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The ESG Experience Podcast - Season 1, Episode 4

ESG Experience Podcast Our Partners
  • March 10, 2021
The ESG Experience Podcast - Season 1, Episode 4

Factors driving demand for ESG in private equity ft. Pamela Hendrickson

In this episode of The ESG Experience, hosts Helee Lev and Ryan Nelson are joined by guest speaker Pamela Hendrickson, Vice Chairman at The Riverside Company, to discuss the driving forces behind the increasing demand for ESG in private equity.

Topics covered in this episode include:

  • Factors driving increased demand for ESG in private equity
  • Differences in ESG adoption in Europe vs. the U.S.
  • Trends in ESG implementation across private equity
  • Challenges around managing ESG policies & strategies for overcoming them
  • Promoting diversity & inclusion in private equity
  • And more

Read the transcript of this episode below:

Helee Lev: Hello, and welcome to The ESG Experience podcast brought to you by Goby, the ESG platform. I’m Helee Lev, Goby’s Chief Revenue Officer.

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

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

In today’s episode, we will be discussing the growing demand for ESG in private equity. To help us really dive into this topic, we are honored to be accompanied by Pamela Hendrickson, Vice Chairman at The Riverside Company. Pam joined The Riverside Company in 2006 and currently serves as the Vice Chairman. In her over 15 years at Riverside, she oversaw tremendous growth as the firm grew from 750 million in assets to over 10 billion in assets under management from 3 fund strategies to 9. Whoa! I didn’t even know that. That's awesome. She still supervises some of the newer funds and manages policy and legislative risk globally for Riverside and its portfolio companies.

Pam has done everything from developing a nifty credit card during her 22 years at J.P. Morgan to driving establishment of a well-regarded financial tracking system for Riverside portfolio companies. She is a frequent speaker on many topics and has even given testimony in the United States Congress. Whoa! I didn’t know that either. She lives in New York City with her husband and dog and has two adult children who also live and work in New York City. Welcome, Pam. We are delighted to have you.

Ryan: Welcome.

Pamela Hendrickson: Great to be here.

Ryan: Excellent. Well, again, we’re really pleased to have you, Pam. Obviously, your experience is spot on with the topic today of talking about the growing demand of ESG disclosures in private equity. So, again, we really appreciate it. We've got a series of questions we’ll throw at you and help lead the conversation so I’ll dive right in. You manage Policy, Political and Legislative Risk for a global private equity firm. We're interested in describing the differences between adoption of ESG in Europe versus the United States. What is your opinion on what are you seeing between those two places?

Pamela: I think that there’s no question that adoption in Europe has been historically happening and is more serious. And I think maybe that’s because the countries are smaller and there’s less of a political division. I see that. Actually, I have a house on a small island and they are very ESG-forward. There’s no plastic allowed, et cetera. And I think it’s because they’re small and so they realize that it’s really critical to them to be environmentally forward. So as of the end of March, there are some new regulations in New York that impose a lot of detailed disclosure requirements on both European companies as well as any U.S. fund manager who is raising money in Europe under the Private Placement Rules. The goal of the new regulations is to try and create some sort of common language. There are actually 30 mandatory sustainability measures so that firms are held to some standard and they’re not greenwashing...

Ryan: Sure.

Pamela: To use the technical term that people sometimes use. Meanwhile, European LPs have been viewing ESG as very important for a long time. There are many who even won’t consider investing in your fund if you don’t have some kind of program or not, in some cases, the signatory to the PRI. In the U.S., on the other hand, LPs have asked more peripherally about ESG. And until fairly recently, I would say it was more of a box-checking exercise.

I was just talking to someone on our fundraising team and she said in the six months prior to the current six months, and maybe that was because COVID kind of threw everything for a loop, but she said, “I got zero questions.” Now, I would say, of due diligence questionnaires, we’re getting one to two a week from U.S. LPs. So I think both U.S. investors as well as the regulatory regime are changing. And the regulatory regime in the U.S. will start with the public companies, but for sure, it’s going to trickle down to privates. Increasingly, I think also, we’re seeing both European and U.S. LPs request a lot more measuring around diversity and inclusion. So it’s not just at the firm level, but also within your portfolio companies. And it’s one thing if you have diversity, but there are no decision-makers who are in that diversity population so they’re looking at that very strongly.

