Rare look into an asset manager’s thought-process: Apollo’s sustainable investing report

Here’s a note from Nawar Alsaadi:

I read through Apollo’s sustainable investing report today, and I must say I am very impressed by the firms focus on the concept of ESG value-creation. Apollo’s ESG value creation framework consist of three key pillars, each of which is composed of three components:

1. Sustainability (carbon reduction, waste elimination, and water efficiency).
2. DEI (diverse leadership, diverse supplier base, creating equal opportunities)
3. Responsible Stewardship (employee safety and well being, privacy safeguards , and strong governance)

To me the chosen ESG factors are imminently sensible and are clearly tied to opportunity creation through ESG integration. Most importantly, an impactful ESG framework doesn’t have to be overly complicated. At the core, ESG value creation ties to the proper management of a handful of core ESG themes and factors. To help their teams integrate ESG through the investment lifecycle, Apollo created an ESG Playbook to guide investments and the firm’s various management teams, from the report:

“The playbook provides insights on key sources and economic drivers of emissions by sector and a detailed list of carbon reduction levers, from building efficiency to renewable energy options. These new capabilities are already being applied in partnership with company leadership to develop project roadmaps and long-term strategies“

Adding to the above, the company has published a rare breakdown of its financed emissions for around $40B in assets (screenshot below). Although this still a small portion of Apollo’s total assets, this does represent a unique opportunity for various stakeholders to evaluate and track the ESG impacts of a traditionally secretive industry. We need more of this across the board. Financial actors of the size of Apollo are systemically important, and can play a crucial role in hastening the transition to a fully integrated sustainable economy. I strongly recommend those interested in ESG integration to read the report in full. For the most part, I found the report, light on fluff, high on substance, and rich with examples. Well Done.