Neuberger Berman ESG Investing Challenge

2019 theme is Income Inequality and offers a prize pool of $10,000

Neuberger Berman will donate an additional $10,000 to a 501c3
organization of the teams’ choosing.

Thank you for your interest, signups for the 2019 Neuberger Berman ESG Challenge are now closed!

THE WINNING TEAM

We are proud to announce the winning team of the 2019 ESG Investing Challenge, Team ETSY.

Kyle Campbell, Mingming Wu and K.Y. Wong

OVERVIEW

Neuberger Berman is proud to announce the Neuberger Berman ESG Investing Challenge in conjunction with Columbia Business School. The Challenge seeks to empower MBA students to incorporate sustainability within robust investment processes. Participants will identify investments with the potential to meet a dual objective: positive impact and financial performance.

Neuberger Berman

Founded in 1939, Neuberger Berman is a private, 100% independent, employee owned investment manager. From offices in 34 cities worldwide, the firm manages a range of strategies including equity, fixed income, quantitative and multi asset class, private equity and hedge funds on behalf of institutions, advisors and individual investors globally. With more than 500 investment professionals and over 2,000 employees in total, Neuberger Berman has built a diverse team of individuals united in their commitment to delivering compelling investment results for our clients over the long term. That commitment includes active consideration of environmental, social and governance factors. As an active manager, Neuberger Berman has a long standing belief that material environmental, social and governance factors are an important driver of long term investment returns from both an opportunity and a risk mitigation perspective. We also understand that for many of our clients the impact of their portfolio is an important consideration in conjunction with investment performance.

ESG Investing at Neuberger Berman
Neuberger Berman’s 2018 ESG Annual Report

Columbia Business School

Columbia Business School’s Heilbrunn Center for Graham & Dodd Investing — a dynamic resource for students and practitioners to learn about value investing through world-class education and research, bridging theory and practice — and Tamer Center for Social Enterprise — which educates leaders to use business knowledge, entrepreneurial skills, and management tools to address social and environmental challenges — are proud to work in conjunction with Neuberger Berman to launch this challenge.

The Challenge

2019’s Theme is Income Inequality

Students will work with mentors to identify publicly listed equity investments that are aligned with the ESG theme and expect to generate positive financial performance (dual objective). After an initial round of eliminations, finalists will present at Neuberger Berman where a panel of judges will select the winning team(s), which will receive a financial prize from Neuberger Berman.

Key Dates

September 18
Neuberger Berman on Campus

September 30
Deadline to Submit Teams

October 15
Mid Challenge Check-In

October 31
Submissions Due

November 7
Finalists Announced

November 14
Finals Event at Neuberger Berman

Why Participate?

Environmental, Social, and Governance (ESG) investing is a rapidly growing space with ~$12 trillion in AUM, and ESG considerations are increasingly becoming central considerations in investment processes.

Through the NB ESG Investing Challenge, students will study an ESG theme and learn how to incorporate ESG considerations into their investment processes.Neuberger Berman also views the Challenge as an avenue through which exceptional candidates can be identified for internship and full-time positions.

"Our ESG philosophy, which is really something that is owned and believed in by the individual investment professionals that work here at Neuberger, is a belief that ESG factors can be material to investment performance over the medium to long term from both a risk and an opportunity perspective."

~ Jonathan Bailey, Head of ESG Investing

2019 THEME

ESG Investment Theme: Income Inequality

What is Income Inequality?

Income inequality refers to the high concentration of wealth or income in a small percentage of the population as well as inequality in relative income along gender, age, geographic, and racial lines.

Despite a decade of economic expansion in many countries, the benefits of growth have been unbalanced exacerbating income inequality in many parts of the world. Opportunities and outcomes for individuals continue to be shaped by their wealth, gender, ethnicity, geography and family background. As technology disrupts industries and traditional ways of working, there is the potential for inequality to be exacerbated. For investors, high income inequality may negatively impact long term investment performance, change the risks and opportunities that affect the universe of investment opportunities, and destabilize financial and social systems.

How should investors integrate risks and opportunities from income inequality into their investment processes?

What company characteristics open the door for outperformance when it comes to income inequality?

CEO Pay

In 1965, the CEO to worker compensation ratio was 20 to 1. By 1989, the ratio increased to 58 to 1. Today, the CEO to worker ratio is 312 to 1.

Do businesses with higher ratios outperform or underperform? Are there businesses that work to address this ratio?

Wages at Quick Service Restaurants

Some chains have highlighted slowdowns in revenue due to income inequality arising from stagnant wages in the low income bracket in 2018, the median fast food worker earned $21,750 in 2018 per the Bureau of Labor Statistics.

Do QSR restaurants that pay higher wages outperform?

Retail

Low and middle income households have a higher propensity to spend new money than high income households. Higher income inequality results in more money saved than spent in the economy, which affects retail and local businesses.

How are businesses adjusting to this imbalance and are businesses that operate in areas with low inequality more successful?

Outsourced and Automated Labor

The traditional worker company dynamic has been challenged recently with the proliferation of businesses that rely on outsourced (i.e. ridesharing) or automated labor (i.e. warehouses).