Ryan: Yeah. Well, that’s very interesting. I appreciate your insight there. Of course, when you talk about LPs, you’re referring to Limited Partners. Those...

Pamela: Right, investors. Yeah.

Ryan: Firms, institutions that invest in private equity. And so they’re interested in how the firms that are managing their investments, what they think about ESG and how they’re spending that money and what their process is. We talk a lot about how Europe is leading, but I like your theory on perhaps why being the size of the countries and maybe just less political red tape. That’s interesting, but anyway as a global private equity firm, you have to be aware and deal with both the U.S. and Europe so very interesting and appreciate that.

Pamela: Well, it’s also...

Helee: I don’t know. Europeans have always schooled us when it comes to environmental regulation...

Ryan: Yeah, but...

Helee: And volunteering...

Ryan: Why? Have we ever explored why?

Helee: I don’t know.

Pamela: Right. Well, I was just sort of thinking about the why of it.

Helee: They’re just better people than we are.

Pamela: Well, I mean I do think there are important, there are critical reasons to do this, but I also do think that the why does have to do with if you’re very reliant on your own resources and you’re small...

Helee: Yeah.

Pamela: Then you just can’t afford to not have them. Whereas we’ve been...

Helee: That’s what they...

Pamela: The beneficiaries in the United States of having a lot of resources.

Helee: Yeah. That’s exactly what I was going to say. I remember I studied abroad in Copenhagen in Denmark and I had like a host family. It's a family of four, two teenage girls, and the family had one car. It was like this tiny, little hatchback. And that was their family car; a two-door hatchback. They all shared it. It was a completely normal thing. You know upper middle-class family and that’s just how they roll in Copenhagen. And I was thinking of the same family here would probably have like two jeeps and a third car. So I think it’s just baked into their DNA is part of it, but like you said, smaller country’s resources.

Pamela: I completely agree.

Helee: They’re just kind of used to it.

Pamela: Yeah. I completely agree with that.

Helee: Cool. So we talked a little bit about LPs. I recently had a call with a lady who manages the New York City Pension Fund and just asking her what kind of demands they’re putting on their GPs. She said that she felt that it was still definitely coming out of that check the box or greenwashing phase that you said. Or the GPs who have maybe had a homegrown program up until this point that was fine for their last fundraise, but as they go to raise their new fund, that’s not going to cut it anymore. And the LPs are becoming a bit more demanding of ESG programs that go beyond just a firm-wide policy that have more tentacles that extend into the actual investments themselves. So how do you guys, as a firm, engage with your LPs on ESG topics?

And another example of this that, in my own experience, RBC, they’ll circulate a handful of different spreadsheets that come from different LPs, both domestic and Canadian. And essentially, it feels like they’re all asking the same questions, but they’re all doing it in their own Excel format or in their own way. So from your experience, how are you guys interfacing with the LPs? What are they asking for? What trends do you see? And is there any consistency with how they’re asking or the format they’re asking or the frequency that they’re asking?

Pamela: It’s so funny you say that, Helee. So we actually, as Riverside, we actually have over 100 pages of due diligence questionnaire answers from stuff we’ve just gotten from our investors; over 100 pages...

Helee: Yeah.

Ryan: Wow.

Pamela: Just on the topics of ESG diversity and inclusion.

Helee: Wow.

Pamela: And we now have a template which is sort of the vast majority of the basic questions that we have gotten over the years which we send to all investors who are thinking about investing in one of our funds in the hope that that will answer all of their questions. It doesn’t always and sometimes we have to put something else in there...

Helee: Yeah.

