ESG Explained | ‘Billions’ Season 5 Episode 4 Recap Review

In the latest episode of Be Smarter Than Your Neighbor #BSTYN we take a dive into ESG investing; and, we explore why Taylor Mason and Wendy Rhodes would be interested in creating such an investment vehicle within Axe Capital.

ESG Explained

In tonight’s episode of Billions: ESG (Environmental, Social, Governance) Investments and ESG Strategies emerge as a focal point for Axe Capital.

View Billions Season 5 Episode 4 Recap:

This is what Taylor and Wendy Plan on Doing: ESG | Billions Season 5 Episode 4 Recap
Billions Season 5 Episode 4 What is ESG | An Explainer

From ESG Innovations:

“What is ESG Investing? ESG (Environmental, Social and Governance) investing refers to a class of investing that is also known as “sustainable investing.” This is an umbrella term for investments that seek positive returns and long-term impact on society, environment and the performance of the business. There are several different categories of sustainable investing. They include impact investing, socially responsible investing (SRI), ESG and values-based investing.”

ESG Innovations
ESG Explained | 'Billions' Season 5 Episode 4 Recap Review » Be Smarter Than Your Neighbor!
ESG Investments Explained

Deep Dive Review of ‘Billions’ Season 5 Episode 4

Season 5 Episode 4 of ‘Billions’ on Showtime.

As I’ve done before: I want to cover the jargon and finance concepts explored within the episodes of Billions.

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By having a better understanding of all the various financial machinations we are able to enjoy Billions a lot more.

The primary driver in the episode’s evolution was the central conversation between Taylor and Wendy; and, their desire to open a new fund within the Axe Capital structure. So, inevitably the question arises: what exactly were they talking about; and, what exactly is their goal in starting a new fund?

When you review Episode Three of ‘Billions’ on Showtime, you should remember that we talked about how the University President wanted to divest the University’s investments in all fossil fuel industries. The President wanted to be out of all forms of investments that were negative or damaging to the environment.

So, the new focal point that Showtime wishes to introduce in ‘Billions’ is the novel concept that Taylor and Wendy are now going to explore.

What does ESG Mean?

ESG Investing” is not a new form of investing; nor is it a new category. But, as of late, ESG, as an investment class is getting a lot of attention. A lot of money is being transferred into this new strategy; and, we’re talking about money in the trillions of dollars.

ESG Explained | 'Billions' Season 5 Episode 4 Recap Review » Be Smarter Than Your Neighbor!
Rising Assets Under Management in ESG Strategies | Via Financial Times

Essentially, ESG is the acronym for: Environmental, Social and Governance. ESG strategies aim to ensure that investments have a low environmental footprint, high social impact, and are governed in an ethical and practical manner.

And, what that basically means: in a nutshell, is that large pension funds, large endowments, large bowls of money are now actively seeking to invest their monies in strategies and vehicles of an ethical manner.

Clients and customers are now saying: “Hey! I don’t want my money just sitting passively in some company! Rather, I want my money to not only sit with the firm; but, I want to be able to actively ensure that my investments in these companies follow certain rules and regulations.”

ESG attempts to create an investing framework in which investments are ethical and sustainable.The application of ESG is to ensure that investments have high degree of social impact and a low environment footprint.

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What do ESG Investors Want?

Investors in ESG strategies want to make sure that corporations are run well; and, that they’re run with a focus of doing good. And, it is this construct is what Wendy and Taylor are going exploit. They understand the social and economic benefits that can be gained when rich people wish to invest as concerned citizens engaged in the public good.

How will ESG Investments be Handled in ‘Billions’

  • The impact question: How do you get someone to get rid a $2 Billion investment in a company such as General Motors? To do so successfully, one would have to find a buyer; and, one would seek and require liquidity.
  • The impact answer: These are solutions that Bobby Axelrod and Axe Capital wish to provide.

So, as episode 4 continues, the show ‘Billions’ builds upon the idea that Axe Capital could become the agent that conducts efficient divestitures. And, moreover, they become the agent that controls the large capital inflows via ESG investments. Axe Capital would make money by transacting these divestitures in an efficient manner and they would make monies from the gains that arrive via these investments.

It’s the profits from such investments that Taylor Mason and Wendy Rhodes are going to bring to Axe Capital.

So, as the show progresses, ESG investments are going play an increasingly important role in the development of the story line arc.