TBLI BLOG The world will benefit when the economy supports well-being.

Thirty-eight US billionaires have pledged at least 50% of their wealth to charity through a campaign started by investor Warren Buffett and Microsoft founder Bill Gates.
The same effort is underway in Europe to get wealthy individuals to give away half their fortunes before they die to charity. I am against this idea, but for a different reason than most of the European billionaires are using. Names, government should be doing this job. My objection is mainly based on impact.
Traditional philanthropy takes the principal and invests the money to achieve only financial returns, and gives away 5% to maintain non-profit status. Few of these large endowments, family offices, individuals, etc. try to achieve financial returns as well as achieving a positive social and environmental impact (impact investing). This traditional philanthropic route, namely give away 5%, which represents a portion of the interest, to charity, is a very poor use of capital. If the asset owner created a portfolio that achieved social, environmental, as well as financial returns, 100% of the money would be leveraged for society and the environment. In addition, if 5% of the returns were given away, the total leverage would be 105%. I don’t know about you, but I learned that 105% is larger than 5%.
A majority of philanthropy is ego. People love to cut ribbons, see their names on buildings, wings, plaques, etc. If people are driven by ego, that is fine, but I don’t think the taxpayer should finance this. By shifting from interest to principal, we impact more, and don’t require a tax break to mobilize the money. In the United States, Federal tax law requires philanthropies to give away 5% of their total assets each year to maintain their nonprofit status. In these days of tight budgets, it might not be such a bad idea if more money was invested in impact investing.
If Warren, Bill, and the other billionaires are listening, “how about really leveraging money for the commons, by doing impact investing and leveraging much more, without having to go around trying to convince people to give half their money away. As astute businessmen, I am surprised that after all these years, they are still doing the same low impact approach. As Jerry Maguire said” Show me the money”.

We are happy to announce that presentations, full audio, and a few short video interviews from this year’s TBLI CONFERENCE ASIA™ 2010 are now available.

Please enjoy this content and if you really like it, let us know or even better, share it with your friends and colleagues who might also be interested.

RENGO, the Japanese trades union confederation announced plans, during last weeks TBLI CONFERENCE™ ASIA 2010, to integrate ESG- factors into its investment decisions. These pension funds represent a significant part of the country’s institutional retirement savings, which as a whole is more than JPY 50 trillion (€450 bn). This move is especially important because of the close relations between RENGO and the new government of Japanese Prime Minister Yukio Hatoyama.

For the fifth time TBLI CONFERENCE™ organized the largest annual global networking and learning event on Socially Responsible Investment (SRI) on May 27th and 28th 2010, this year in Tokyo, Japan.

TBLI founder and CEO Robert Rubinstein on this development: “Sustainable Development has been slow in uptake to date in Japan. This step forward is a gigantic impulse for impact investment.” At this two-day conference RENGO stated ESG is the way to regain trust within the financial sector. By the end of the year a report will examine how pension funds could steer away from short-term returns in favour of ESG-related, long-term investments.
TBLI GROUP™
Robert Rubinstein

TBLI GROUP™ specializes in Triple Bottom Line Investing (TBLI) and ESG (Environmental, Social and Governance). Based in Amsterdam, The Netherlands, TBLI GROUP™ seeks to raise awareness of sustainable investment in the financial sector by assisting investors and providing a global network for parties who share this goal. TBLI CONFERENCE™ has an annual edition in both Asia and Europe. More than 375 participants, all leaders from industry, finance and government, visited TBLI CONFERENCE™ ASIA 2010 May 27-28, 2010.
www.tbliconference.com

What should one think of a company or salesman that does the following. You go in and ask to buy a ferrari, porsche or other quality vehicle and are excited about the purchase. The car is delivered and you find some problems. The clutch doesn’t work, the tires are worn out, the steering wheel is missing, pain job is terrible, and the brakes don’t work, and you have an immediate accident. Then on top of all this bad news you find out that the salesman and his company took out insurance on the car getting into an accident. Wouldn’t you find this questionable behavior, bordering on criminal activity? I would. Then why is it ok for Goldman Sachs to do exactly the same with financial products, and saying that ” we are a market maker”. In my neighborhood, they were called crooks.

What is even more galling about the entire Goldman story, is that they actually admitted that they cut and past financial products. The most important part they left out, in the testimony. Namely, after cutting and pasting the financial product to create a new product for a client, they add several zeros to the bill. Is that why people go to work with Goldman. To get the best and the brightest whose main interest is themselves and not the client.
They are definitely masters of generating returns. They had a perfect record for the first quarter, not a single day of losses in trading. If you switch from an investment bank to a commercial bank and are able to access the hundreds of billion of federal reserve money at nearly 0%, you don’t have to be too brilliant to make more than zero.

In the light of industry knowledge of how Goldman operates, and that the Dutch pension fund Transport pulled their 9 billion euro mandate from Goldman, how could our own minister of Finance be so morally bankrupt. The Minister of Finance, De Jager, decided not to exclude Goldman from lucrative government bond syndication. Didn’t Jan Cees de Jager (minister for finance) read this The headline read “Europe bars Wall Street banks from government bond sales • Leading US banks blamed for triggering financial crisis • Policymakers propose a rival European monetary fund” http://www.guardian.co.uk/business/2010/mar/08/us-banks-european-bond-trading.

We had written about the potential of reputation loss, last year, and the impact on investment banks. The association with Shell-Brent Spar & Nigeria, and Dow Chemical during the Vietnam War was quite similar, except the vulnerability of the banking sector was far greater. Whereas Dow was associated with products like Napalm and Agent Orange, Shell with Nigeria and Brent Spar, there was not much choice for alternative napalm producers or big energy companies. There are hundreds, if not thousands of investment banks that can cut and paste. This makes banks like Goldman extremely vulnerable to reputation damage, and its impact on hiring and business. It will be interesting to see how this plays out this year. Will investment banks actually learn from the past and start working in the interest of clients and other stakeholders. Having seen the testimony of Blankfein (CEO Goldman) and the testosterone financial engineer clones testifying before the Senate, I am not hopeful.