Pamela: But for the most part, it does. I do think that this situation is enormously complicated. For a global firm, you have the issue of there are differences between the Europeans and the Americans in terms of how they think about this...

Helee: Sure.

Pamela: But then there’s just the whole value chain issue, right? So you would say Tesla is an environmentally forward company, right? You would say that or we would all say that, but if 12-year-olds are mining the cobalt for the batteries and in the Congo...

Helee: Sure.

Pamela: Then where in the value chain are you supposed to be as a person who is sort of looking at those kinds of things? So I do think one thing that’s great about the European regulations is there is this sort of taxonomy or vocabulary that you use and it’s a little bit more consistent across a bunch of whole different firms. It’s also complicated by, and if you take Riverside for example, we have companies that are technology companies or even dating companies versus manufacturing companies and so it’s very hard to measure the same thing across all of us. It's not even relevant for a lot of them.

Helee: Yeah.

Ryan: Yeah, that's a great point. Just because you’re selling or building solar power or something doesn’t mean that you are a responsibly run business that’s doing good for your community necessarily. That in and of itself, doesn’t resolve it. You have to look at the whole value chain, stakeholders, shareholders so, yeah. It can get complicated. So we talked about those Limited Partners, those LPs, and they have whatever ambitions they have that they’re pressuring. Them, of course, being the prospects and the customers of a private equity firm. What else might be driving, or I guess I'll say, policy and regulation? So maybe the stick, if you will, or maybe there’s a carrot in there, but ESG data requirements, the capture, the reporting, what kind of policy and regulations are you coming up against and what kind of maybe evolution do you see around the corner?

Pamela: I think in the U.S., the regulatory environment will largely focus on public companies first and then we’ll trickle down to private capital. It would be helpful to shape it, but you talk about the carrot and the stick, Ryan. And I think people sometimes forget that investors carry an awfully big stick, right? And if an investor will only give you money because you do X, Y and Z, you’re going to do X, Y and Z. That’s pretty critical.

Ryan: Yeah. An investor reminded me of that on a call this morning actually. “Remember, we carry a big stick, Ryan.”

Pamela: Yeah, exactly. So I do think the ability to aggregate data and sort of be very clear about where is it that I need to focus my effort or even to report out whether it’s to regulators or to investors is going to be hugely helpful. And I don’t think, certainly in America, that is not where the industry is. I mean you guys probably know that better than anybody that we have a lot to do and this has been less of a priority than perhaps it should be. I have often said that for private equity, I really think it should be GSE instead of ESG because we talk about the Governance and I sort of feel like if you get the governance right, other good things will follow, but we need probably more focus than we had.

Ryan: Yeah, I think it’s great. And you got me thinking the reason we love engaging and working with private equity and why, Goby, that’s our audience is because of that incredible impact that private equity has on communities socially, the environments enabling businesses. So sure, we could go to medium-sized businesses one by one by one by one and try and engage them on ESG and bettering ESG performance, but if we partner with private equity firms, they’ve already got 100 companies that you engage with. So we love taking on that challenge that you brought up earlier. How do we normalize some of this information so that we can make it useful in scale to 100 companies which can be challenging? And that’s the challenge we’re excited to take on, but yeah. I mean working with private equity, we get to expedite or have a bigger impact on the amount of firms that we’re supporting in telling their ESG stories. So we’re working for you. We're working for private equity firms, but you’re working for LPs and you have investments that you need to operate. So, yeah. We love the ecosystem.

Pamela: You know, Ryan, you just reminded me. So I once asked this question of a CIO of a pension fund, and I won’t say where, and this particular pension fund gives a diversity and inclusion award, a diversity award, and so I said, “Let’s just suppose you have two funds and they’re both top-quartile funds for performance, but one which has no diversity at all is at the top of the top quartile and the other one which has a lot of diversity in decision-making is at the bottom of the top quartile. Who gets the money?” And there was no answer to that question. So I have a feeling that the same is, for the moment at least true in ESG which is if you don’t have the returns, you could be great on ESG, but frankly it matters less than your returns, but I think increasingly, if your returns are the same and the world has become more and more competitive, this will be the thing that will make you stand out that your ESG reporting is really good and you have a good policy and you’re very focused on that.

