Teaching Impact and Investment: John Oxtoby and the Rapidly Changing Field of ESG

John Oxtoby was deep into ESG long before most of us knew what those letters stand for. Suddenly it seems the whole world is speaking his language.

As Senior Vice President and Director of ESG Investing at Ariel Investments, Oxtoby has a front row seat as sustainable funds flourish and change abounds in the field of environmental, social, and governance (ESG) investing. 

His from-the-trenches knowledge drives a new course at the Harris School of Public Policy. Introduction to ESG and Impact Investing recently wrapped its inaugural session and will be offered again in Autumn 2022. Oxtoby co-teaches the class with a former colleague, Leah Yablonka.

The class grew from three lunchtime sessions Oxtoby curated for Harris' Center for Municipal Finance at the invitation of Tom Coleman, PhD’84, the center’s director. 

“We saw that students were super engaged and interested in these topics and in career paths in these different fields,’’ Oxtoby said.

So engaged, in fact, there was a wait list for that lunch series, and more than 90 students applied for 40 slots when the full course was announced.

Intense interest among Harris students should be no surprise, Oxtoby said. ESG is rooted in data-driven policy and measurable social impact – tenets on which Harris is based.

ESG investing has grown quickly. Investors and corporate issuers are grappling with policy, practice, measurement, and reporting. Policy makers and regulators are scrambling to establish standards, rules, and monitoring methods.

“All of this has happened without a consensus over what constitutes ESG or landing on a consistent approach to ESG,’’ Oxtoby said. “It’s a fast-moving space and we’re still very much in the early stages.’’

He predicts real transformation over the next 10 years, leading to many new opportunities for policy people in roles such as setting targets, creating strategies to meet those targets, metrics, and reporting.

“ESG has clearly moved away from being the domain of the chief sustainability officer to something that is becoming best practice across corporate America, distributed across the organization,’’ Oxtoby said.

He approaches the Harris course through his firm’s lens as a public equity investor. 

“What investors demand is consistent, comparable, decision-useful data that we can use to compare and assess companies’ performance against their peers,’’ Oxtoby said. 

That leads naturally to considerations of other stakeholders across the landscape – regulators, policy makers, corporate leaders, consumers, and employees.

The course starts with asset management fundamentals and the history of ESG and impact investing. Other topics include thematic investing, such as climate change and gender issues; the intersection of impact investing and public policy; and the role of NGOs and investor coalitions. 

Greenwashing, a focus of policy makers and regulators, is a thread throughout the course.

“We encourage students to pressure test these different strategies we’re learning about, consider to what extent firms are really doing what they report to be doing.’’ 

Oxtoby’s work at Ariel gives him an unusual perspective.

John W. Rogers Jr. founded the first African American-owned investment management firm in 1983, rooted in ESG principles before ESG was a term. Today he is Co-CEO (along with Mellody Hobson) and highly regarded for his influence in the field, which has evolved from socially responsible investing (SRI) to ESG as we know it today. Ariel has nearly $18 billion assets under management.

Oxtoby joined in 2014 after working in the Obama-Biden White House as Associate Director of the President’s Job Council, a CEO-led advisory group for which he helped develop public-private partnerships focused on growing the clean energy economy and expanding workforce training. Oxtoby also served as an aide to Senior Advisor Valerie Jarrett (LAB’73) and to Chairman of the Council of Economic Advisers Austan Goolsbee, a professor at the Booth School of Business.

Through his experience in government, Oxtoby became convinced that private sector leaders can gain powerful insights from public sector leaders.

“Whether it is attracting and retaining mission-driven talent, looking beyond short-term returns, or assessing climate risks, public sector leaders have a head start operating in an “ESG” environment,’’ Oxtoby said.

At Ariel, Oxtoby said, ESG has been core to how the firm invests, engages, and behaves since its founding 39 years ago.

“My role is to harness this new world of ESG that didn’t exist 10 years ago, helping to bridge what we've done historically, augmenting that with a focused centralized group navigating today’s opportunities and resources related to ESG.’’  

Ariel boasts that its approach differs from others in the industry. With a turtle attached to its “slow and steady’’ slogan, the firm stresses a long-term approach, investing in small- to mid-cap firms and pushing for positive change.

“Most importantly, we work with management teams to push them to improve across social and environmental dimensions,’’ Oxtoby said. “We’re really proud that we can point to over 55 examples where we’ve successfully engaged portfolio companies to add diverse directors to their board, for example.’’

Oxtoby’s team is also pushing portfolio companies to adopt best-in-class ESG disclosure framework, to set and track greenhouse gas emissions and to set GHG emission reduction targets.

Oxtoby is new to the Harris faculty but long in the UChicago universe. His father, David Oxtoby, was a professor of chemistry and Dean of Physical Sciences and now serves as President of the American Academy of Arts and Sciences. His mother, Claire Oxtoby, taught at UChicago’s Lab School. 

John attended Lab School starting as a preschooler and now serves on the Lab Alumni Association Executive Board. His 3-year-old daughter Leila starts there in the fall.

And it is because of Lab School that Oxtoby is at Ariel. As a student at Lab, he met then Lab board member John W. Rogers, Jr., who later helped Oxtoby with a soccer recruiting visit at Princeton, where Rogers is an enthusiastic alum. Rogers serves as vice chair of the board of trustees of the University of Chicago.

“I ended up playing soccer at Harvard, but he sort of forgave me,’’ Oxtoby said.

He must have, as Oxtoby interned at Ariel during college and the two stayed in touch while Oxtoby worked at the White House. 

His time at the White House inspired Oxtoby to embrace the ESG path. 

“It was the work we were doing as an administration, convening corporate stakeholders and influencing them to find ways to help drive positive change on various social and environmental priorities.’’ 

Today Oxtoby seeks to leverage the power of investors to affect change. And through Harris, he hopes to bring others along.