How To Integrate ESG Into Your Portfolio Effectively. with Eric Duchon & John Fitzpatrick

Summary: In the ninth episode of Season 10 of the Propcast, host Louisa Dickins is joined by Eric Duchon, Global Head of ESG for Blackstone Real Estate and John Fitzpatrick, Chief Technology Officer of Alternative Asset Management Technology at Blackstone, the world’s largest alternative asset manager. John featured previously in Season 2 of The Propcast.

Eric and John share where Blackstone is on ESG and why they are seen as one of the leaders in this space. They talk about what Blackstone is focusing on as a business when it comes down to strategy, investment and innovation across their diverse and global portfolio.

In this episode you will hear how Blackstone ensures attractive returns for their investors whilst making a positive impact on the communities in which they invest.

Resources:

• LMRE Global Recruitment and Search Consultancy
• LMRE YouTube Interviews

Companies Mentioned:

• Sphera
• Schneider Electric
• EQ Office
• Willis Tower

Shout Outs:

• Don Anderson
• StuyTown
• Kenneth Caplan
• Kathleen McCarthy Baldwin 
• Jonathan Gray 

Key Insights From This Episode:  

 

• We believe that ESG is a real source of value and a way to mitigate risk in our portfolio - Eric

 

• What drove me into this space is the use of passion to drive change, whilst driving value - Eric
• We do need the technologies that help us automate and optimise our buildings but this also requires the people that know what they’re doing - Eric
• Technology is important, but having a clear strategy is the starting place that people should have if they want to achieve their ESG targets - John

About Our Guests:

Eric Duchon:

Eric Duchon is Global Head of ESG for Blackstone Real Estate. As part of the Real Estate Asset Management team, he partners with the firm’s central ESG team and Portfolio Operations to initiate, manage, implement and report ESG initiatives across the global Real Estate portfolio.

Prior to joining Blackstone in November 2020, Mr. Duchon was at LaSalle Investment Management where he was a Managing Director and Global Head of Sustainability. Prior to LaSalle, Mr. Duchon spent over 9 years at Cushman & Wakefield as the Director of Sustainability Strategies.

Mr. Duchon received a BBA from Emory University – Goizueta Business School and a Masters in Real Estate Development Degree from New York University Schack Institute of Real Estate.

John Fitzpatrick:

John Fitzpatrick is Chief Technology Officer of Alternative Asset Management Technology at Blackstone. He handles all aspects of technology across Blackstone’s Real Estate and Private Equity businesses and assists our portfolio companies with managing their technology programs and strategy. He is also involved in the firm’s balance sheet investments in targeted, early stage, technology-related opportunities.

Prior to his current role, Mr. Fitzpatrick oversaw various initiatives across the entire Technology and Innovations group. Before joining Blackstone in 2011, Mr. Fitzpatrick worked at Capital IQ, a division of Standard & Poor’s, for seven years where he was most recently the Head of Product.

He received a BS in Finance from St. John’s University and currently serves on the Blackstone Charitable Foundation’s Leadership Council.

About Blackstone:

Blackstone is the world’s largest alternative asset manager. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our $941 billion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, infrastructure, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow @blackstone on LinkedIn, Twitter, and Instagram.

About Our Host

Louisa Dickins

Louisa is the co-founder of LMRE, which has rapidly become the market leading global PropTech recruitment platform and search consultancy with operations across North America, United Kingdom, Europe and Asia-Pacific.

To promote the industry she is so passionate about, Louisa set up the Global podcast ‘The Propcast’ where she hosts and invites guests from the built environment space to join her in conversation about innovation.

About LMRE

LMRE is globally recognised for leading the way in Real Estate Tech & Innovation talent management.

From the outset our vision was to become a global provider of the very best strategic talent to the most innovative organisations in PropTech, ConTech, Smart Buildings, ESG, Sustainability and Strategic Consulting.

