2017 Trump Presidency Cause for Celebration-Tipping Point towards Fuel Free Energy and Value(s) Investing

As the year comes to an end,  we normally take stock and think encouraging thoughts for the future. I feel extremely upbeat, in spite of hardships, refugee crisis, elections, referendums, heros dying, Syrian War, corporate governance abuses, financial challenges, and more.

Who would have thought that Donald Trump would become President of the United States. Well, in spite of losing the popular vote by nearly 3 million, he is. Among my immediate and intermediate network, many were upset, angry, and concerned that the progress that had been made on climate change,  would end. In addition, we would lose all the momentum that COP 21 set in motion. Fossil intensive investments would gain the uperhand. I don’t share that concern. In fact, maybe this is the ultimate stress test that a carbon free economy needs. The USA has a President and his team, and a great deal of Congressmen and Senators, that are climate deniers. The government seems controlled by those in the camp of fossil intensive industries. If we can survive that, then the system has turned the corner. I believe we have. Just look at the figures, even if Donald and Fox News say otherwise.

Coal companies have gone bankrupt (Peabody) or loss most of their share price, on lack of demand and low prices. Oil prices are at historic lows. If demand keeps going down for fossil fuels, how will increasing drilling and mining help the matter. That train has left the station. If we look at the state of fuel free energy systems, we can only see massive success that can’t be turned back, as that would fly in the face of economics. Trump’s team does seem to have some expertise in making money and should be able to do the math.

2016 has been a year of record low prices for low-carbon technologies. In August, a solar PV project in Chile set a new low price of 2.9c/kWh. The following month, a record low was set for offshore wind in Danish waters of approximately 6.4c/kWh. The third record to fall is that of battery storage courtesy of Tesla’s Powerwall 2 that was announced in November. The Powerwall 2 is nearly half the installed cost per kWh of its predecessor with an inverter built in, making it “the cheapest lithium battery for the home ever made”, according to Bloomberg New Energy Finance (BNEF). To make matters all the more impressive, BNEF announced this year that 2015 saw record levels of investment into renewables and record installed capacity.

Bloomberg New Energy Finance, 2016

How electric cars will cause further oil collapse?

Investment Agreements

The Montreal Pledge is the first agreement of investors that require full transparency of their carbon risk and exposure. You can imagine that very few have signed, as this is not an aspirational statement like most of the international ESG agreements, but a true commitment to de-carbonization. “By signing the Montréal Carbon Pledge, investors commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis.”

Want to know who has signed and who hasn’t?

Podcast on Corporate Governance-Wells Fargo Bad Form

Great podcast on how Wells Fargo forced its sales teams to force customers to buy products they didn’t want, which led to fraudulent practices. Unfortunately, the employees took a great deal of the fallout.

TBLI VIP Dinners

In 2016, TBLI organised 4 VIP dinners and they were a huge success. The last two we held Dec 6&7, were sold out. In 2017,  TBLI will be organising private dinners in various locations during international ESG & Impact Conferences,  for a small group of thought leaders (25). The goal is to support each other in our ambition of scaling up Impact Investing.

Speaking Engagement:

Responsible Investment 2017 Copenhagen March 2, 2017

Books:

Journal of Cleaner Production

TBLI Foundation

Support TBLI’s work on building capacity and educating asset owners and managers about liquid and illiquid investments in Sustainability (ESG and Impact Investing). Make a Donation to TBLI Foundation.

Closing Remarks

I want to particularly thank my immediate family. They have been a great source of strength, inspiration, and sometimes less so. One thing, for sure, they are never boring. Rieki, Sam and Silas. May all your aspirations come true. Let’s keep laughing.

Arthur stay well and hope to see you more frequently in 2017.

To my 90 year old mother in NY. As we say in Brooklyn ‘Ma. Ya did good.” Thanks.

As a sign of defiance in a world of injustice, let us all confront Chat and Cutters, and other abuses, as Larry David does so brilliantly.

