game. Matt, just give me a one to 10 rating. How batshit crazy is this founder? Here's the question for, okay. Was FTX a Ponzi scheme, he replied. I had a duty clearly. I didn't do a good job of that. Clearly. I made a lot of mistakes things. I would give anything to do over again. I didn't ever try to commit fraud in anyone, I saw as a thriving growing business and I was shocked by what happened this month. So crazy. What do you think? Oh, we go. I mean, doesn't the level like this isn't this just Bernie made off level narcissism like no one. Like they don't try to commit fraud like nobody's not true, is it? But no but it's a you don't set up an organization that makes billions of dollars because you're strictly trying to commit fraud. Most the time when you're trying to commit fraud, it's like that Deli in New Jersey, right? Like you literally set up a shell company that's worth kind of nothing and you're it's a pump and dump scheme and that's like straight up trying to commit fraud. This was like he was so Earnest about doing the thing and so bad. At the thing, he wasn't trying to commit a fraud. He just did the frog, right. Okay, let's talk about this, then there were reports that FTX. That's the company he screwed up. Lent out billions of dollars and customer funds to his family, office hedge fund Alameda research. This is starting to smell like fraud. And how about this question? They asked him did Ellen media raid, the FTX piggy bank, he said I didn't know England funds. I wasn't trying to Coleman go funds. I wasn't running Alameda, I don't know what was going on. that's, this is what I mean. His explanation tour involves him mostly saying, I had no idea what I was doing and I kept my eyes closed. All I wanted to do was kick a hacky sack and pretend play with pretend money. It literally sounds. I think this will keep him out of jail. So you think the ignorance will keep him out of jail? No, I don't think it will keep them out of jail because like, not knowingly co-mingling funds and not knowingly spending. All your customers money is still not an excuse. Otherwise, everyone could go up on the stand and be like, well, I didn't know, I was spending their money, I didn't mean to so that I'm really sad about it and get off, was there? A secret tunnel to move funds from FTX to the family hedge fund? He said, I don't, I don't even know how to code. I couldn't build some back door into the system. I could barely use the system. This is a MIT graduate with two. His parents are staring for professors. You really believe he didn't know how. To use the system, I believe he didn't know. I believe that. Whoever invests with a guy who starts a trading platform and doesn't know how to code the trading platform and comes up with things that are only available in code. Maybe she should be asking questions about themselves. There's a lot here, both none of this strikes me as batshit crazy know, we're really okay? No, because someone enables me as petulant Baby Bros, and somebody gave him the money. It but it's all bros. A bunch of bro. Like private Equity Bros. There's a few sisters. Not that many, who give another bro, some money. Oh, another smart give us money, bro. The givers of money is a Bros. The sandbag man freed is the only, he's the head bro here, despite the fact that his girlfriend was token running Alameda and all the sudden, he didn't know, I don't know who's having Alameda, it's just my girlfriend running it. I didn't ask her questions. What? Let's now talk about the two that are the ESG adjacent here. The two, the first one. The first one is the ESG win. They asked him was FTX really his personal fight to him and he answered, there's certainly an extent to which I wish there had been someone who wasn't me, who was in charge of managing conflicts of interest. That's a great quote. That's a ESG win for the for the ages, right? I mean someone just sent out to Elon Musk be like, this is really what? It's really pretty. This is what we're doing here, the devil. We're literally just saying this is all we're looking for. Yeah. And then the last one is a another ESG question for Matt. This is like Where he was kind of playing around a lack of disclosure here, it turns out that he also gave money to Republicans because the big story was that he gave a lot of money to Democrats. They asked him, did you also give money to Republicans? He said all my Republican donations were dark, but the reason was not for regulatory reasons. It was that reporters freaked the fuck out when you donate to Republicans. And I didn't want to deal with that. So this. So this seems to be like a wink to the ESG world, right? He he didn't want. He didn't want liberals to freak out. I, what do you think about this one? Actually, thats very libertarian of them. That's very Elon musky, isn't it? Isn't it? Isn't that very like like look knee-jerk political correctness, like whatever liberal things that the liberal mainstream media freaks out. When you give money, true money who's an anti-semite, but you Rudders, but you're giving it to them because you just want like lower regulatory burdens. So there's just a lot of stuff happening. That is just baby stuff. There's just a lot of day I don't this this whole story. If I know it's fascinating and Michael Lewis's book is gonna be something I read. I'll be the only good thing out of Italy. That well anything Michael Lewis writes is Good. Michael If you're listening, come on the show. Let's let's have it. Let's have a talk. We talk about, we already talked about with author, Seth Wickersham about the Bill Belichick Dynasty. Why can't we talk about the great Sam bacon? Fried Dynasty. Yeah, come on the show and talk about what I do know