The ESG Experience Podcast - Season 1, Episode 9

ESG Experience Podcast Our Partners
  • January 12, 2022
The ESG Experience Podcast - Season 1, Episode 9

ESG from a lender's perspective: Measurement & risk assessment ft. Tim Kleiman

In this episode of The ESG Experience, Ryan Nelson is joined by Carlos Solano, ESG Manager at Goby, and special guest Tim Kleiman, Managing Director & Head of ESG at Golub Capital, to discuss ESG from a lender’s perspective. They discussed Golub’s longstanding commitment to ESG and strategies they’ve used for incorporating ESG into their corporate values & culture, examined similarities & differences in the approaches that lenders and owners take toward ESG, reviewed methodologies for measuring ESG outcomes, explored factors that make diversity and inclusion (D&I) programs successful, and more.

Read the transcript of this episode below:

Carlos Solano: Hello, and welcome to the ninth episode of The ESG Experience podcast brought to you by Goby, the ESG platform. I’m Carlos Solano, Manager of ESG for Fund Management here at Goby.

Ryan Nelson: And I am Ryan Nelson, Goby’s CEO, and we’re your hosts for this podcast.

Carlos: Whether you’re an ESG expert or just dipping your toes in the ESG universe to understand how it could help with engaging stakeholders, mitigating risks, and attracting investors, this podcast is for you. Together, we will navigate the alphabet soup of ESG, discuss ideas, review strategies and share industry news and trends.

In this episode, we’ll be discussing how ESG is integrated into measuring risks and opportunities in lending. To help us with this conversation, we’re pleased to be joined by Tim Kleiman, Managing Director, and head of ESG for Golub Capital. Tim joined Golub in 2011 and is a Managing Director and the Head of ESG. He’s responsible for overseeing the implementation of the firm’s ESG practices, communicating them to key stakeholders and driving continuous improvement. He also supports the firm’s Investor Partners Group as a subject matter expert for the firm’s private funds. Prior to joining Golub Capital, Mr. Kleiman was an investment professional at D. E. Shaw and Company, where he focused on fundamental credit and equity strategies. Prior to this position, Mr. Kleiman was a Business Analyst at McKinsey and Company where he advised clients in the financial services and consumer sectors. Mr. Kleiman earned his BA degree summa cum laude in Psychology from Yale University. Tim, thank you so much for joining.

Tim Kleiman: Thank you Carlos and Ryan for having me. I’m thrilled to be here. I don’t know if you know this, but I live in Brooklyn, New York, and podcasts are kind of the highest form of cultural currency in Brooklyn. So you are massively increasing my credibility in my neighborhood, so I am grateful for the opportunity.

Ryan: That’s good to hear. They’re becoming to the point where they’re pretty popular, but for the last couple years, that was the thing I would use for authority in any room. Like people would be having an argument and I’m like, “Well, this is how it is. I heard it on a podcast.” And that was like the end of the conversation. It was on a podcast.

Well, Tim before we get into it, I did want to read a little bit about Golub Capital here too so I’m going to read this quick note here. For over 25 years, Golub Capital has defined and refined direct lending, providing reliable and creative and compelling financing solutions to companies backed by private equity sponsors. Golub Capital pioneered the one-stop or unitranche GOLD Loan and Golub continues to develop new structures to support their lending partners. The expertise and discipline processes enable Golub to respond with speed, consistency, and reliability, inspiring repeat clients again and again. Today, Golub Capital has over 40 billion under management with lending offices in Chicago, New York, San Francisco and London. So welcome again. That’s all correct, right? It all still holds true for Golub Capital, I imagine?

Tim: That sounds right.

Ryan: Great. Well, again, you know we’re very appreciative to have you with your resume and experience. We’re excited about this conversation, and I love New York. Personally, I spent quite a bit of time there and I love it. Love Brooklyn, love Manhattan and so I’m sure we will sprinkle in some stuff about that, but to kind of...

Tim: Absolutely, absolutely.

Ryan: Yeah, great. To get started, so ESG which you know most of our audience base understands at this point to be an acronym for Environmental, Social and Governance. I guess it’s something that the industry understands now, but how did you end up in ESG? What is your journey that made this discipline, I guess, if you want to call it, of ESG something that is essentially your focus?