Helee: Well, and they say that there is a correlation between the two as well, right? So someone who is a good steward of ESG initiatives is probably a good steward of your money and doing all the right things anyway.

Pamela: Right.

Helee: So it’s hard to say like causation, correlation, but there’s definitely a connection between the two, but yeah, understood that it’s still all about the financial returns. And even, I remember being on a webinar and hearing a woman talking about how they passed on an investment opportunity because of an ESG issue that came up in due diligence, but it wasn’t just because of an ESG issue. That specific ESG issue had material financial impacts on the performance of the business. It was something in the supply chain that should it go wrong, whatever it was, it would tank the whole company. So it was an ESG issue, but it was more of a financial decision then I guess, if you will. But had it not...

Pamela: Well, I think that...

Helee: Had those...

Pamela: Sorry, go ahead.

Helee: No. Actually, had they not had those ESG questions incorporated into the due diligence process, they may never have exposed that specific issue.

Pamela: Exactly. I also think sometimes an ESG issue could be symptomatic of a deeper values issue.

Helee: Yeah.

Pamela: And you know, we’re very reliant on the people who run these companies. So, Ryan, so I think we do want to make sure that we’re working with good people, you know? And so those people are going to just be forward thinking on ESG.

Helee: Yeah. That totally makes sense. So a lot of the folks that I have been talking to recently, specifically, I would say in the midmarket PE space, they’re looking to implement an ESG program or, like I said, they’re looking to take their homegrown program and engage a third-party like Goby to help them take it to the next level as they go to raise their next fund. So what I'm getting at is that a lot of times, upping the game of the ESG program comes along with the fundraising. So how do you balance doing ESG for the right reasons, if you will, but also, of course, wanting to reap the benefits of the obvious PR marketing benefits of having the program?

Pamela: Well, if the PR part of the program drives people to do the right thing, then that’s probably good. That said, I think investors are very smart and they totally get if you’re greenwashing, I mean is this really part of your DNA? Is it something that you do every day that you look at every single deal that if I ask you about this one specific company over here, you can tell me about it? Versus this is just a thing I’m doing because I have to. I also think that the regulatory environment is going to come to a theater near you soon and so you better be prepared. Unfortunately, we don’t yet know what is going to be required in terms of reporting, but I think being able to show the SEC that you’re doing something in this regard is going to be helpful.

Ryan: Yeah, I love the way...

Pamela: It’s the same way at cyber, you know?

Ryan: Sure. I love how you said the investors are smart. I think we don’t always, people in general, don’t always respect their audience enough and think if you have an answer, it’s good enough, but people are smart and they have gotten smarter about ESG. And we’re not where Europe is, but we are starting to have some language that’s a little bit more consistent and we can more easily have the discussions. But yeah, if you respect your audience, then you have to provide information and answers with authenticity. And then, if you shake them a little bit, they hold up. It's just so much better than trying to check a box and greenwashing and all that stuff that happened before. And if you don’t think that the people that you’re telling your story to are smart, you’re probably going to end up being wrong and embarrass yourself.

Pamela: I completely agree with that. I mean I think it’s a thing I say to people in Washington all the time when there's a heavy focus on regulation. And I am often the person that says, “But wait, in private equity, our investors know more about us than anybody else.” I mean they are asking us about absolutely everything. They're in our offices for hours.

Helee: Yeah.

Pamela: Well, they used to be in our offices for hours.

Ryan: Yeah.

Pamela: Now, they’re on Zoom for hours.

Ryan: Right, yeah. So how different is this? We look back, you became a COO for private equity in 2006. Were you having similar conversations? Were they started? What was happening in 2006 compared to maybe the kind of conversation we’re having 15 years later?