Do these shifts result in sustainable competitive advantages and outperformance? Do these shifts result in improved income inequality or worker outcomes?

Taxes and Wages

The US recently overhauled its tax code in part as a response to a string of corporate inversions to lower tax domiciles.

Do businesses with lower taxes have lower or higher income inequality within its workforce? Have workers or shareholders benefitted?

Wages across Geographies

Income inequality is typically higher in developing and emerging economies than in advanced economies.

Are businesses operating in emerging economies sustainably advantaged and have workers benefitted?

Insights and Sources

PRI

Why and How Investors Can Respond to Income Inequality

Ray Dalio

Why and How Capitalism Needs to be Reformed

IMF Working Paper

WP/17/236: Inequality in Financial Inclusion and Income Inequality

Financial Times

Amundi’s New Fund and Why Everyone Should Care About Inequality

Harvard Business School

Walmart’s Workforce of the Future

Columbia Business School

Are Americans Primarily Suffering from Income Inequality or Lack of Opportunity?

Economists for Inclusive Prosperity

A Network of Academic Economists Committed to an Inclusive Economy and Society.

Additional Material

AFL CIO, OECD, US Chamber of Commerce, World Bank

GUIDELINES

Prize Pool

$10,000 to be split between teams at the judges’ discretion. Judges may award prizes to multiple teams. Neuberger Berman will donate an additional $10,000 to a 501c3 organization of the teams’ choosing.

Investment Universe

Investment ideas must be a public equity (long only) with a market cap of $1 billion or greater. Investments can be global.

Eligibility and Team Composition

Graduate students at Columbia University are invited to participate. Teams must consist of 2-4 members, all of whom must be students at Columbia University – the team must appoint a Captain responsible for team organization and communications with Mentors and Judges. At least 50% of the team must be full time MBA students.

Deliverables

Each team is required to submit a maximum 5 page investment pitch with up to 5 additional pages for appendix and supporting tables (10 pages total). In addition, each team must complete a mandatory mid competition check in (Mid October) with their assigned mentor, to be scheduled at their discretion. All ideas must be presented using original content.

2019 Theme: This year’s theme is Income Inequality. Examples of investments may be companies that are actively addressing Income Inequality through its products or services, companies that score/perform well relative to peers from an Income Inequality perspective, or companies that have the demonstrated potential to be either.
Financial Objective: Investments must provide compelling financial upside.

Required Elements

Investment thesis, price target including expected total return and relevant timeframe, valuation methodology
Alignment with the Income Inequality theme. Identification of key metrics for measuring company’s success within the theme, any relevant engagement objectives with the company, and broader ESG considerations
Financial statements and forecasts
Assumptions and risk factors

Finals Presentation

Finalists will be notified by November 7th. Finalists must prepare a presentation for the judges that effectively communicates the investment and its satisfaction of the dual objective criteria. The presentation will be followed by Q&A from the judges.

All decisions made by NB and the judges are final. Any issues not specifically covered here will be at the discretion of NB.

CRITERIA

ESG Objective 30%

Does the investment meet the criteria for income inequality and is the argument well articulated?
Is the investment impactful and with scope?
Is there a discussion of broader ESG considerations?
Are the key performance indicators identified?

Financial Objective 30%

Does the investment have compelling financial upside?
Is there an alignment of financial performance with success addressing income inequality?

Quality of Analysis 30%

How thorough and deep is the analysis?
Are forecasts/projections and assumptions rooted in strong financial logic?
Have the requirements been met and are key questions answered?

Quality of Presentation 10%

Is the submission clear and compelling?
For finalists: Is the presentation polished and compelling, and have all team members participated substantially?

ENVIRONMENTAL, SOCIAL AND GOVERNANCE INVESTING

Neuberger Berman believes ESG factors can be material to investment performance over the medium to long term from both a risk and opportunity perspective.

LEARN MORE ABOUT NB’s ESG INVESTING PHILOSOPHY

JUDGES

Joe Amato

Joseph V. Amato

President of Neuberger Berman Group LLC and Chief Investment Officer of Equities

Ingrid Dyott

Ingrid Dyott*

Co Portfolio Manager of Core Equity and Sustainable Equity Strategies

Jonathan Bailey

Head of ESG Investing

MENTORS

Timothy Creedon

Director of Global Equity Research

Dan Flax

Dan Flax*

Senior Research Analyst, Technology, Media and Telecom Group

McCoy Jen

Research Analyst, The Capital Group

Manisha Kathuria

Manisha Kathuria*

Portfolio Specialist, Core Equity and Sustainable Equity Strategies

Jared Mann

Jared Mann*

Senior Research Analyst, Industrials and Materials Group

Robert Moffatt

Senior Vice President, Core Equity and Sustainable Equity Strategies

Jennifer Signori

Senior Vice President, ESG Investing

Anu Rajakumar

Portfolio Specialist, Multi-Asset Class

Jake Walko

Vice President, ESG Investing

*Columbia Business School Alumni

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