Tim: Yeah, as Carlos mentioned, I’ve been at Golub Capital for almost 11 years now. And one of the reasons I stuck around so long and one of the reasons why I’m proud to be at Golub Capital is that we’ve been believers in ESG for as long as I’ve been there, and I think even longer than that. You know, again, using my Brooklyn hat, I can say that we were into ESG before it was cool. Partially, this is just a matter of culture and values. You think about the impact of your actions on the broader community because it’s the right thing to do, but it’s also good for business.

I mean I think we have been able to make really smart credit decisions for a long time because we’re, for a lack of a better way to put it, paranoid about everything that can go wrong in a deal, and if you’re not including ESG in that analysis, then you’re not being paranoid enough. So, on a business level, we view ESG as part of kind of prudent underwriting and that’s our bread and butter. You know personally, I never set out to become an investment firm person. You know my parents were hippies, but I’ve always liked the idea that as investors, our choices have ramifications. It’s not just about our P&L, they affect society as a whole and so we’ve got to be intentional about those choices. And I think that a lot of the fundamental impulse behind ESG is about creating that sense of intentionality and that sense of accountability for the choices we make as investors.

So, when the firm decided to bring its commitment to ESG to the next level and build Version 2.0 of ESG at Golub Capital, I jumped at the opportunity to be part of that. You know I would say in 2020, we built our roadmap for what that looks like with a number of the heads of our investment teams and our operational functions. And we’ve all said the roadmap needed to be owned by someone, someone senior who was accountable to the president of the company and I jumped at that opportunity, and I am really grateful for it.

Ryan: Well, that’s great. That’s very interesting. I’m glad to hear you say someone senior at the company. I think I’ve told the story many times, but the journey has always been from 12, 15 years ago, for us, we saw a lot of people, it was the most junior person who was doing this as an aside to their other job. And now, we do see a lot of very senior people, C-level people, actually whole executive teams that have part of their performance-based bonus around ESG. So, we see a lot of that so that’s great and I appreciate your comment about that intentionality of it. That reminds me of Goby’s vision. Our vision is that if you really want to value a company or talk about if the company is a good company or not, the financial statements, the performance is one thing. Oh, great they’re growing this fast or they’re this big or whatever, but that doesn’t tell you the whole story.

Tim: Absolutely.

Ryan: It’s ESG that gives you the rest of the story of do I like this company? Am I glad this company exists? I need the ESG record and the financial record to actually decide if I like this company.

Tim: I completely agree with that premise.

Carlos: One common view, Tim, that sometimes gets kind of thrown around in direct lending or in fixed income or credit asset management, is really why bother with ESG if we don’t own the equity or if we’re not direct owners. What would you say to those comments?

Tim: I think that it’s a really good question and that I think that thinking about one’s role as a lender versus an owner is an important piece of the story. And there are similarities and differences. I think there are more similarities than there are differences, but in broad strokes, ESG is newer in the private credit world and our colleagues in private equity and in public markets have more experience with ESG and thinking and communicating their stories about ESG in a coherent way. And so private credit, we’re kind of catching up a little bit. I think there’s a lot of serious work going on to help the private credit industry learn and coalesce around a series of best practices. But I think that, Carlos, the kind of strawman argument you laid out is not too different from what you might heard from a lender you know call it 5, 10 years ago.

That’s like you know we’re, well, we’re not in any “bad industries” from an ESG perspective. We’re lending at the top of the capital structure so it would take a lot for you, the investor, to experience any losses because of some ESG factors so don’t worry about it. You know you try to make that argument today and you’d be laughed out of the room, right? We all know now that ESG is part of risk analysis and really kind of the things that we considered ESG risks are credit risks fundamentally. You know I think there is sort of a kernel of truth to that view that I was making fun of a little bit ago, which is it does take a lot to make a risk material, but I think that what we’ve seen certainly is that ESG risks can become material really quickly and can lead to material issues really quickly so it’s partly on you as an investor to stay ahead of the curve on that.

Carlos: Great, thank you. If there are any examples that come to mind, we would greatly appreciate it, but it makes sense the trend, as you mentioned, is moving in that direction. That’s what we’ve seen in recent, not even recent, but for a couple of years now. Conferences and industry groups.