Pamela: So the world has gotten so much more competitive. It's quite extraordinary. I was looking at some statistics. So between the years of 2006 and 2008, about 2 trillion dollars was raised in private markets. Today, that number stands at 6 trillion.

Helee: Yeah.

Pamela: The number of private equity-backed companies has doubled from 4,000 to 8,000 with the same time as publicly held companies have decreased. And I think multiples, because of all this competition, multiples are super, super high. So that old 80s adage which I think U.S. News wrote this in 2006, that private equity is totally different today. They say that they’re not the guys who come in and buy a company and just tear it apart and wreck everything. Now, they’re just trying to make inefficient companies more profitable. And to some degree, I think that's true. In fact, I'm doing a session on Private Equity 101 for our CEOs. And one of the things that I'm saying is you have to grow. Because the multiple we have paid for your company is so high...

Helee: Yeah.

Ryan: Yeah.

Pamela: That there is just no possibility that we can do anything other than grow.

Ryan: Yeah, buy cheaper chairs or...

Pamela: Right. You just can’t save you way to prosperity.

Ryan: Yeah.

Pamela: You just can’t. So there has to be a path to growth and I think that has changed. And yet, the view of the world is that private equity does really bad things, but I don’t think anybody really wants to hear from the moguls of private equity. I think they want to hear from people like you. I mean or any of the companies in the Riverside portfolio where people have gotten the benefit of both our financial capital and our intellectual capital to be helpful.

Ryan: Yeah, that’s exactly right. I mean entrepreneurs, if I may, we have enough arrogance to get a company so far. But then I like to think enough brains to know that getting a company to 20 people and 15 customers, that’s one thing. Going from there to 1,000 customers and having hundreds of employees and how that is different from bootstrapping a million-dollar company, it’s a big difference. And we really need support and can really expedite things when you have that kind of support. So taking the guidance, the leadership, in addition to the capital and then now having some ESG kind of guide rails as well to know that well my private equity organization is asking us the kinds of things that are important. So we don’t have to own all of that because someone has the lead on here’s what the LPs are saying, here’s what the regulations are, here’s how you can do it effectively and we can guide you along the way. So, yeah.

Pamela: I mean scaling is really hard. Once I had a friend who was an entrepreneur and he sold his company for a mere 6 billion dollars, but I said to him, “How did you deal with if you had to fire someone?” And he said, “We were growing so fast. It really didn’t matter. I could’ve had the world’s poorest performer and it was irrelevant to me because we were growing so quickly.”

Helee: There is that arrogance.

Pamela: There is that arrogance, exactly.

Helee: There it is.

Pamela: So, totally...

Helee: No, but there is something to be said for it.

Pamela: Something different.

Helee: I mean you guys have the experience and now you have the vested interest as well so you live, you learn, you live, you learn, you live, you learn. You guys have lived and learned across hundreds...

Pamela: Seven hundred and fifty transactions.

Helee: That’s right. That’s right.

Pamela: Yeah.

Helee: So we’ll take that and, you guys, it’s more than just, of course, you could get some of that from peer networking groups and entrepreneur groups and ranks and the founder’s network and that kind of thing, but those people don’t have skin in the game. They're not going to help you the way that you guys have. So one other thing too. You talked about policy, and I know that you do a lot of work with the American Investment Council just as an advocate for private equity in general and kind of, like you said, just debunking that it’s not like this evil ivory tower and I think that’s something that I would love to help debunk as well. Because our experience with you guys specifically in under 12 months or just about 12 months has been monumentally effective and helpful in running our own business and we couldn’t have done it without you guys. But anyway, so as an advocate and you talked about this policy kind of coming and it will be, how did you say, playing soon? Oh, in a theater near you soon, but I forgot what a theater is. On your couch in your living room soon.

Pamela: Exactly. It will be streaming to you soon.

Helee: Yeah. So how is that work specifically important to Riverside’s mission and to making sure that you guys remain viable and are able to do what you wanted to do?