that I can boil this whole story down to do it because we're about to move on. Do it what? Diaper baby diaper baby? All right. Let's get to the next stupid game. I hate your transitions. Good. I'm calling this one. Oh, this is for the holidays. Oh exciting. Time of year. Hanukkah and Christmas are overlapping this year. So it's a very special. It's very special holiday season. Here we go. I took this from. 25 eco-friendly gift ideas for the sustainability minded us and I want you to rate their ESG gifts. Like should I give it what rating scale Triple-A want to see? 100 favorite earrings, provider and emulate their ratings model? All right, I, well, I don't know what s gauge is rating model is because there are sponsor. But we use them for governance. We know their governance say that, so let's do sustainalytics. Okay? In which, yes, 100 is not good. It's the worst. Okay, that's what I'm seeing, CEO, Michael Chancey. I should know what you're saying. Yeah. So I might change. I might change. I don't like that. He's like, I think it's the opposite of what you'd expect 100 the best in the worst. Okay. So there's 25 gift. ESG gift ideas, I took five. I want you to discuss just five first. There's a super warm parka, right? I made with recycled materials but the recycled materials are recycled down feathers so I ask you Matt, is it? Okay, so someone is messed with the duck in the first place but then someone else comes along around, right? And it's like the argument about, well I can wear the fur coat because it's I got it at a thrift store and someone else killed it. I didn't buy it new the first like what do you think about this? This is this this is really hard, this is really good. We think. Um well so if your traditional like like old school ESG you would you would want to know like the name of the duck. And how many massages they got before they were killed? Yes. Um this is recycled that means you have a supply chain issue. I'm gonna give this a 60 on a 0 to 1. 100 scale 60 is not so great, it's not great, a little worst, a little below media, okay? All right moving and if listeners if you're confused by the scale, Welcome to our life. This is what This is what he was trying to do here. We're secretly trying to do. Here is have a little fun. Yes, I'm gonna call my answer. Correct. A 60. The next one is actually three products a best selling skin Tint. That's something painful. What about racist? Bright colored, reusable sandwich bags, and a sustainable sheet set. Well, whoa, is this a package? No. Okay. What these three products do. And here's what I'm gonna ask you to write their ESG news, is they all do the same thing. They all donate 1% of its profits to the planet. One percent. This seems low to me 1% of its profits so it is that okay ESG move this is a kind of like a carbon offset or something. I'm gonna I'm gonna go with. This is a 99. Oh you don't 100 scale of terrible. Yeah, this is not a she I mean look, we just, we just went through the fact that REI it was it. REI? Yes. No, don't themselves entirely right? Oh Patagonia. Patagonia, donated themselves entirely to the planet. So you're calling this a green wash. I'm gonna say that 1% is of skin tint. Going to play. This is like diabetes, Giver Pepsi. Showing off about their new green pledges. This is like Pepsi if you buy more Pepsi they'll donate 1% of the profits to diabetes Foundation. I'd be these nurses run by Pepsi that's what it feels like next. A flannel shirt made from a host of sustainable materials. Here's the kicker. How ESG is this matte biodegradable buttons made from tree nuts? Wow, I mean I don't understand this one, first of all, they're gonna like either, this someone who's gonna be wearing this shirt and get hungry and eat the buttons, which is more. They're gonna know what they're gonna rot away. I don't get this one tree nut. I mean this, when they say biodegradable, when do they mean by? Like if it's a button long enough to last, you like I wear my I'm still wearing a flannel shirt. I bought 10 years ago. Like what did I just throw your shirt? The landfill the buttons are biodegrade but not the shirt. The shirts gonna stick around the shirt will be there in perpetuity, you just need new. Nut buttons. So where do you write this one? I'm gonna give this one a. Wow, this is a big. I think it's worse than recycled down feathers, but not as bad as 1% profit. So I'm gonna go with this. 70 percentage. Look pretty high. All right, let's go to the s. E, s g. Let's go to the S category. This is a cashmere sweater the company. The company pays local nomadic herders. 50% more than traditional Traders. That's the best part of this ESG. Hey, this is the selling point. This is from an actual article. You're shaking your head but this is my gifts. 50% more. What is the local? What is the local nomadic herder? Get do we have an accounting of that? Well, I knew you're gonna ask that and conveniently the article leaves out that data. So I don't know what a is. I don't know what B is. I don't know what c is. Oh good. So 50% on the dollar that they might pay them to begin with but this is they're selling point. Do you think that the 50% more, they pay the nomadic herders who are nomads by definition and have no? Where else can be? How are they gonna? Yeah. Whereas their Bank. Exactly. Yeah. Well, how do we know they're like with this, you could never prove that the nomads got 50 because you go to find them. They're not there, they keep walking the other direction. That's what I would do. Because someone came to you and was like, I'll give you an extra nickel. What do we think that the 50% more than they pay is more or less than the one percent from the skin, tint profits? Like that's this is