Tim: Yeah. And I think it comes down to, Ryan as you were mentioning, you don’t get a complete picture unless ESG is part of it. And in some sense, I think it’s a leading indicator of other things that we care about when analyzing a business either for an investment or as someone we want to entrust our capital to as an investment manager. And you know if you’re an investor looking at us as a lender, and we’re not convincing you that we’re taking ESG seriously, you’ve got to scratch your head and wonder like, “Okay, what else are these guys not taking seriously?” You know candidly, we work with a lot of private equity firms, many of whom are very serious about ESG. And if they weren’t, that would be a big red flag because that is part of the long-term value creation of private equity. It has to be done in a sustainable way. Otherwise, it’s just not going to work. So, I think that there’s an increasing amount of collaboration among owners and lenders and trying to get our arms around ESG, reduce ESG risks and increase sustainability. There’s still going to be differences, right? We don’t own the company. We can’t hire and fire the management team. We don’t have strategy, but I think there’s a lot of room for collaboration and I think that’s likely to continue.

Ryan: So, is anything driven as far as saying there’s some sort of line or a sector that you just don’t even want to do business with? Kind of like saying from an ESG perspective, you’re not good enough or we refuse to participate in this sector. Has it gotten to that point?

Tim: I would answer that with a qualified yes. And the reason I provide a qualified part is not just to appease our legal and compliance department, but also just because as a matter of policy, we don’t exclude specific factors. I’m happy to talk about why we don’t do that as we go, but as a practical matter, there are a bunch of sectors that we don’t touch from a credit perspective. And a lot of them are kind of again the “bad sectors” from an ESG perspective. For example, we don’t want to have anything to do with companies involved in fossil fuel extraction. We have no edge when it comes to forecasting oil prices. I’m not sure anyone does, and we don’t want to have the success or failure of our investment depend on commodity markets that are volatile and beyond our control.

And I think there’s a philosophical question of, “Okay, well does this mean that we are passing on these deals on ESG grounds?” And I think the honest answer is not really. I think that there’s a piece for potentially, if we invest in energy companies, you might think it would be reasonable to invest in a natural gas company because at least that’s better than coal. Or you might think you shouldn’t even touch that because anything with hydrocarbons is pointing in the wrong direction. And you know, for us, we don’t have to resolve that argument. I think that’s a tough argument to resolve because there are, again, kernels of truth on both sides, but we don’t need to apply that sort of subjective, ethical filter to end up in the same place of saying no, we don’t want to expose our capital to this industry.

I think there’s often a degree of ethical judgment that I think is reasonable, right? Like you’re an investor and if you want your capital to match what you believe is right, you’ve got a totally legitimate perspective. I’d say we have a very vibrant and constructive dialogue with some of our investors who think we should have exclusions. I would say we generally prefer to leave room for nuance, but I think we’re very sympathetic to their point of view.

Ryan: Yeah, very interesting. That policy makes sense to me. I mean it sounds like you’re making sound decisions as needed. We kind of hinted, I think, at you know ESG in a way being an indicator of an industry or sector or particularly an owner in a company. It always reminds me of this story that I’ve told, the M&M’s theory. There’s some band, I forget who it was, Van Halen...

Tim: I think it’s Van Halen, yeah.

Ryan: Is it Van Halen? Yeah. If they found out one detail, they would just walk in, they would check the jar, and if there were no brown M&M’s or only brown M&M’s or whatever it was, then they didn’t have to check everything else, right? Because they’re like, “Wow! They did this one thing. It was buried in the contract...” So, it’s an indication that it’s a good thing so that’s interesting.

Carlos: Tim, so there was some news recently that Golub Capital became a signatory of the Institutional Limited Partners Association, ILPA, Diversity in Action Initiative. Can you tell us a little bit more about this partnership?

Tim: Yeah. I’d be happy to. This was an initiative that was personally important to me and to the leaders of the company to be part of. Just by way of context about what the initiative is, when we joined in March of 2021, I think we were part of the second cohort of folks who joined, there were about 130 signatories at that time. As of our last quarterly roundtable, it was over 200 so really a huge amount of traction in a very short period of time, which I think is a credit to our industry that people are taking this seriously. It’s also a sign that our industry has a lot of work to do. And I think it’s important that as members of that industry, we’re doing our part to address some of these issues.

