Edward Soffer: ESG Manager at Interactive Brokers – Ep. 87

2:17 – “Interactive Brokers is one of the largest broker dealers in the United States, and also globally. So we provide investors an opportunity to trade all sorts of securities and stocks and commodities and other things. My title is ESG Manager, and I arrived at the firm in December of 2019 with the mandate to start an ESG team working very closely with our director here internally. ESG…stands for environment, social, and governance. Some people might refer to as sustainability, responsible investing – there’s a lot of terms out there and there’s not one uniform way of defining it, except I would say it is ways that will help to improve our society and improve our planet, our earth.”

4:09 – “I started questioning…‘is there something bigger out there?’ And I guess the universe responded. When I was in South America at a conference in Panama, there was this panel and someone was talking about sustainability and how to marry it and financial services. And I’m like, ‘Wait, am I dreaming? Or is this for real?’ Because I try to be a spiritual person. I’m sure I’m not perfect at it, but I try. And so to hear that resonate and to see that it can be part of my business journey was something that was amazing to me.”

5:03 – “I started to do research and I taught myself ESG, just reading massive amounts of information out there. And when you start doing that in addition to your day job, it means that there’s a passion there. There’s something that you need to explore. There’s something that’s feeding your soul.”

6:09 – “We all live together in one planet and my actions affect your world and vice versa…I do feel that it is the time to focus so much more on that and to continue to sound the alarm. And I think that world events and things that are happening speak for themselves…You’re seeing climates change. You’re seeing all this very unusual weather patterns and fires happening around the world. That’s on the environmental side. You’re seeing what’s happening with social justice. You’re seeing what’s happening with wars out there, the pandemic. So all of these events, in my opinion, are a sign that we need to take action collectively and do something about it.”

8:31 – (Ross) “I’ve seen where a lot of the plastic stuff that we purchase is made, and I’ve seen how much pollution is in the air. And most people who’ve never visited such a place can’t imagine how much pollution there is in the air at all times in the place where all of this stuff that you buy is made. And when you witness that, you realize this is also on Earth, this is just a part of Earth, that if you don’t go to, you don’t know that it’s there. So it’s easy to put some blinders on and forget about it and say, ‘In my neighborhood, I don’t have pollution. I don’t have rivers that are destroyed. I don’t have rivers that change color depending on which iPhone is being manufactured that week.’ But when you start traveling more, you see some things from a different perspective.”

9:36 – “I grew up in Mexico. My parents are from the Middle East. I’m Jewish background. There’s so much diversity here and it makes me appreciate cultures even more. But it also focuses on how sometimes and you’re seeing it, people are discriminated against for your background either because you’re this or because you’re that. And so there’s an element of not just saving the environment, but treating each other as human beings with respect. And being more sensitive to where people are coming from. So that also inspired me to get into the sustainability world because of the background that I have.”

11:04 – “I do feel that once you find that path that you’re really, really passionate about, do not give up. Keep pursuing it because the universe will answer. I think we’re all on this earth meant to do something that we are supposed to do and something that we love. And once you find that, somehow the door is open. But it’s not easy. You need to take action now. You can’t just say, ‘okay, I want to go into sustainability, so I’ll just sit here and wait.’ No, you’ve got to do something about it.”

13:28 – “You need to find a network of allies that had the same opinion as you, people that are probably well known in the field…and bring them into the equation and introduce them to the people that you’re talking to so we can have an open-minded discussion. Don’t give up and don’t get defensive either. You have to understand where they’re coming from…of course it’s about helping the planet and the environment and society, but it’s also about making money, right? So you have to find the language that you can talk to them in, to find common ground….it has to be done in tandem. It’s like ballroom dancing. You have to both dance at the same time to get to the destination.”

17:05 – “I see it kind of like a risk management tool…you don’t want to be a big oil company with a big oil spill. So…you need to take care of your processes and make sure that the ships are very strong so they don’t spill any material into the oceans. And you need to make sure that things are done in the process that minimizes risk. That’s what ESG is about, honestly. And it’s the same with the social standards. You want to treat your employees right. You want to make sure that you listen to them so there’s no scandals that come out of labor. There’s got to be open communication. So all of that really is a risk management tool.”

18:23 – “The name of the product that we created is Impact by Interactive Brokers, and myself and my director who worked on this, Will Peterffy, we’re very excited about it. It’s really a tool that is like no other…We wanted to make it personal…sustainability means different things to different people, we should allow that to be the case also for investors…Maybe I care more about social issues and the environment, and for you it might be the flip side – this tool does take that into account. It’s a customized journey where you’re able to select from 13 values that you care about most.”

19:08 – “Other products out there…will provide what they call an ESG score – that’s based on certain methodologies that different companies have. So we take those scores, but we transform them and add an impact lens, based on your personal values…Some examples are clean air, pure water, racial equality, LGBTQ inclusion, sustainable business models. So the app starts with that. It asks you what you care about most. And you actually can put in the degree of importance, either important or not very important or most important. And then after that, you have another filter of areas that you would like to avoid in your investments, like animal testing, nuclear testing, fossil fuels and others. And based on those two filters, you’ll be able to look at your existing investments and see how closely aligned they are to your personal values. You’ll get a personalized scorecard.”

