Spotlight on Sustainability: Physis Investment
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We sat down with Stefania Di Bartolomeo, CEO and founder of Physis Investment to discuss table tennis, her work to bring greater transparency to investing and sustainable finance technology.
Q: Stefania, moving from Italy to Massachusetts to build a business takes a lot of courage – what did you find here that helped you on your entrepreneurial journey?
A: I play table tennis, and I am quite good at it. In Italy, it was always hard to play in college because people did not want to be defeated, especially by a woman. When I came to study at Harvard for my Master's, everybody wanted to play against me because they wanted to improve their skills. I knew I had found a winning culture here in Boston.
The right culture is everything. It shapes minds and society, and brings up new opportunities for everyone. I wanted to start a business in an environment where people come together to become better, stronger, and go faster without the fear of losing.
Q: Tell us about Physis Investment and how you bring greater transparency to ESG investing.
A: The Physis platform is for institutional investors who are serious about building the new frontier of sustainable portfolios. We started the company at Harvard in 2019 with the goal of bringing transparency to the investment industry. The world of sustainable investment is dominated by ambiguous ESG scores, which are limited in terms of evaluating sustainability. However, investors and regulators are starting to demand real proof of the impact of these “sustainable investments”. This is exactly where Physis technology comes in. We measure a portfolio's impact by telling you the raw impact data of any investment from day one. Examples include the amount of emissions produced, women employed, sustainable products and services created for over 12,000 companies, and 335,000 funds. As sustainability includes the analysis of different factors, such as resource scarcity to social issues, we empower investors to construct unique portfolios with all the aspects they care about.
Q: For businesses to become more sustainable, what needs to be done culturally within an organization?
A: We are living in an area of incredible transformation. Today we expect businesses – small or large – to respect the environment and people. From an investor perspective, we expect more than company commitments and we look carefully at the data. As investors, we demand proof of a company's water usage, waste production, and recycling. 92% of the S&P 500 companies report this information. Ten years ago, it was just 20% of companies.
Reporting sustainable data is the first and probably most important cultural evolution, because it triggers an irreversible process of change. Before publicly disclosing a single sustainable indicator, a company needs to investigate its performance, understand what they are doing and why, compare their results with peer companies, and potentially act on it to make improvements.
As a result, companies need to start disclosing information that measures sustainability because it helps them move to a more sustainable business strategy.
Q: The Inflation Reduction Act made headlines earlier this year – how do you foresee it making an impact on investment decision making?
A: The passing of this act clearly indicates that governments are becoming increasingly interested in sustainable development and will continue to finance these projects in the foreseeable future. Also, the increased understanding of a company's sustainable development could lead to the issuance of more green bonds. Investors are likely to track how the government is allocating its resources and may invest in companies that will benefit from them. As funds are consistently allocated to these projects, the government will not want to misdirect their funds to the wrong sources, which could lead to the creation of more regulations regarding sustainability disclosures. This will create an incentive for investors who may have otherwise been disinterested or hesitant about ESG or impact investing due to its lack of standardized data to consider incorporating sustainability strategies into their portfolios. And in a nutshell, it will lead to even more growth and demand for our technology.
Q: What differentiates Physis Investment from other companies that are involved in Sustainable Finance?
A: While the entire sustainable data industry remains focused on ESG scoring, Physis technology addresses the next big question in sustainable finance, which is, “Can you prove the impact that my investment is making on the planet?” An ESG score can potentially show why your investment is considered sustainable but cannot provide a clear measurement of the impact on the planet. Our platform enables you to track, compare, and report on your portfolios' actual environmental and social impact performance using tangible numbers and metrics. We offer data where others simply cannot. This added granularity changes the way investors understand the performance of an investment. When you invest, it’s important to know that there is more behind the financial data – this is where Physis can help. We tell the story about the impact that your money has on the planet with real-time, tangible information.
Q: What’s next for Physis Investment? Will you stay in the Commonwealth?
A: Physis’ technology has come at the right time. As the EU and the SEC increase regulations on portfolio sustainability disclosure, more financial institutions are looking for innovative technology that can help them stay ahead of the curve, and lead sustainable innovation while complying with the new regulations. We see an incredible increase in interest in our solution. The company is growing, and so is our team. We are currently expanding our sales team in Europe, where we already have two team members, and our tech team is growing in Miami.
I love Boston and am incredibly grateful for the supporting ecosystem here. When you want to grow a business, you need a great vision, the ability to execute it, and a supportive network. Physis has found its home in Boston, thanks to a phenomenal network of institutions like Harvard i-lab, FinTech Sandbox, and MassFintech Hub, among others.
As we grow, we keep our strong identity as a proud Boston-based company and will continue to be active members and give back to the fintech community.
Q: How does fintech change the world for the better and how can the Massachusetts fintech ecosystem do more?
A: Fintech companies are innovating in two ways – they make everything we already do faster and easier, and also create new solutions to improve financial accessibility and transparency. Fintechs in sustainable investing are offering different solutions that empower investors to build portfolios aligned with their values. Today, this is already an old narrative, and the market has moved to the next big innovation – the traceability of the impact of portfolios. This is Physis’ speciality. When you can measure the impact of an investment on the planet or society, you can build more sophisticated portfolios and direct money to projects or companies that will generate a positive effect and, of course, financial returns. This system creates a powerful reinforcing loop in the world of portfolio management and helps the financial system to actively contribute to financing a better world.
Mass Fintech Hub has done an incredible job of bringing together many stakeholders who want to support the development of a strong fintech ecosystem. With its leadership, the ecosystem will benefit from its plans to provide more in-person gatherings with experts who can share their stories, the creation of a group of mentors who can dedicate some of their time to advising startups, and a strong network of angels and VCs that can provide capital to startups.