Pamela: It’s funny. One of our CEOs said to me one day, “I don’t actually feel like a bad person. And yet, when I read about myself in The Wall Street Journal, I’m kind of the access of all evil.” So that’s why I feel so strongly. It is a large myth debunking, but in a certain way, one of the great things for me about spending time in Washington has been understanding how many things everybody there has to know. So I’m in line to come talk about private equity and the next person is coming to talk about corn and the next person is coming to talk about oil and these poor representatives and senators, I mean they have to know so much...

Helee: Yeah.

Pamela: It’s just extraordinary. So things that are very obvious to me are not at all obvious to the group in Washington. So, so much of it is education and for a long time, the private equity industry just wasn’t in Washington because we were just doing our thing. You know keeping our heads down, buying our companies, trying to help them grow and figure out how to grow and then making some money for our investors. So it came, I think, as a great shock to everybody after the financial crisis which is really when it started that suddenly people thought something completely different, but it shouldn’t have been a surprise because we never told anybody what we did.

Helee: Yeah.

Pamela: So now...

Helee: That makes sense.

Pamela: We’re spending a lot of time trying to say, “But wait, this is what.” And I don’t think people want to hear from the Henry Grouses and the Steichwartz, but I think they want to hear from you, Helee.

Helee: Sure, yeah. Yeah.

Pamela: One of the greatest lines of all time I think was, “The only difference between an entrepreneur’s great 3:00 a.m. idea and a company is capital.” I think that’s one of the great lines.

Helee: Yeah. No, and it’s the truth. And I like how you guys as well have put a, I’m talking with other private equity firms, you guys do the ESG, but then you also have plus V, plus your Values, and you guys like to put that front and center. And I admire that because I think it makes your firm seem more human. You have these values, you have these guiding principles and it’s just not at the firm level. These are principles that you want to put upon the investments as well and make sure that they’re in line and they fall in line with your values. So I like how you guys have made that front and center. And not just for your firm, but also when you guys are going through your annual ESG index, you’re actually surveying investment portfolio companies with regards to values in addition to ESG.

Pamela: Right.

Helee: So that’s something I think is unique to Riverside so good job.

Pamela: Well, thank you. Thank you.

Ryan: Well, let’s dig in a little. We're talking ESG here and we’re the day after International Women’s Day, let’s talk a little bit about diversity and inclusion. Diversity, of course, the consideration of having a diverse group of humans at a particular firm with ethnicity, culture, race, gender. And then, of course, inclusion meaning are we actually including that diverse group and making sure there are opportunities and growth for everyone. So as one of the few and the most senior c-suite women in private equity, maybe you could share a little bit about your initiatives to promote diversity. Maybe you’re into paying it forward or maybe advise listeners and then that can be private equity and or investments on how you’ve done this in your career or with Riverside.

Pamela: Well, just in terms of my own, I would say that for myself, I never considered it an issue. I thought I was qualified to be in any room and I thought I was just as smart as everybody else and over time, I’ve realized that that’s not true for everybody. So a lot of the time it’s helping bolster confidence, but I think it’s also really about networks. If you keep going to the same network all the time, you’re going to get the same people.

So you’ve got to be willing to experiment, you’ve got to be willing to say, take someone “Okay, yes.” Typically, you go to college, you go to an investment bank, you go to private equity. All right. Well, what if I turn that model on its head and I take someone straight out of college? Or I take someone who has had a completely different background in an operating company because they’re really smart and I think we can teach them, but I really like this candidate. So we’ve done that a few times. I actually had one of my managers say to me one time, “Okay. I have three experiments going on. Could you just not give me any more for right now?” But I'm happy to say a lot of them worked out. One didn’t, but a lot of them worked out. So I think that’s really good.

Earlier today, I was on this call with Anthony Jack who is a Harvard professor and he wrote this book called The Privileged Poor and How Elite Colleges are Failing Disadvantaged Students. And he pointed out that a college might get an award for being really diverse in its student body, but if you went to Andover and Exeter to get all of those students, then are they really diverse? Probably not. So that’s one issue.