23:10 – “If you care about clean air, you’re going to get a whole lot of charities that are doing things to improve the air or water or social equality. There’s quite a number of charities in there, over 200,000, that you can donate to…you take the money from your earnings that you’re making and you give back to your communities that way, which is pretty cool.”

30:55 – (Ross) “There is this element that corporations are responsible for some parts…They should make those changes if they have the power to do that, I believe that. But I also believe that [Coca-Cola] keep producing billions of bottles of coke because people keep buying Coca-Cola in plastic bottles. And we choose with our money whether to support unsustainable farming practices or to support a CSA box from a local farm. We choose to buy single-use plastic or something that might be a little more expensive right now that is better for the environment…We should make a series of choices about what we value most, and that can help us feel like we’re supporting the people that we want to support.”

33:25 – “It’s not just your company, but who are you partnering yourself up with, who is supplying you with all the material? That’s also becoming a big, big factor in sustainability. And I think it’s great. It’s across the whole chain from the beginning until the end of the product is produced, and consumers are becoming very interested in this and they’re smart now. They’re reading labels more than ever before. They want to see where it was made. I think there’s a huge revolution happening in sustainability across the board.”

37:55 – “I love meeting people from everywhere in the world…Every time I take a cab, every time I see someone, I’m like, ‘Where are you from?’ And some of them probably think I’m crazy, but I love chatting everybody up – that’s what unites us. And I promise it creates a bond. People just sort of become softer, become so nice, and you develop this, ‘wow, we’re all human after all’. You find common elements. And so that international part of it is really very exciting to me and that’s always been a part of my career.”

41:02 – “You need to do…a self check-in. Am I happy? Am I fulfilled? What’s missing?…Do a list of things that you really feel passionate about, that you really want to accomplish…It doesn’t have to be ‘I want to get a house,’ it could be every day things: ‘I want to go ride my bike.’ You have to make time for those things to come in but you also have to be brave with yourself. You have to take that next step because it’s not easy changing your behavior, changing your ways. It’s a very difficult thing to do. It’s like a changing culture in a company. It’s your changing behavior, changing your own culture. So you’ve got to be brave and be honest with yourself and go there.”

43:39 – (Ross) “You can only pretend that everything’s fine, both for yourself and for the world, for so long…It’ll catch up with all of us.”

43:55 – “Sometimes people don’t act because it’s not affecting you. It’s not affecting my everyday commute. It doesn’t affect my vacations. It doesn’t affect me going and having a meal with my friends. And so that’s why it’s easy to just sit and wait…You need to act now. It’s kind of like giving back to others…You’re not alone in the world and I think that’s what sometimes we forget. And that’s why we feel lonely and we feel we don’t matter because we sometimes have our own entity. No – get out of yourself, be out there and connect. And that’s what’s going to help.”

45:10 – “The perfect scenario is that people will all be aligned. Everybody will work together to help save the environment. Everybody will be nicer to each other, treat each other with respect, be more mindful about where we’re coming from. There won’t be any sort of discrimination. We can help each other out professionally, personally, and we can make the place more liveable and less lonely and connect with one another. I think that’s kind of the ideal scenario – and for everybody to be happy in whichever way they feel happiest.”

51:02 – (Ross) “I think for many people we fear things that we think are difficult, not knowing that there might be happier things on the other side. It’s easier for me to stay at home, to never get a passport, to never leave my hometown, because getting on a plane is hard. It’s challenging. Getting a passport is challenging. Getting a ticket is challenging. Going through security is challenging. Taking an eight-hour flight is challenging. All of these little micro-challenging things. But the rewards that wait for you on the other side are huge if you’re willing to get over some of those things.”

52:14 – (Ross) “We don’t like to embrace things that are uncomfortable…I think there’s this viewpoint, for example, like if I see how an iPhone is made, if I see the factory, if I see the pollution, then I have to confront some part of that situation. When I’m choking on smog outside of the factory and I feel bad for the people who live right next to that factory…some part of you must confront something. You must ask yourself some kind of question. I think many people instinctively feel that doing that only leads to unhappiness…But I’ve always believed that that’s not necessarily the case. I believe that you can embrace the problems and see the challenges of the world as they are and not be just depressed by it. I believe that you can be aware of what’s going on and still find happiness – and maybe even find greater happiness because you’re aware of what’s really going on instead of turning a blind eye.”

54:10 – “You can start going on a journey where you find people that think the same way as you and that can make you a happier person. Finding people that are value aligned with what you believe in…It’s uncomfortable to face those realities at first because the immediate result of it is not satisfaction. I think as human beings we want satisfaction now. Instant. So if I’m not going to get it, why would I go there? And so we have to kind of re-train our brains to realize that taking that first step might be tough, but it might be better for you in the long run.”

55:22 – “Being uncomfortable, I think is good. And it’s counterintuitive, because people think sometimes, ‘oh, my God, I don’t want to be in that space’, but sit in there for a while, don’t act, and see what comes out at the other end. Don’t be reactive and be uncomfortable. I think it’s good for you.”