You know formally, the Diversity in Action Initiative is about connecting us with our peers to talk about best practices, discuss common challenges. And I think that they’ve both done a really nice job of curating a forum where investors, asset managers, consultants, other stakeholders can come together and have a kind of safe and candid environment for discussing these issues. I’ve certainly gotten some great ideas from hearing other members of the Alliance speak on these corollary roundtables and hopefully, we’ll be able to give some interesting ideas as well over time.

Ryan: Yeah. I like that kind of creating a good place to have a conversation and a safe place. Some of these conversations can be you know, tough to approach. Even smart people, you want to be politically correct in their sensitivity. And you’re worried that maybe you don’t know exactly what’s appropriate and how to address the conversation, so they don’t happen. So I appreciate you saying, “Hey, this is a safe space.” If you say the wrong thing or you know whatever, we can step through it, so I think that’s very cool.

Tim: Yeah, but this is hard. I mean it really shouldn’t be hard, right? Like in a perfect world it wouldn’t be hard, but when you’re dealing with root causes of inequity that go back decades and centuries, right? You’re not going to have all the answers right away. I’ll be the first to admit, we don’t have all the answers. And I think that, to your point, that kind of gives a very humbling perspective and we all need to approach these questions with a degree of humility.

Ryan: That’s a great way to say it. You know I really try and encourage that one when we can. How are you measuring ESG at Golub Capital? Do you have specific focus areas or how do you put some sort of performance base around it?

Tim: Yeah. I distinguish a little bit between what we do on the investment side and what we do internally within the firm. I think the investment side tends to be what people focus on. And for us, the real kind of metrics and key issues vary by industry and by sub-sector. You know when I described earlier how we have this roadmap for ESG Version 2.0, a big part of that was developing under the templates that are customized by industry and even in some cases, by industry sub-sector that really hone in on what are the ESG risks that are most likely to become financially material given the context of that industry and sector.

So, for example, we do a lot of software deals. We have a very big and a very successful enterprise software lending franchise. And you may not think of that as even having an ESG issue, right? But there’s a whole slew of issues around data protection and consumer privacy, all of the cyber security, right? And those all speak to governance and to some extent, the social side of things. So, there are real ESG risks, and we want to hone in on those when we do a software deal. If we were to lend to a specialty retailer, for instance, those issues are still relevant, but you also would add a whole layer about work or health and safety, for example.

Ryan: Right.

Tim: So there are some differences between sectors and sub-sectors, but I think that the common theme behind a lot of our work is that we are big believers in standardization. I don’t know if it’s officially required reading, but it might as well be required reading, Atul Gawande’s The Checklist Manifesto. We’re very big believers in replicable processes and by designing the templates to be as comprehensive as we can, we like to think of it as improving the consistency with which we are analyzing these issues.

You know, on the firm level, I think we’re wrestling a little bit with this question of what are the right things to measure, manage and incentivize. It’s tricky because numbers never tell the whole story and I think it would be fair to say that a lot of our goals are, for the near term, are really focused more on actions that we’re taking. We can’t necessarily guarantee that the outcome is going to come out one way or the other, but we follow through on the plans we’ve made to expand the diversity of our applicant pool for job positions, for example. That’s something we can do. That’s something in our control. And I’m certainly accountable for part of that as are the members of our HR team. And I think that a lot of the firm level ESG issues and DEI issues fall into that category.

Ryan: Yeah, that’s all very smart. I mean, again, I’m impressed to hear how mature this is. Like you said, the industry may be a little bit behind equities and other public markets and that, but still you’ve got sort of a lot going on. It’s great. You mentioned D&I, we talked briefly about the challenge how to approach these conversations with humility. I really like that. D&I, Diversity and Inclusion, of course is a hot topic, if you will. One of the frequent questions that we hear from our clients is why do D&I programs fail? What are the components of a successful D&I strategy? Do you have anything that you can offer? Some advice on that?