Ryan: Right.

Pamela: And then, the second issue is once the person gets to the culture, think about the vocabulary and what are you doing to teach people what that culture means. So Professor Jack gave this example and he said when he went to Amherst as an undergrad, people would talk about fellowship which in Amherst code was a dorm. But for him, growing up as an of color young man in the south, fellowship either had to do, as he said, with religion or food. And so it was just a totally different thing. So I think that’s what we have to really think about.

There are just a lot of things that we have to change, but the great news is I have increasingly seen so many firms started by women; so many of my women friends really working together to try to solve this and helping each other which I think is different. I think there was a generation of women who were not as supportive of each other...

Helee: Totally agree.

Pamela: As they are today.

Helee: I totally agree. I don’t even know if it’s generational. It's up to the individual. I’ve had, I think even to my time at JLL, I think I had something like 9 managers in 8 years and some women couldn’t have been bigger advocates, helpers, wanting to promote other young women and help them kind of rise through the ranks. And others couldn’t have been more of a barrier or a deterrent. It was just almost dependent on the personality or the person, but at the end of the day, isn’t that just a Kellogg thing? It’s a Kellogg thing.

Pamela: Maybe it’s a Kellogg thing, I don’t know. I really feel strongly about being a team and helping each other where we can. I really do. I just think...

Ryan: Well, I love your advice. I think you’re talking to maybe me or others of find a different network. If you just go back to the same pool every time and I think that’s very interesting. And I have, after learning and being inspired over the last couple years, specifically made an effort to find other networks and look at my own. And basically, the way to do that is look at my LinkedIn network and then look at it a year later and make some headway there. I think this is a good spot to plug the ESG hub on our website because we had a conversation with what you’re talking about where you’ve got to make very specific efforts as a firm to create diversity. Having one training or something at the beginning of the year for everyone who doesn’t quite do it.

Helee: Yeah.

Ryan: You’ve got to go, you’ve got to say we’re going to hire this way, we’re going to have this kind of mentor, active mentor program, we’re going to do very specific things and not just a blanket policy so that’s great. And then celebrating, I think the thing that we put out yesterday, the content that we researched about yesterday was about how women are leading the way in ESG. Interestingly...

Pamela: Yes, I saw that.

Ryan: In this particular area, yeah. There’s some cool stuff in there about why that might be, but not to totally derail us, but yeah; very interesting.

Helee: Yeah. I’m kind of a proponent too of a meritocracy. I think it should always be the best person for the job. I don’t think there should be closures...

Pamela: Totally agree.

Helee: Like women and minority. It really should just be at the end of the day, like if a 45-year-old White male is interviewed the best and has the best qualification and the best for the job, then go for it. But at the same time, I recognize the importance of what NASDAQ has done by trying to put out some of these mandates to fix what has just become the way it is and requiring one female and one minority on board so that they are NASDAQ-listed. So things like that had to happen, but at the same time, I think it’s about efficacy from the top. So if you’ve risen up through the ranks, like you have, Pam, and you’re in a position of power and you can help and facilitate women, minorities, et cetera, but keeping in mind that, like I said, I really do feel strongly that it should be a meritocracy.

But I also recently told, so speaking of Kellogg, my brother is in the program now and his group interviewed me for their leadership project. And one of the things I told them too, they’re like, “Well, what can we do to promote diversity? We're just going to business school now. We’re young in our careers.” You should be demanding it. You should be demanding it of your companies. You should go to your companies, you should look at the board makeup, you should ask why your face is not represented there and you should demand it and make it happen. And you can be an advocate just as much in that position as in your position, having been at Riverside for 16 years. So I think it comes from everywhere. The pressure has to come from all around.

Pamela: Yeah. I completely agree. I mean I think frankly one of the silver linings in COVID is that for a long time we had this group of people who believed that you had to have facetime. And I think anybody who believed that has been proven wrong now. And so while I totally agree that you need that creative combustion of being together some of the time, I don’t think you need to have it all the time. And I think much more flexibility in terms of work arrangements is going to be the norm now going forward.