a this is an 92 is. All right, let's and this stupid game. Stupid portion of the game with this one, this is the best game you've ever made. This is for just in time for Christmas and Hanukkah a virtual tree planting. Oh yeah. And wait, wait. Yeah. Is the actual planting virtual in the metaverse? Yes, I believe so. One tree planted plants. A tree per dollar and the gift part a card with your gift is name on. It is 100% virtual. I guess the I guess I don't know. I don't know. Here's the what I like the virtual certificate is like an nft that says up. A real tree was planted right but that's problematic know. Okay, here's why I picked this one, the tagline is planting a tree in. Someone's honor is probably the most sustainable gift, you can think of do you agreement is on the ESG scale. I look if yeah everybody this holiday season no matter what your holiday persuasion is even if you have no holidays. If everybody planted one tree You would have. Conservatively eight billion, more trees in the world. And in 20 or 30 years. That's a lot of carbon. You remove everything here, I like look, I'm one of the suckers who's into that trillion tree planting thing. Sure I do. I do like that concept Far Cry from 8 billion. Why you want to know why? Because I fucking like trees. Yeah, like looking outside, a beautiful green leaves in the summer. It's beautiful. It's wonderful. Well then you're not like it with, you know, a line with former president, Ronald Reagan or current Senate candidate Herschel Walker because they both Said that, you know, how many more trees do? We really need to know that, right? They were ahead of, they're ahead of their time. I'm gonna say, spare the yeah, if the tree is virtual, this is real. If the tree is real, I'm gonna give this a five. It's it's it's the best one as the CEO of Morningstar stainless. I agree with you. All right, I'm gonna spare you the last game because I see that you snuck a game from the ESG games closet. And let's why don't you take over and let's get out of here. Let's I don't really have a game. I just have an update so edit that out of the show then. Yeah well edit this part out. Well what I have is it a short update about Larry Fink so oh God, thank God. This to the end Larry Fink gave the interview before Sam bankman, freed on the deal book conference, whatever, that was. And the interview was titled Larry Fink on ESG investing. What? I have not seen in the news, anywhere is anything. Larry thinks said about ESG investing, we have been talking here about where is everybody fighting back against this ridiculous anti-woke thing. And Larry, fake turns out is saying things. You know what's happening? Is that? No one cares, what Larry Fink has to say about it. That's why I realizing, I also noticed that at the New York Times dealbook Summit, he was he his position in the speaking lineup was right before Right before? Sam Bachman fried. Yeah. SPS. So clearly No New York Times agrees that nobody cares because that's because, you know, you're going to the session to get your IPA and your pressing, right? You're just before the thing that you're going to the bathroom and you're grabbing it at least two ipas. So really, it's not a game. I do want to get a reaction or two of the things he said. first of all, Every sentence started with, let me be clear. Oh, like how do you feel about someone who starts every sentence? Let me be clear, my guess is that he's probably someone who's used to a certain level of manipulation because I feel like he's a bit of a Jedi mind trick because I don't know it is and as trunk would white and would say, you know, you don't need it, you don't, it's just extra words, you don't need. Yeah. You know what? You're gonna be clear, if you're running. If you're running BlackRock, I would assume that Clarity is part of your skill set. He does, he was, I think it's like supposed to foster a, I'm a straight shooter thing. I'm not like I understood one third of the words he said after he said, let me be clear. So that was often the case he did say, quote, I believe. Stakeholder capitalism is not political, it's not woke, it's just capitalism. So you could take that either way. Right? I could, I could, I I, this is where he's good is a I can agree with that and disagree with that, the same time. Maybe that's maybe that's the Mastery of Larry Fink. So, when you say, let me be clear, I believe. Stakeholder capitalism is not political. It's not woke, it's just capitalism. I mean, are we being clear? And a lot of people, of course would say that capitalism is is in itself political. So no, I don't know, I don't know. I don't know what we're talking about. He did. He said you will admit he's good at though. He's good, very good and clear but saying he's gonna be clear. I do have. Here's my pop quiz question for you. This is the only Pop Quiz question. He said, quote, the world is losing hope. And here are your options for what, what he was talking about? Was he talking about a, the global birth rate be ESG investing. See inflation at 2% or D long-term investor paradigms. Where? Oh my God. This, this is why I'm at I'm getting my beer before SPF it's one of those it's one of those. Yeah the world that's why the world is losing hope. I'm gonna pick the one that is the most Gobbledy Gokey and that's long-term, investor Paradigm. Know it's inflation at 2%. It turns out inflation at 2% is, the reason the world is losing. What can't we increase wages? Why can't they just know you? Just imagine like a kid working in a in a like Fast fashion factory in Bangladesh being like I'm losing hope because inflation globally is at 2. Percentage is losing hope he didn't say New Jersey, so yeah, it's ridiculous to me that