Tim: Yeah. I mean before I jump in, you know of course just to reiterate that point about humility, you know again I don’t have all the answers, our firm doesn’t have all the answers. I’m happy to talk about how we’re thinking about the issues, but I want to acknowledge that I’m not saying this is what we know the secret sauce behind what makes this a successful program. I also acknowledge look, I’m a white guy, I’m able-bodied, I’m male, I’m gay so I get like one diversity point, but there are a lot of aspects of this question that I know I approach from a position of privilege and so, on balance, I would much rather be listening than talking, but you graciously invited me to do some talking so I’m going to set that principle to the side for now. You know I’m glad we started with that question about the industry initiatives because I think it points to the fact that there are multiple layers on which as a business, that you can practice good diversity, inclusion, and equity practices. There is what you do as a firm is one level. There is what you do as an industry is another level and there is kind of what you do as society on the third level. We think it’s important to attack all three of those because they are ultimately linked to one another.

So, on the industry level, we talked a bit about how the ILPA, for one, is really helping us collectively identify best practices. At the firm level, really, we’re focused on recruitment and retention. We have very talented diverse employees. I looked at the data most recently and half of our employee base are women or people of color. I don’t want to pat ourselves on the backs, but it’s a prominent indicator, in my mind, and I think there’s room where we can do more. Part of that comes down to making sure that we’re seeking talent from a broad and representative set of channels.

Just to give one example because I find it always helpful to hear concrete tactics as we’re designing these programs. We recently partnered with an organization called Jopwell, J-O-P-W-E-L-L, for those who want to follow up with them. They are terrific. They have been fabulous partners. They are a career advancement platform designed primarily for Black, Latinx, and Native American students and young professionals. And they’ve been great at surfacing candidates for us, and I am very optimistic that this partnership is going to continue to flourish. And we’re looking to replicate that with other organizations.

You know, on the societal level, a lot has been said about corporate social responsibility over the years. And we think of what we do as impact philanthropy. That’s the tag that we put around it because we want to focus on philanthropic activities that have the potential to really move the needle on big societal issues. The coolest thing we’re doing on that front is building a network at Golub Capital Social Impact Labs at a number of leading business schools. The core idea there is bringing together leading academics and the next generation of business leaders to enhance the effectiveness of organizations that are solving social problems. You know, in particular, it’s about enhancing the effectiveness of organizations led by and serving historically underserved and marginalized communities. We’ve committed over $10 million to launch labs at Stanford, Kellogg and we have ambitious plans to do more because we think that these types of partnerships between academia, business, the non-profit sector are really the key to making change on the societal level and we’re happy to do whatever we can to catalyze that.

Carlos: Those are great examples. Thank you so much for sharing that. And I really like how proactive that approach is to not only joining another program that is addressing these issues, but actually creating and helping lead in some of these conversations and programs so thank you for that. And maybe just coming back and tying it back again to the firm level, you came up with an ESG roadmap last year. Just curious to know your takeaways for implementing that in 2021 and what are you looking forward to in 2022?

Tim: Yeah. It’s a great question. It’s one that’s very timely as we’re doing our planning, and I want to go back, Ryan, you used the term “journey” at the beginning of the conversation, and you know as well as I do that ESG people love talking about their journeys. So. I would position what we’re doing as part of that journey of continuous improvement. I think the big positive learning for me for 2021 is just how much our organization has embraced the new policies and procedures that we have put into place. You know our investment teams have had the busiest year in history for us. It has been an absolutely you know grueling year for a lot of our lending professionals. And you know you could imagine a bit of resentment about, “Oh, you know I have to fill out like these ESG templates. What’s this all about? I’m too busy.” And there has been none of that. There has been deep acceptance from the investment teams that this is part of what our responsibilities are and part of what helps us make good investment decisions. And at the end of the day, we live or die based on how good our credit results are. I don’t think we had to work that hard to persuade the investment teams that this is part of good credit analysis, and the responsibility falls on the deal teams themselves and not just the ESG person coming in from the outside.

That level of eager embracing of the new initiatives is really, really encouraging. When I think about where we have opportunities to improve, it’s just we still don’t know what we’ve learned yet from this year. And I think we’re going to, as we look back over the next couple of months, have better ideas about okay, this is what really works; this is something that we did that wasn’t that effective; and these are good ideas that we have heard from some of our peers that we’re not doing. I don’t know exactly what those are, but I think the theme of just continuous improvement and raising the bar is really where we’re headed for 2022.

