Every year on Feb. 9th, my birthday, I take a day off to reflect on the past year and the coming year and just chill. I will be doing that tomorrow. Thanks to those who have already sent me birthday wishes. 2016 will be a year of great transition. Looking forward to each moment.
If you want to do something special for my birthday, give a donation to TBLI Foundation
I hope you enjoy this speech I recently gave in Stockholm. My dear friend Karl-Henrik (Kalle) Robert of The Natural Step organised the StepWise Conference-The Future of Leadership is Now. It was particularly special because King Carl XVI Gustaf of Sweden was in attendance. What was even more surprising is that he stayed to hear my talk, and enjoyed it. Thank you Kalle for the kind invitation and wonderful experience.
Due to TBLI Group’s unique network, we are often asked to “meet for coffee, catch up, share ideas, compare notes, etc”. This is code for I need to pick your brain to develop a strategy, find clients, find investors, find staff, find a job, or repackage my deck to get business. We were always happy to help educate others as this would ultimately create the inclusive values economy. That is our mission. Lately, I have been rethinking this. As more and more consultants, asset owners, fund managers and govt. agencies were contacting us, I started to look at what drives all of them. ROI (Return on Investment).
When I look at the ROI of what TBLI has done to build the community of ESG and Impact Investors, the industry has benefitted and the ROI is a big plus. My next question was has TBLI benefitted? What has been the ROI for TBLI? Have all these individuals who we have connected with strategic partners, investors, clients put something back. The jury is still out on that. Many have not.
Going forward should we not share? Should we not meet for the data dump, unless we are compensated? Should there be a clear donation to foundation, consulting jobs, sponsorship, conference attendance before assisting others. Many have been extremely generous to TBLI and others working on an economy based upon well being. How can one create a filter for those that feel by not sharing and closing their arms to have more will give them a leg up on others? I have often long conversations with other colleagues who’s work benefits the commons more than themselves. They all struggle on monetising their relationships. I would be curious how you deal with this?
Not sharing would not be beneficial to us all. In the end, I am always amazed by the generosity of people, so I think this issue will resolve itself. People do surprise you. Even your teen age boys ultimately clean their room.
I am quite honoured to have been asked to join the advisory board of Lifestyles Magazine. Lifestyles Magazine is a 44 year old subscription only publication for high philanthropy. Looking forward to help them expand their content around Impact Investing.
IE Business School’s Net Impact Chapter will hold its 10th Annual Social Responsibility Forum in Madrid, Spain. I have been asked to give the keynote speech at IE Forum November 27-28. Looking forward to meeting the MBA’s who want to embrace a values based financial system.
TBLI Social Entrepreneur
A very dear friend of mine, Khun Thippaporn Chearavanont has been very active as social entrepreneur in community development and real estate. She has been doing amazing projects taking the Green Building concept to new heights, by integrating health in her projects. Her company MQDC (Magnolia Quality Development Corporation) part of the DT Group is very innovative in that they have been developing low carbon properties, where health is integral part of the experience. Congratulations.
I looked up the definition of a commonly used word. Awesome: extremely impressive or daunting; inspiring awe: the awesome power of the atomic bomb. In the informal extremely good; excellent: the band is truly awesome! Why then is everything awesome? “I will call you back later”. “Awesome”. “See you next week.” “Awesome”. “I am going for a run”. “Awesome”. Why don’t we start being a bit discerning in what is awesome and what is just “fine”.
Cap and Share
TBLI has been working for its entire history on scaling up zero-low carbon investments. The solution always seemed very clear, carbon has to be a cost but no one wants to pay for it. In addition, the consumer was not included in most of the discussion around cap and trade.
Why don’t we go to a cap and share and give everyone an equal carbon allowance? If you are carbon efficient, take public transport or the bike, you can earn credits. If you can’t live without your ferrari, you buy credits. This way consumers can earn money by reducing carbon emissions. With everything being captured by big data, public transport chip cards, green credit cards and other new sources, it is doable.
That is what I call Awesome.
That’s what we’re missing. We’re missing argument. We’re missing debate. We’re missing colloquy. We’re missing all sorts of things. Instead, we’re accepting.
The daughter of a friend of mine called me about a Dutch Fraud Film festival. Would I have any examples of fraud to apply for the Fraud Film Festival Prize? The winner would receive funding to produce a documentary. I replied. “Wow. There is no shortage of examples”. Leonard Blankfein’s (Goldman Sachs CEO) Senate Hearings testimony came to mind.