At LMRE we are fully committed at all times to exceed the expectations of our candidates and clients by providing the very best advice and by unlocking exclusive opportunities across our global network in the UK, Europe, North America and Asia-Pacific.

Timestamps:

[2:06] Eric: What is your role at Blackstone?

• I lead ESG for Blackstone Real Estate globally, this means myself and my team work with all the departments at Blackstone to ensure we are implementing our ESG priorities as they are aligned with our fiduciary duty to add value to our portfolio and deliver great returns to our investors.
• We are finding ways to continue delivering value and ensuring that we are improving the environmental, social and governance performance of our companies and our assets.

[4:44] John: What are your responsibilities in your role at Blackstone and how have they changed?

• My responsibility is alternative asset management technology, this involves everything under our private equity and real estate umbrellas, it’s more than half of the AUM at Blackstone and really fits within ESG.

[5:35] Eric: What does ESG mean to Blackstone and how has it changed since you joined in 2020?

• There were great initiatives happening across Blackstone when I joined with regards to ESG however, the firm needed a more programmatic approach which is what we have done over the last 2 years.
• We’re focused on 3 main areas; diversity, decarbonisation and good governance. This guides everything that our ESG teams do and how we continue to integrate this more programmatic approach into our portfolio.

[7:40] John: How does your team assist with the ESG part of Blackstone?

• If you want to hit targets and goals then you need to be able to get the data and track it to see your progress over an extended period of time. 
• It's our job to collect that data in the most streamlined fashion so we can process that content in real time to ensure we are driving towards those targets

[9:05] John: Are there any more climate focused ESG investments across your portfolio that you could share with us?

• The data and insights that we have got from Sphera have helped us improve and learn in this space and helped our ESG technical ecosystem.

[9:42] Eric: How do these investments assist with your portfolios?

• We worked to develop a framework which sets out Blackstone Real Estates ESG priorities across 6 pillars, these set the tone for how we engage with the portfolio companies in order for them to develop their 3 year strategic ESG roadmaps.

[13:31] John: How do you tackle the technology gaps in businesses across your portfolio?

• We use our data initiatives to help them implore technology and try to make the transition as seamless as possible. We can then analyse and track their data and help them achieve their targets.
• We tend to make investments in solutions that have a competitive advantage or a unique data set like Sphera. 

[17:11]  Eric: What are the main barriers when it comes down to reducing carbon across your portfolios?

• A couple of years ago the social aspect of ESG was focused around  health, wellness and community engagement. Today, it is more focused on diversity, equity and inclusion.
• When we look at PropTech solutions for ESG one of the main barriers is being able to identify what the strengths and weaknesses are. There are some really good processes in place but humans are still necessary to ensure the quality data flows through.
• We need to ensure that we have the right people that understand the technologies and can drive action from it.

[20:45] John: Is there anything you would like to mention that you have seen in terms of barriers?

• Technology is important but having a clear strategy is the starting place that people should have if they want to achieve their ESG targets.

[23:00] Eric: What is the balance between automation and optimisation, and reducing carbon footprint? 

• We need the technologies that help us automate and optimise our buildings but this also requires the people that know what they’re doing.

L – Touch on the main lessons you have learnt throughout your career within this space?

Eric: You need to stay nimble in everything that you do, different things come at you everyday and you need to be able to take them in your stride.

M - Please give a mention to anyone / product / service.

John: Jonathan Gray, President at Blackstone, he is committed to ESG and doing it the right way. 

R – What has been the most  rewarding  aspect of working in ESG?

Eric: Whether you're reducing carbon emissions, whether you're ensuring that folks from under-resourced communities are getting better opportunities working with our portfolio companies. That to me is what drove me into the space connecting the passion to drive change.

E - What are you excited about in the future of the ESG space?

John: The innovation that is coming down the pipe, some of the best and brightest minds are in this space that are really passionate about this topic so the landscape in a few years time is going to look vastly different.

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