Carlos: Great. I do have one quick follow-up to that and what you measure in implementing this roadmap. Some of the recent talk is the difference between inputs, such as writing a policy, versus action and some of these engagements, just activity, but then ultimately what we want to track is outcomes, right? And actually moving, for example, diversity which it sounds like from the examples you gave, you’re doing a great job at. And just curious to know how those conversations go. If you have any recommendations or lessons learned for driving outputs, not just inputs and activity, if that makes sense.

Tim: I think it makes perfect sense. I mean I think the premise is really right on which is you know measure it moves. I think often the challenge in ESG world and DEI world is, “Okay. Well, like what’s the right thing to measure?” And by right thing to measure, I mean what do you measure that gives you the outcome that you want to have and helps you see that outcome. So, I think it’s a really deep question that you asked. Again, I wouldn’t say that I have all the answers.

I think that on the ESG side and on the investment side, I’ll say it’s trickier to have those feedback loops because you know, again, we’re lenders. And so, our best-case scenario is nothing goes wrong, right? Like we get paid back. And so, if we’re seeing a lot of successful payoffs and good credit outcomes, we can’t rest on our laurels and say well we’ve done everything we could on the ESG front. We don’t know if there were issues that maybe we missed that we should’ve caught but ended up working out. So if we’re being like kind of intellectually honest with ourselves, it’s really hard to say that one specific type of thing that we’re looking at did or didn’t cause a credit issue that ultimately is measurable. And that’s why I think that we really try to customize our approach by industry and subsector just to maximize the likelihood that we’re hitting all of the key ESG issues in that sector.

On the firm level, I think it took a willingness to go outside of our comfort zone a bit. I think it can often feel fraught to try to reduce people in your rich and vibrant team to a set of categories and put that in boxes and count the people in the boxes. There’s something about that that doesn’t really feel consistent with the spirit of DEI, but at the same time, it’s the only way to know what your starting point is and to know kind of how that’s changing over time. And we’ve had you know I’d say fundamentally constructive, but tough conversations internally about how should we track, what should we track, what should we report and how do we report it in a way that’s both clear-eyed about what we know we have opportunities to improve and also that celebrates the things that we think we’ve been doing well. It’s hard to find the right set of metrics for any of these efforts, but I think the process of trying to wrestle with that question had a benefit for us in terms of just clarifying what should we do strategically. Even if we can’t measure it perfectly, like what can we do strategically to drive towards the outcomes we would like to see.

Ryan: Yeah, that’s great. It is difficult. I’ll tell you one thing we do that is impactful at Goby, that’s what we’re trying to do is gather appropriate data, present some context to private equity about what that means. And if we’re talking at the firm level and internally, the power we show people okay, here is the, in your particular region, here is the average percent for investment firms of women on boards in investment companies or women in management. And the number itself is concerning, okay? So let’s say in some cases, it’s like 20% of the companies across these investment firms. In their portfolio companies, they have, 20% have women in management so like wow that’s not good. Then you look at your firm to see what you have invested in and you’re like, “We’re at 14%.” So right then you’re like, “Hey man, at least let’s do the average,” you know? Is that where our bar is? Maybe, maybe not, but you’re definitely inspired to do something if you look at it that way so it’s not always the answer or whatever but putting that data in front of you often inspired people to do something.

Tim: Yeah. And Ryan, one of the things I’ve liked about what I understand about Goby’s approach is very much this idea of context. I think one of my pet peeve phrases and my colleagues will tell you I have a lot of them, but one of them is, “The data speaks for itself.” Like no, data never speaks for itself. Data takes context. Like if I tell you the number of this thing is like 5 million, how do you know whether that’s meaningful or not without context. And so, I think that the lack of comparability across firms and how they think about and measure these issues, I’m sympathetic to investors finding them frustrating because it becomes hard to say, “Okay, where does this firm stack up against its peers?” And at the same time, it makes it harder for us to say, “Okay. Well, are we really behind the curve? Are we ahead of the curve? Are we a little bit of both?” So, I commend you for being part of the solution on putting context around these kinds of hard to define concepts.