Empty Gestures

I am a huge fan of the tv show Curb Your Enthusiasm. The star and writer, Larry David, is brilliant in his ability to be brutally honest, awkward,  and totally embarrassing with his social dysfunctionality. However, the show makes you laugh, which is essential, these days.  If you never watched it, start today. Every time I am watching a television interview or listening to a podcast interview about something that I find important, I think of Larry David.

Most people being interviewed always say “that is a very good question” even if the question is stupid, useless, empty or just a dead end. What drives me crazy is the standard  one-two punch in responding to the interviewer. First “that is a very good question” then you hear “You know. It is very interesting…”, even if nothing is interesting, which they often prove with their answer. I often think that media advisors or other “experts” on not being authentic, train people with these two repetitive statements. Larry David’s does a brilliant parody on these empty comments.

Let’s  have a real dialogue where people say what they really think and challenge the interviewer in a polite, educational, and engaging way. Empty gestures don’t cut it and just dumbs us down. The stakes are too high and we need to be inspirational, thought provoking and laugh.

A genuine leader is not a searcher for consensus but a molder of consensus.

Martin Luther King, Jr.

Come to TBLI EUROPE 2015, Nov. 19-20 in Zurich. You will  be inspired and have your thoughts challenged, and have a great time.

Guest Post Jochen Wermuth

The first Dow Jones Industrial Index only had steam engine rail companies in it, there were only horses on the roads and horse-whip-makers were great investments. Just a few years later there were no more horses on the road, no rail company in the Dow Jones – a new industrial revolution based on the combustion engine wiped out the old economy companies, with many losers and winners like the Rockefellers and JP Morgans at the time. A similar new industrial revolution is under way now with similarly large risks and opportunities.
With solar power being offered at $4cent/kWh in Austin Texas, a price with which oil could only compete at $7/barrel, the fossil fuel economy is dead. There will be huge changes in the world economy with many losers (the old oil, gas, coal companies and their related industries ) and many winners, the new Rockefellers. We  can stand at the spearhead of this new industrial revolution, allowing us to earn outstanding profits and at the same time generating a sustainable future for our planet.
On the risk side, there will have to be write-offs of $21 trillion in oil, gas and coal reserves by listed companies, as they will no longer be profitable to burn because greater energy efficiency and competition from renewables will drive down long-term fossil fuel prices. This is huge and compares to $15 trillion write-offs in the mortgage bubble.
On the opportunity side, emerging markets still consume 4x as much energy as we do say in Germany or in the EU. Thus bringing state-of-art products there we can make a lot of money and have a huge impact. With solar and wind-power now costing less than power from the grid there are also ample business opportunities across the world. Few have realized this, just as few realized for a long time that smoking was bad for your health…
Great background reading in this regard is the book “My indecent proposal to the German Chancellor” which tells the great success story of a farmer’s boy becoming the owner-manager of a multibillion dollar company in the renewable energy space and sets out the plan for Germany to become 100% renewable powered by 2020. A model for a successful business leader in the new industrial revolution, winning against all odds, and a model for any country in the world (in particular those with more sun) to follow.
As missing this opportunity may not only cost each of us money but could destroy life on our plante, my wife Sasha and I have shared with many of you a hard-copy of the book already. Given continued interest we have gotten the author to make the book available electronically and free of charge for TBLI Blog readers in return for my father having edited and translated it to English.
To download your complimentary copy of the Book in different “eBook” formats for almost any common reading device like Kindle, Tablets ( IOS Android ) or Smartphones, please visit There is also a pdf version for PC-, Mac and Linux Users available. If everything else fails, you can also find an adobe flash based ePaper Version that you can read online with any flash enabled Browser. If you have Problems downloading or opening your copy, please contact helmut.zengerling@wermutham.com.
Please have a look and enjoy!

Jochen Wermuth
Founding Partner and CIO
Wermuth Asset Management GmbH
www.wermutham.com
jwermuth@wermutham.com

Presentations TBLI CONFERENCES™ 2011 Available

Best wishes for New year.