Helee: Oh yeah, agreed.

Pamela: So I think that’s great.

Helee: Sure.

Pamela: Big digression from yesterday, but hey.

Helee: It’s all incorporated under the umbrellas of ESG or in Riverside’s case, ESG and V.

Pamela: Right. Right.

Ryan: Or G, S and E.

Helee: GSE.

Pamela: Yes. I really do think G, Sand E. One thing I was going to say just on the women in private equity, I do think generally if you look out and you don’t see anybody that looks like you, that’s a challenge. So one of the things that I personally do, just in terms of paying it forward, is I'm obviously a female in private equity so to the extent I can embrace the women at Riverside, I will do that and that has been helpful.

Helee: Yeah. Sure, makes sense.

Ryan: Good. One more question, Helee? Or you want me to get to the next...

Helee: I think we kind of covered these other ones and what we were just talking about now.

Ryan: Well, good.

Helee: We can move on to the next segment of our podcast.

Ryan: Yeah, let’s move on to the next segment. Really appreciate that conversation and your expertise, Pam. We get to talk about it a lot at Goby and amongst each other and it’s always more meaningful to actually talk to someone who’s living it and who we’re trying to serve and support. And so to get your point of view, it's very meaningful to us and hopefully to the people listening and that’s very important stuff.

We’re going to lighten it up just a little bit and we’ve got a segment here, it’s called “Beer or Beans.” And all you have to do, Pam, is guess. In this world of artisan and craft, I have selected either a craft brewery or a craft coffee place and you just have to tell me, I'm going to tell you the name and all you have to say is if it’s a beer or beans. That’s all you have to do. Do you know, first, I’m going to ask you this, do you know in North Carolina, rumor is you’re familiar with North Carolina, do you know there’s a city known as the Queen City? You’re familiar with this or no?

Pamela: I did not know that, but I will take your word for it.

Ryan: Check it out. Yeah, Charlotte is the Queen City...

Pamela: Okay.

Ryan: And they’re fighting with Cincinatti about which one is actually the Queen City so that sort of thing. So anyway, this place is in Charlotte. It's called Smelly Cat.

Pamela: Oh, give me a break, coffee.

Ryan: That’s correct. That's correct. At Smelly Cat, they say, “We know beans” and I like this because it’s diversity, “One coffee style does not fit all. We roast our own ethically sourced beans to create a wide range of profiles to fit the wide range of coffee drinkers in the Queen City and beyond.” So they don’t sponsor us, but maybe they want to call and sponsor us, but congratulations. You are correct.

Pamela: Oh, whew. Thank goodness.

Helee: One for one. That’s amazing.

Pamela: One for one.

Helee: That’s way better than my record when we don’t have guest speakers and I have to do “Beer and Beans.” I’m not 100% accuracy like you are.

Pamela: Yeah. Well, don’t ask me another one because my mother always told me to quit while I was ahead.

Ryan: Well, how were you so sure though that Smelly Cat, because you know it or am I missing something? How are you so sure that that was coffee?

Pamela: Oh, it sort of linked in my brain. Smelly wouldn’t be smelly if it had a good place to go to the bathroom and I don’t know so it just seemed more like beans than brew.

Helee: Why do you have to grill her on her correct answer?

Ryan: I’m trying to learn...

Helee: Just leave it be.

Ryan: Learn a system for how you might know something like that, but well done.

Pamela: But I didn’t know about that. I didn’t know what it was, no.

Helee: All right. Well, thank you to our hundreds of thousands of loyal listeners for joining us on The ESG Experience podcast. Our next episode is going to focus on diversity and inclusion in commercial real estate and we will be joined by special guest Anna Marie, Managing Director, Global Head of ESG for BentallGreenOak. Looking forward to that. Make sure you tune in and follow us on your favorite social medial handle channel at #esgexperience. Catch you next time. Thanks again, Pam.

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