Saker Nusseibeh’s family guards the Church of the Holy Sepulchre, while he manages $670 billion: ‘Investing is about reading the undercurrents of history’

The Church of the Holy Sepulchre, in Jerusalem, is the place where — according to the Gospel — the crucifixion, burial and resurrection of Jesus Christ took place. It’s one of the most important centers of Christianity.

Since the 7th century, the family of Saker Nusseibeh has been responsible for guarding the keys to the temple and caring for the structure. But this isn’t the only interesting biographical information about Nusseibeh, who was born in Jerusalem in 1961. He also happens to be the CEO of Federated Hermes Limited, which has $670 billion worth of assets under management.

Surprisingly, the topic he chose for his doctoral thesis — medieval Spain and the coexistence between Christians and Muslims — is totally removed from the world of finance. Decorated by Queen Elizabeth II as a Commander of the British Empire (CBE), he’s also a great fan of the guitar. “I play rock and folk… although I love flamenco,” he smiles.

Question. Why did you choose to do a doctorate in Medieval History?

Answer. I specialized in the beginnings of power in Europe; on the kingdoms that gave rise to modern states. My thesis was about the 11th century and, particularly, about what was happening in Zaragoza, within the framework of the growing rivalry between [the kingdoms of] Aragon and Castile. Aragon, at that time, was much more advanced culturally and economically… but the race was won by Castile. For a historian, it was interesting to understand why.

When I came to study in Spain, I fell in love with the country. Since 1979, I’ve come back every year. I think it’s the best country in the world. [While this interview was conducted in English, Dr. Nusseibeh spoke this last sentence in Spanish.]

Q. While crafting your investment strategies, do you ever apply any of the lessons you learned while writing your thesis?

A. Of course. [During my historical studies], I learned that cultural differences generate different ways of solving the same problem. This means that you have to understand the cultural differences when doing business. Another lesson I learned is the importance of knowing how to interpret long-term trends. When the Muslims arrived in Spain, they brought new tools with them. But still, back then, few would have predicted that the country would become an agricultural power 200 years later. An investor at the time — who had read the trend correctly — would have invested in water wells. Investing is about knowing how to read those undercurrents of history. This requires time and discipline.

Another thing I learned during my thesis is the importance of politics. During the last 30 years, few people in the market paid much attention to political factors. And, suddenly, the war in Ukraine showed us why geopolitics should matter to investors. Stability is very important for the long-term trends that I mentioned before.

A. Queen Elizabeth II decorated you in recognition of your efforts to expand sustainable investment. Do you think that ESG (environmental, social and governance) investing is a passing fad in the financial markets, or a philosophy that’s here to stay?

A. It’s a long-term change that will materialize, because many people are moving in the same direction. China, for example, is now the largest producer of electric cars, because it has no oil. Right now, they use coal, but they know that they have to look for alternative energy sources. On the other hand, the situation in Ukraine — with the disruption in the grain supply — has made many people realize that water and food are also scarce goods. It’s true that, in recent years, for a sector of the market, sustainability has also become a fad. Yet, underneath this trend lies a structural change. And no one can oppose these tectonic movements.

Q. Don’t you think that there’s also a risk of many companies engaging in greenwashing?

A. Yes, that risk is real. The fact that many firms appear to be green or ecological means that they know that sustainability is an important objective for society and don’t want to go against the general sentiment. But the key for things to change isn’t to pretend, but to do. Greenwashing — from an investor’s standpoint — is bad in two ways: it doesn’t solve the problem, and it prevents them from benefiting from opportunities to grow their money.

Q. How do you distinguish between companies that are really committed to sustainability and those that are bluffing? I say this because Bloomberg recently published a survey, which shows that the favorite stock purchased by funds that supposedly invest in companies with ESG criteria is the French luxury giant LVMH...

A. That doesn’t make much sense. It has more to do with those who make the ESG criteria ratings than with sustainability. [At Federated Hermes], we do the research and analysis internally — that’s why we put money into the companies that really change things. It’s all about identifying disruptive companies and accompanying them on their journey.

It’s also important to know what sustainability actually means. There’s nothing in the market that’s black or white: things always depend on something. Is an energy company always bad? Well, it depends, because many work with gas, which is an energy source that facilitates the green transition.

Q. Most fund managers focus on environmental factors. Few focus on social factors and even fewer on corporate governance criteria. Why is that?

A. Because it’s easier. Everyone understands the 1.5ºC target of the Paris Agreement. Therefore, for many firms, it’s easier to focus on [environmental factors] to raise capital. Social aspects, however, are more difficult to address, because they require understanding nuances and differences. Human resource management practices in Spain, for instance, aren’t the same as in the Philippines.

As far as the principles of good governance are concerned, for me, they’re vital, because they not only protect investors from bad corporate practices — they also protect managers from their own mistakes. Many CEOs fail because they don’t have a good governance structure… [such a structure] protects them.

Q. Do you get involved in the management of the companies that your firm invests in? Do you vote at their board meetings?

A. Since 1983, we’ve had EOS [entrepreneurial operating system], a stewardship service provider that we also sell to third-parties. Our involvement with companies isn’t temporary. We don’t tell them what to do, we’re not activists; we ask them how we can work, as partners, to make the company better in the long-term. I don’t think it’s about threatening to vote against [a project], but about making things work for the benefit of everyone.

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