If you look at this clip, it is quite amazing to see how Blankfein defends Goldman’s actions in a very circular reasoning that gets the viewer so confused that one loses the script. The basic question that Senator Levin asked was quite simple. “Is there not a conflict when you sell something to someone and then are determined to bet against that security and don’t disclose that to your client?”
Blankfein’s answer is stunning.
“Whoever is careless with the truth in small matters cannot be trusted with important matters.”
“TBLI is not just a great place to increase one’s understanding about sustainable investing it is also an excellent place to meet and network; some of the contacts I have made at TBLI have turned into successful and lucrative business partnerships.”
Rufo Quintavalle-Poet, Investor and Director at Agro-Ecological Investment Management
Guest Blog: Rufo Quintavalle
Tracking errors are themselves an error
An article earlier this year in Institutional Investor pointed to low carbon indexes as an alternative to fossil fuel divestment for investors who are concerned about climate change. Citing the example of the Swedish pension fund, AP4, and the French pension fund, FRR, who both use this investment strategy the article describes these funds as “low-carbon equity indexes that closely track blue-chip benchmarks while excluding most carbon-exposed companies in those benchmarks.” Which, translated into terms that people outside of the financial sector can understand, means “a way to say you are doing something about climate change while not actually doing it”.
It is probably already too late to stop global warming of 2?C, although that remains the official goal that negotiators at the COP21 will be working towards. But what is certain is that if there is to be any hope at all of avoiding catastrophic climate change then the world economy will have to fundamentally alter. In such a context any strategy that proposes closely tracking “blue-chip benchmarks” is woefully inadequate since the “blue-chip benchmarks” simply reflect the reality of the world economy as it is and not as it should be.
Proponents of low carbon indexes would say that by excluding the most polluting companies they can contribute to an incremental change towards a low carbon future – companies will be pressurized to improve their performance in order to make it onto the index and a virtuous circle will be set in place. But in the same way that you cannot have your cake and eat it you cannot have an investment strategy that purports to address climate change while only accepting a tiny tracking error relative to the broader economy. The broader economy is itself part of the problem and if we do want to address climate change then what is needed is as large a tracking error as possible. Otherwise we will end up with low carbon indexes that by their own internal logic are obliged to invest in companies such as Royal Dutch Shell (the fourth largest holding of MSCI’s European Low Carbon Leaders Index) and Exxon Mobil (the third largest holding of the equivalent global fund).
The inadequacy of low carbon indexes to address climate change is, to be fair, not an indictment of institutions like AP4 and FRR who are, compared to their peers, among the more progressive of institutional investors. Rather it is an indictment of our financial system as a whole which, as it is structured will never be able to address climate change or indeed any other problem that is time-sensitive and requires systemic change. And ultimately this failure boils down to a philosphical failure regarding moral agency and the true nature of investment. If the goal of investing is simply to mimic the behavior of the broader financial market then the money managers and the people devising the indexes are doing a good job (although one suspects it is the kind of job that could be done just as easily by a computer). But if we are to understand investment as something that does not simply follow the markets but rather seeks to actively create value for society then our financial system is conspicuously failing.
So what to do in a context where the system as a whole is inadequate to serve society? And in which every single one of us is complicit in this problem the minute we take out an insurance policy or start paying into a pension plan? To those with no disposable income at all the most obvious course of action is to lobby your pension fund and your insurer to adopt a genuinely proactive policy on climate change and divest from fossil fuels. For those who do have disposable income to invest and are interested in using their investment dollars to combat climate change then you could consider investing this money outside the stock markets via angel investing, crowdfunding, private equity and other asset classes that your banker will do his or her best not to tell you about. The rewards here are far greater both financially but also in terms of accelerating the transition to a clean, green economy. And finally, since it is all too easy to point the finger at others we ought to examine our own collective responsibility in creating a state of affairs where “investment” has reduced itself to the buying and selling of shares in publicly listed multinationals who never needed our money in the first place.
Bernie Madoff was able to thrive as long as he did because there was a stream of people who liked the idea of a steady “no-risk” annual return of 10%. But ultimately if you are getting returns without risk that means someone else is picking up the bill. In the case of Madoff it was the new subscribers who were picking up the bill for the old ones. In the case of the broader financial system (of which low carbon indexes are merely a symptom) it is the planet as a whole which is picking up the bill for our obsession with “low-risk” listed equities and our refusal to rock the boat.