1. MARLYS APPLETON
Managing Principal
Eleventh Crow Wing
Financial Sector Risk Leads to
ESG Awareness and Improved
Risk Management
11 December 2014, Zicklin School - Baruch College

2. Financial Sector Forces Leading to New Paradigm of
Informed Risk Taking
• Outdated Static Model: Historical disconnect between executive
decision making and Risk Management.
• As risk measurements became increasingly sophisticated so did the ex
post “check the box” exercises while the decision making paradigm
remained mostly unchanged. (GAAP, STAAT, EPS, CF, ROE, earnings directions +
Business Strategy & Corporate Finance)
• Absence of dynamic risk taking - not to be confused with innovative uses of
M&A, product development, etc, aimed at growing a static business, cost
effectively
• Focus on delivery of stable accounting-based earnings, masks risks
lurking behind these cornerstone activities/measures
• GLOBAL FORCES pressured this model, forcing FINANCIAL
INSTITUTIONS to seek new ways of economic value creation, under
greater complexity and uncertainty, leading to speculation without
enhanced Risk Management.

3. New Strategic Vision: Balance Sheet Optimization, Risk Adjusted Economic
Performance, Proactive Stakeholder Engagement, Stable, Growing
Accounting Variables
Old = Static
• Acctg Variables
• Business
Strategy, Corp
Finance
• Risks Masked &
Not Fully
Understood or
Managed
• Vision: Grow
Static Business
New = Dynamic
Investment
Analysis
• Supply/Demand
across financial
markets
• Maco economic
trends,
Imbalances,
Fundamentals
Risk Mgmt
• Exposures, Replicating
Portfolios, Risk
Decomposition
• VaR, Stress Testing
• Risk Based Business
Model
• Black Swan-ESG
• RM as Strategic Tool, not
Check the Box Process
Ref: Leo Tilman

4. Equity Asset Class Example: Integration into Proxy Voting
Process
REVIEW PROCESS
• External Counsel
• Internal Counsel
• Proxy Committee Reps
•Legal/Compliance
•Asset Managers
•Sustainability
DIMENSIONS OF ESG PROXY INTEGRATION
FUNDAMENTAL BASIS
• Fiduciary Responsibility
• Best Economic Interest
• Where ESG is Material
• Vote for More
Disclosure to Better
Assess Risks

5. Thank you marlys@alum.mit.edu
Marlys Appleton is Founder and Managing Principal of Eleventh Crow Wing, a sustainability consultancy, whose mission is to collaborate and co-create value
solutions for business and government entities in the field of sustainability risk management. Appleton has a distinguished career working at global corporates:
Morgan Stanley, Bank of America, Swiss Bank Corp (now UBS), Barra/GAT (now MSCI-Barra), BlackRock Financial Management and AIG Asset Management, in a
variety of roles: financial modeling and security valuation, business planning, sales management, performance management, quantitative risk assessment,
regulatory reporting, sustainability risk management and the practice of stakeholder engagement on sustainability topics.
At a global main-stream insurance asset manager Ms Appleton was appointed to lead the integration of E-S-G (environmental, social and governance) risk factors
into the investment due diligence process across multiple asset classes for its $700 billion global portfolio. As a sustainability ambassador, she lead external
stakeholder engagement with the Carbon Disclosure Project, CERES, the United Nations Environmental Program-Finance Initiative (UNEP-FI), Asset Management
Working Group, and contributed to publications on fiduciary risk and the legal basis for emerging E & S risk integration, published by the UNEP-FI Asset
Management Working Group.
As Chair of the Sustainability Steering Committee and leader of internal engagement on integrating sustainability, her team defined and managed the acceptance
of the intellectual and legal basis for E and S proxy voting policy, convincing sometimes reluctant executives to expand their definition of risk to include E and S
factors. She became the first non-portfolio manager voting member of the Proxy Committee, voting on various proxy ballot issues in multiple sectors: energy,
metals & mining, technology, pharmaceutical, utilities, food & beverage, touching on such topics as executive compensation, internet access in China, agricultural
practices in food production, public reporting on risks and opportunities related to climate change, and on human rights issues in Africa and Asia.
Ms Appleton is a frequent speaker on leadership for sustainability risk management and ESG integration. As a Board Member and Treasurer of WNSF, The
Women’s Network for a Sustainable Future (www.wnsf.org), she recently participated in its “Mentoring for Sustainability Fair”, a joint effort with NYU that
attracted more than 150 students. As an adjunct lecturer at New York University, she developed a highly popular course on the fixed income markets and was an
invited participant, to the IFC Sustainability Exchange 2014 on the Extractives Industry, presented in 2012 at the UNEP-Finance Initiative Global Round Table in
Washington DC, and, in 2013 spoke at Reuters Sustainable Finance Conference in New York. Her contributions in interest rate modeling and corporate models
are acknowledged in Ho & Lee’s Oxford Guide to Financial Modeling (2006) and contributions acknowledged in Approaches to Risk Management by Golub &
Tilman (2000) while at BlackRock Financial Management. Education: MS in Management from MIT, BA in Economics from the University of Washington and
Certificate in Public Finance from the University of Michigan,.
raduate School of Business.
Twitter: https://twitter.com/marlysal
Linked In: https://www.linkedin.com/in/marlysappleton
Web: https://www.eleventhcrowwing.com
Recent Press Interview: http://www.forumforthefuture.org/greenfutures/articles/woman-who-pioneered-sustainability-risk-management-wall-street