You can now access all the presentations given at TBLI CONFERENCE™ ASIA 2011 AND EUROPE 2011, free of charge. Just register, if you haven’t already.

To view the presentations, click  TBLI CONFERENCE™ ASIA 2011 or TBLI CONFERENCE™ EUROPE 2011.

Enjoy.

TBLI Team

ESG and Impact Investing- Is it really happening?

If all the stories of ESG fund management, Impact Investing reports, mandates, commitments, one would thing that we are a tipping point. Sustainable investing is just about to breakthrough bigtime, and we all be awash in cash looking for social, environmental, and financial returns. Having done the TBLI conference for over 13 years I am often asked, is the glass half full, half empty or just empty?

We have seen significant money flows in low carbon activities, social investing, cleantech, Esg public equity analysis, Esg fixed income on sovereign and corporate side, and of course lots of ribbon cutting (press releases). Has the definition changed to allow more new members into the club? I think more and more investors for communications reason want to wear the badge that they are doing something. I don’t believe “that all that glitters is gold”. In general, I think there is a great tendency to accept a very weak cola light version, rather than going for the “real thing”. The financial community want to have the membership to the fitness club of sustainability but they don’t want to get on the scales to see if they lost weight.

This behavior is true for asset owners and asset managers; including pension funds, endowments, high net worth, grant making foundations, church, ngo’s. If you look at the dramatic growth of Sri in the Netherlands, 48 billion euros to 480 billion euros over two year period. One would be thrilled, but the reality is that many funds filtered out certain companies, like cluster bomb manufacturers and then claimed the whole portfolio as clean or and Sri or Esg fund. Putting on a nice coat when you are overweight doesn’t make you thin.

Engagement- Schmoozing or pressuring?

Engaging with a company to say “we are talking” without true behavioral change serves whom? Does engagement actually increase the share price or even change behavior? The rockefellers have tried to influence the company that they founded, exxon (formerly standard oil), to embrace fuel free energy system (renewable energy) without success. Does engagement work only when a company is failing financially?

ESG Goals?

Esg and impact are the buzz words, and there is an acceptance by some that social and environmental and governance are risks that need to be priced. The real question is what is the goal for embracing Esg or impact. Is the goal to create an economy based upon well being,like the mission of TBLI? Is the goal to be part of the club? Are investors trying to take out reputation insurance? Is it to be part of the herd that is building in running towards a low carbon, resource efficient economy? Do they feel that as asset owners they have a responsibility to society, because having a pension in a society that is in total collapse doesn’t compute?

Highest Retun on Investment- Lobby not to pay taxes.

Paying taxes are not a requirement or an issue for Esg analysts? A recent study in the US by Planet Money found that returns of 22.000% up to 100.000 % for hiring lobbyists. The results were massive tax savings which generated no jobs, or economic growth. Even conservative think tanks found these tax breaks were bad policy. Companies are successful, as Elizabeth Warren said because of the collective activities of govt. (police, roads, schools, fire dept., clean water, air) which happen because taxes are paid.

In America, there are many repors by JP Morgan, Harvard business school, and Rockefeller Foundation predicting large money flows and potential of impact investing. We need a reality check. Most of those funding reports are not doing impact investing. There is a great deal of chatter but that doesn’t mean there is a lot of check writing. Just ask any social entrepreneur who is trying to raise money. Let’s not crate another bubble. To me it seems like chickens flapping their wings, making a lot of noise, getting a lot of attention, but will never fly.

Deep down, I do believe that asset owners and asset managers will manage more and more of e their money In line with the societal,environmental, and governance impact of the company or project that is being funded. I believe that. In order to convince the controllers of capital to fully embrace ESG and Impact Investing, they need to see three things before the money is moved or analyzed differently. Investors must be shown self interest, opportunity and money flows. If they are shown this, then we will start to see significant changes in behavior. Until then, we will have nice stories, some of which will be fairy tales, but as the song says “fairy tales can come true…”