like inflation is why people are losing hope they're losing hope because most of our Lives sucks and well that guy has millions upon billions of dollars and it came at the cost of something. Can I tell you? That? That is the genius of him because just citing inflation as the world. The reason the world is losing. Hope is the most political answer there. Yeah, it's inflation, right? Going to 2%. I I have to Phrase that properly because but but again, we're getting a 2%. That's the most politically heated. Inflation is a politically heated topic. So he again he he counter he's he's counter-intuitively not being clear about his original message is definitely. If I started the sentence, the world is losing. Let me be clear. The world is losing. Hope if inflation goes to 2%. Does that make it easier for you know? Okay, I have two more for you. One is interesting. Only because he's kind of talking in our language. He said. And this is about the anti woke backlash, the specifically Republicans. But he's also stuck in about Democrats. He says, quote, I'm not happy with the narrative. I'm spending a lot more time in Washington trying to correct the narrative and let's be clear it's not based on fact so he let's be clear in the middle of that one. Well I like this. Right, I can't disagree with this. It's not based on fact. But what I like about it is that he's, he's pointing out. This is just a narrative without saying, it's political Theory. He's saying it's political theater, it's just not political, because he said that he called capitalism is not political. Yeah, it's not woke. And finally, This is just a shot across the bow. I have to ask. You does anyone like these organizations quote? If the people are taking back their vote, he's talking about proxy voting. Whether it's an individual, a corporation or a pension fund, they take back their vote and they don't do the necessary research to analyze and they rely on the proxy voting organizations, we're in trouble. Does everyone hate glass Lewis and ISS that much? Well, am I speaking is Damien at freeflow or Michael jensy? CEO? Morningstar do they disagree now. I want to know. I think this is a garbage statement. Why? Because why do we have to rely on? Do your own due diligence? Do your own research. I don't understand this. You don't have to go to ISS. I don't get this. Boogie man argument well, I think he's saying, help me out and let me let me be clear here and they recommendations by the way, i s. S Let me be, let me be clear on very clear methodologies because I know forcing you to do anything. I know a little bit about how BlackRock stewardship teams were. I don't know it well, but I know a little bit and I know That they cover 9,000 plus companies that they have to vote on. So they put themselves in this position in the first place because and there's like over 30 themselves, right? There's like they cannot cover the companies so impossible. I know what they do is they buy data from like five different people, including proxy voting organizations and they take that into account and they really only isolate a handful of companies that they actually have any knowledge of. So what's the problem they do? So, what's the problem? What he's saying is if you only relied on the proxy voting organizations, we're in trouble trouble, being some not some amorphous trouble. Like we don't know what the trouble is but I'm sure what is the trouble. I mean again like I says is it's not it's not opaque. I mean they they lay out their rationale dumb but you may not like it. They give they give us several update per year, the things that they're working on the things that they're changing. I mean this is not a Right. This is not like a Secret Sauce Factory well I think what he's saying yeah what is he say? That it should be a secret sauce factory that that should be. Yeah. I think there needs to be more secrets. I really don't know what he's saying. It sounds to me. He's just passing the buck. He's it's like stop making me the lightning rod. Let's make ISS the lightning rod is therefore the funny one. The funny thing about this quote is on neither end of this quote, did he say? Let me be clear. So maybe this one. He was not, he was purposefully, not being clear, maybe, that's interesting. So that's my Larry Fink on ESG investing update. It was not a lot going on in there that I thought was that interesting, although Parsing. What what? Let me be clear means maybe the best thing I ever did. My playing us out. Oh, that's Damien. Raul is slash Michael jancey. I am. Matt miscarry. We are free. Float. This was like a woke Thursday. Be this. You know what? No it was a game show that got got Larry Fink at the end. It was not much of a game show, let's just be clear on, let me be clear that we played the Sam, bankman, frog, game, we played the ESG gift game. Come on, that's a great game. Let me be clear. That was not much of a game show, but if you are looking for ESG gift ideas by Port, saber metrics for someone you love. Yeah, we're just sponsor this show rapid in a box handed to him and then you can tell them how every director in their portfolio performed individually over their careers. Can't get that somewhere else. That's a very unique gift. In fact, if you wanted to buy it as a present for someone this holiday season, call us up, I would be willing to make you a deal. What? I will give you the data for almost nothing to the first person who calls us for some board saber, metrics like this or holiday presents. And I just learned as Michael Jensen that I went to Matthew. I got my Master's in Nova Scotia, that's great. I didn't realize I did that. That's what we got. Come back tomorrow for wrap of the week until then goodbye.