Ryan: Yeah, and I appreciate that. And we commend out customers who publish data or at least look at it internally. Sometimes, publish it externally or at least share it with their limited partners that data that’s not necessarily or information’s that not necessarily great. Of course, they try and bring the context to position themselves better, but it’s still early in the people that are willing to even look at it.

Then they look at it, “Yeah, it’s not great, but now we’ve done it. Other firms haven’t even looked at it.” So you know that’s interesting that people are doing that. Well, you know I appreciate you sharing all this today. I know you said you enjoy listening, so I do thank you for setting that aside and speaking as well. I really appreciate what you’re doing at your firm. And the reason that we’re in the private equity industry, of course, is because this capital is very influential.

And you know the capital is and you know you can say it really drives the world. So we are able to have a lot of impact because we’re helping firms that have a lot of impact, drive a lot of business, drive the next companies that are going to get to their next level. So...

Tim: Absolutely.

Ryan: It’s really great that you’re looking at it from the firm perspective and how you lend so that’s great. Oh, I do want to mention you said context. This is what I almost forgot. Context and nuance. Sort of like...

Tim: Yeah, it matters.

Ryan: You know so nuance generally is like, “Well, let’s not focus on that,” and I’m like, “No, no. Let’s address the nuances. That’s the fun part.” You’ve got to bring context. Well, Tim, I want to bring a little bit of, is it levity? Brevity? Brevity means free.

Ryan: Levity to the conversation here at the end. Yeah, we have a fan favorite, short little game here that we play. It’s very easy. All you have to do is say the word, “Beans” or “Beer”, so there’s a 50% chance that you’re right. In the world of craft...

Tim: I heard a couple of your earlier episodes. I was very nervous about...

Ryan: Yeah. It’s charming. So, our interest is you know in this world of artisan and craft which, again, I very much enjoy, but there’s so much great coffee out there now and so much great beer. And I really tried to find some ESG connection, and I struggled. Well, I’ll get to that in a minute, but all you have to say is beans or beer. I’m going to tell you a place, okay?

Tim: Okay.

Ryan: Ready?

Tim: Ready.

Ryan: East Rock Brewing Company.

Tim: East Rock. Well, I feel like you’re kind of leading me down the path of questioning whether like it’s brewing, I’m really trying to get into your head of like is brewing a misdirection or is it actually just literally it says brewing in the name and even though you can’t brew coffee like we always think about brewing beer. East Rock sounds to me like a craft beer. So, I would tentatively and reluctantly put my chips on that.

Ryan: So, you’re going to say beer even though you were worried that I was trying to lead you down a path?

Tim: Yeah. It’s a leap of faith, but I think...

Ryan: Okay.

Tim: We’re going to go with it.

Ryan: Okay. Well done, you are correct.

Tim: All right, excellent.

Ryan: Does East Rock mean anything to you? I don’t know.

Tim: Not really, but it sounds very sturdy.

Ryan: Okay.

Tim: Sounds like a nice, hearty type of word so I am sure the beer is excellent.

Ryan: Well, I believe it’s in New Haven.

Tim: Oh.

Ryan: I believe you spent some time there, right?

Tim: Indeed.

Ryan: Indeed, you did at Yale.

Tim: I’m due for a trip back.

Ryan: Good, good. Well, you should check out East Rock. As far as I know, they’re a family-run business...

Tim: Yeah.

Ryan: So, if you’re a beer drinker at a family-run business, but yeah. I thought maybe East Rock might mean something to you out there in New Haven. Good, well...

Tim: Thank you so much for having me, Ryan. I really, really appreciate the opportunity to talk to you and Carlos and really appreciate the work you’re doing.

Carlos: Thank you, Tim. I really appreciate you being here and taking the time to talk to us. For everyone listening, thank you for joining us on The ESG Experience podcast. There is a new episode every month. So, if you enjoyed your time with us today, make sure to subscribe on your favorite podcast directory. And our next guest, the first guest for 2022, will be Laura Coy from William Blair. She works closely with clients, key stakeholders, and colleagues around the globe to deliver best in class programs and approaches for charitable giving and ESG strategies. Thanks to all of our loyal subscribers for continuing to listen and support our podcast. If you want to continue the conversation, please follow us on your favorite social media channels with the #esgexperience.

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