This Industry Veteran Thinks ESG Funds Are Falling Short. So He’s Turning to AI and Carbon Permits to Fix Them.

John Pileggi, whose 35-year asset management career includes running a bank’s mutual fund and distribution business, believed ESG investments were hobbled by two problems he thought he could fix: the challenges that active managers face when trying to deliver consistent alpha, and the need to assure investors that the资金实际上正在做他们的承诺and aren’t simply engaged in greenwashing. Greenwashing isn’t just a theoretical problem. It’s an issue that has put asset managers in the cross hairs ofregulators, who are increasingly on alert for it. In fact, Securities and Exchange Commission Chairman Gary Gensler hasraised the possibility ofrequiringclearer labels适合可持续资金。

在满足Cutione Associates的联合创始人之后不久，支持一个名为Ensemble Active Management的方法，Pileggi认为他有解决问题的第一个问题Alpha。EAM使用称为集合方法的数据科学技术，除了投资之外的几乎每个行业都已经成功使用。根据几篇论文，其中包括2019年在CFA学院发表的一篇论文Enterprising Investor, thesehelp preserve active managers’ alphawith a new approach to diversification. Using ensemble methods, which rely on artificial intelligence and machine learning, firms can use the highest-conviction stock picks of multiple managers, rather than the solo managers employed by most active funds, to provide downside protection. Put in context, it makes sense. Alexey Panchekha, a PhD in math and physics and one of the co-founders of Turing, said, “Concentrated portfolios have a statistically better chance of outperforming. Your best thought is valuable, but your fiftieth — not as much.”

Although there are active funds now using the ensemble methods, nothing is available on the ESG front.

“许多最伟大的管理人员在那里倾向于淹没他们创造alpha的能力。EAM’s science strips away many of the issues and leverages the wisdom of experts,” said Pileggi, who has been the CEO of Strategic Innovations Advisors since 2017. He witnessed the failings of active management decades ago at the bank (ING Bank, which was acquired by a rival after the global financial crisis) and of other wealth managers and advisors over the years.

When Pileggi met Panchekha and Vadim Fishman, the CEO of Turing, he thought that the ability to tap the expertise of multiple managers would be particularly groundbreaking in ESG, where picking stocks based on values was a relatively new field and required certain expertise, and where manyinvestors were still waiting to see that the funds could generate good returns以及良好的结果，例如减少企业碳足迹。

Then Pileggi came across Climate Vault, a nonprofit that builds net zero solutions. Climate Vault seemed to offer an elegant and systematic solution to the greenwashing problem. “They make no value judgments about a company’s ethos or values. They simply say that if you have a portfolio, and the characteristics of the portfolio are to your liking, we have the wisdom of experts to help you conclude what your dollar-for-dollar carbon footprint is. We can correct the problem,” he said.

Here’s how it works: Pileggi’s company provides information about the portfolio generated by Turing, and Climate Vault then quotes脱碳的价格. Financed by management fees, rather than by deducting the cost from the portfolio where investors would pay, Pileggi’s firm makes an irrevocable donation to Climate Vault.

本质上讲,人类component is structured as an overlay to the portfolio; the overlay is run monthly. Through the partnership with Climate Vault, SIA measures the carbon footprint of every company in the portfolio. Carbon permits are then purchased from cap-and-trade compliance markets and locked in a virtual vault so the emitters can’t use them. With the number of permits capped, the solution permanently decreases the amount of carbon dioxide in the atmosphere.

气候金库将把这些允许返回流通的唯一方法是，如果收益可用于进一步发展无法访问资本市场的公司的影响技术。

The design structure reduces — on a dollar-for-dollar basis — the carbon emissions linked to the stocks held by the NetZero portfolio. Although many ESG funds may ultimately invest in companies that will make a difference in reducing greenhouse gas emissions or develop innovative solutions to climate problems, Pileggi’s fund could immediatelydocument its positive outcomes.

“投资者得到了EAM的好处和所有这些都随之而来的。其次，他们可以脱碳我正在创造的投资组合，“Pileggi说。SIA目前正在运行它所谓的Netzero投资解决方案，这是客户的策略。该公司拥有一些未来的计划，包括交易所交易基金版本的战略。

Pileggi is creating a fund that will provide environmental benefits that can be proved and documented. But that’s where his goodwill ends. He’s not sharing it with other asset managers, having recently filed a patent on the concept and design.