Q: Stefania, moving from Italy to Massachusetts to build a business takes a lot of courage – what did you find here that helped you on your entrepreneurial journey?
A: I play table tennis, and I am quite good at it. In Italy, it was always hard to play in college because people did not want to be defeated, especially by a woman. When I came to study at Harvard for my Master's, everybody wanted to play against me because they wanted to improve their skills. I knew I had found a winning culture here in Boston.
The right culture is everything. It shapes minds and society, and brings up new opportunities for everyone. I wanted to start a business in an environment where people come together to become better, stronger, and go faster without the fear of losing.
Q: Tell us about Physis Investment and how you bring greater transparency to ESG investing.
A: The Physis platform is for institutional investors who are serious about building the new frontier of sustainable portfolios. We started the company at Harvard in 2019 with the goal of bringing transparency to the investment industry. The world of sustainable investment is dominated by ambiguous ESG scores, which are limited in terms of evaluating sustainability. However, investors and regulators are starting to demand real proof of the impact of these “sustainable investments”. This is exactly where Physis technology comes in. We measure a portfolio's impact by telling you the raw impact data of any investment from day one. Examples include the amount of emissions produced, women employed, sustainable products and services created for over 12,000 companies, and 335,000 funds. As sustainability includes the analysis of different factors, such as resource scarcity to social issues, we empower investors to construct unique portfolios with all the aspects they care about.
Q: For businesses to become more sustainable, what needs to be done culturally within an organization?
A: We are living in an area of incredible transformation. Today we expect businesses – small or large – to respect the environment and people. From an investor perspective, we expect more than company commitments and we look carefully at the data. As investors, we demand proof of a company's water usage, waste production, and recycling. 92% of the S&P 500 companies report this information. Ten years ago, it was just 20% of companies.
Reporting sustainable data is the first and probably most important cultural evolution, because it triggers an irreversible process of change. Before publicly disclosing a single sustainable indicator, a company needs to investigate its performance, understand what they are doing and why, compare their results with peer companies, and potentially act on it to make improvements.
As a result, companies need to start disclosing information that measures sustainability because it helps them move to a more sustainable business strategy.
Q: The Inflation Reduction Act made headlines earlier this year – how do you foresee it making an impact on investment decision making?
A: The passing of this act clearly indicates that governments are becoming increasingly interested in sustainable development and will continue to finance these projects in the foreseeable future. Also, the increased understanding of a company's sustainable development could lead to the issuance of more green bonds. Investors are likely to track how the government is allocating its resources and may invest in companies that will benefit from them. As funds are consistently allocated to these projects, the government will not want to misdirect their funds to the wrong sources, which could lead to the creation of more regulations regarding sustainability disclosures. This will create an incentive for investors who may have otherwise been disinterested or hesitant about ESG or impact investing due to its lack of standardized data to consider incorporating sustainability strategies into their portfolios. And in a nutshell, it will lead to even more growth and demand for our technology.
Q: What differentiates Physis Investment from other companies that are involved in Sustainable Finance?
A: While the entire sustainable data industry remains focused on ESG scoring, Physis technology addresses the next big question in sustainable finance, which is, “Can you prove the impact that my investment is making on the planet?” An ESG score can potentially show why your investment is considered sustainable but cannot provide a clear measurement of the impact on the planet. Our platform enables you to track, compare, and report on your portfolios' actual environmental and social impact performance using tangible numbers and metrics. We offer data where others simply cannot. This added granularity changes the way investors understand the performance of an investment. When you invest, it’s important to know that there is more behind the financial data – this is where Physis can help. We tell the story about the impact that your money has on the planet with real-time, tangible information.
Q: What’s next for Physis Investment? Will you stay in the Commonwealth?
A: Physis’ technology has come at the right time. As the EU and the SEC increase regulations on portfolio sustainability disclosure, more financial institutions are looking for innovative technology that can help them stay ahead of the curve, and lead sustainable innovation while complying with the new regulations. We see an incredible increase in interest in our solution. The company is growing, and so is our team. We are currently expanding our sales team in Europe, where we already have two team members, and our tech team is growing in Miami.
I love Boston and am incredibly grateful for the supporting ecosystem here. When you want to grow a business, you need a great vision, the ability to execute it, and a supportive network. Physis has found its home in Boston, thanks to a phenomenal network of institutions like Harvard i-lab, FinTech Sandbox, and MassFintech Hub, among others.
As we grow, we keep our strong identity as a proud Boston-based company and will continue to be active members and give back to the fintech community.
Q: How does fintech change the world for the better and how can the Massachusetts fintech ecosystem do more?
A: Fintech companies are innovating in two ways – they make everything we already do faster and easier, and also create new solutions to improve financial accessibility and transparency. Fintechs in sustainable investing are offering different solutions that empower investors to build portfolios aligned with their values. Today, this is already an old narrative, and the market has moved to the next big innovation – the traceability of the impact of portfolios. This is Physis’ speciality. When you can measure the impact of an investment on the planet or society, you can build more sophisticated portfolios and direct money to projects or companies that will generate a positive effect and, of course, financial returns. This system creates a powerful reinforcing loop in the world of portfolio management and helps the financial system to actively contribute to financing a better world.
Mass Fintech Hub has done an incredible job of bringing together many stakeholders who want to support the development of a strong fintech ecosystem. With its leadership, the ecosystem will benefit from its plans to provide more in-person gatherings with experts who can share their stories, the creation of a group of mentors who can dedicate some of their time to advising startups, and a strong network of angels and VCs that can provide capital to startups.
