Tripadvisor for Development

Corruption and ineffective government services seems almost insurmountable, particlularly in developing markets. I recently came across a brilliant and effective solution that is working. DevelopmentCheck, which I would like to describe as the Tripadvisor for Development is a breakthrough in addressing corruption, lack of measurement, poor municipal services, quality of life, education and creating a culture of integrity. Tall order, but if one looks at the track record of 50% success rate in 2,000 cases, DevelopmentCheck can actually say “our system work”s.

Integrity Action (IA) is a pioneering non-profit in the field of social accountability, based out of London. In developing and emerging countries, the failure rate of development projects is extremely high. They have spent a decade to fine-tune a method for local communities to achieve this by working collaboratively with service providers to fix failing or abandoned projects. They can now achieve the highest Fix-Rate in their sector. Local communities are able to fix an average of 50% of the problems they identify.  They have helped more than five million people receive functioning roads, clinics, school buildings, clean drinking water and sanitation by ensuring that projects deliver as intended.

IA has created an award-winning, smartphone ap called DevelopmentCheck.org that they implement in partnership with national governments, ministries, contractors, and development finance institutions. Their approach has the impact that hundreds of millions of additional dollars invested in development would have – at a fraction of the cost.

When I learned about this I saw immediately the benefit for citizens in emerging markets but I also saw how this would be beneficial to investors, DFI’s and companies. Development Check will:

  • De-risk investments in markets
  • Improve the business climate
  • Fast track sustainable development
  • Measure governance improvements
  • Improve quality of life of employees and customers

Congratulations to Integrity Action for giving us DevelopmentCheck. Brilliant idea. If you are interested in learning how DevelopmentCheck can help your business, contact Integrity Action

Nothing is impossible, the word itself says ‘I’m possible’!

Audrey Hepburn

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TBLI EUROPE Next Month, November 19-20.

Come to TBLI Europe November 19-20, Zurich, Switzerland and meet many inspiring ESG and Impact Investing thought and do leaders in

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Save The Date-TBLI and COP 21 in Paris, Dec. 3

TBLI will host a special session during the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21/CMP11) in Paris December 3. The session will cover Zero-Low Carbon Investments at scale. Speakers and audience will highlight large scale zero-low carbon infrastructure in energy, public transport, agriculture,  and buildings and their investment potential.

There will be limited space with strict security,  as the session will be held at the Conference Center where the delegates will be negotiating a new climate agreement. If you would like to attend, please send an email to robert@tbligroup.com. Priority will be given to asset owners.

What is Impact Investing?

Impact Investing has become the most widely used term to describe a “new form of investing”. What is Impact Investing? How is it different? Is there significant money going into it? Here are some of the common definitions that have been used.

  • Investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.
  • Impact investing is an investing approach that intentionally seeks to create both financial return as well as positive social and/or environmental impacts that are actively measured.
  • Impact investing includes investments that range from producing a return of principal capital to offering market-rate or even market-beating financial returns. NO NEGATIVE SCREENS or avoidance.
  • Investments intended to create positive impact beyond financial return.
  • These are investments in business which have been designed with the intent to have positive social and/or environmental consequences. 
  • Impact investing is the deployment of capital with the specific objective of achieving positive social and /or environmental impact alongside financial returns.

This seems rather straight forward and all have very similar definitions.. However, if one looks at what most are claiming to be impact investment, the focus is on social impact. This often has a high level of what I call “The Photo Op”, or a ribbon cutting ceremony. Meaning, the communications seems to be more important than the content. Many investors, particularly endowments, have been trying to show how they are committed to this “new approach” to resolving societal and environmental challenges. Asset owners and managers often ask me what is the difference between ESG (Environmental, Social and Governance) Investments and Impact Investing. My answer is ESG is liquid investments and Impact was illiquid. I am sure many “advisors” will disagree, but I am not trying to sell a definition and write hours. TBLI is creating an active ecosystem for the ESG and Impact Investing Community to attract significant assets.

Impact Investment figures range from 60 billion in assets under management with 10+ billion invested in 2014 (Eyes on the Horizon:The Impact Investor Survey May 2015, JP Morgan and GIIN). There are many detailed graphs about impact and percentages of assets committed, if you need proof to believe that Impact is a good strategy. There are many of these reports and analysis with wide ranges of what it is and what researchers have found in asset allocations. Yet, we are constantly reminded that the investment opportunities are small, not scalable, not market rate, not quality, high risk and fundamentally they are “charity”.

There is a much more compelling story. Let’s focus on money flows. Look at the sectors below that make investments that match the definition of Impact, as stated above.

  • Public Transport Infrastructure
  • Fuel Free Energy Systems (Renewable Energy)
  • Secondary Market of DFI’s (Development Finance Institutions)
  • Green Real Estate including Retrofits
  • Agroforestry including Redd++ (avoided deforestation)
  • Social Impact

If one accepts these definitions then the amount of money going into Impact Investing, is actually in the Trillions and has been for quite a while. WRI(World Resources Institute) recently wrote a report called the Trillion Dollar Question. “The transport sector is growing quickly, with the global vehicle fleet on course to double by 2050. According to the paper, global transport investment is between $1.2 and $2.4 trillion annually.”

If one accepts the common Impact definition, then the present Impact discussions and case studies are vastly missing the point. We are focussed on the one small plant, that is pretty, in a massive forest of opportunity. When I hear the discussions around Impact by those trying to convince others, I am reminded of the scene from the movie Serpico, where Frank Serpico, a New York Police Detective is confronted with the scale of corruption in the narcotics division. One of the crooked cop describes the graft sums as “serious money”. Impact Investing is talking about “serious money” and always has been. One only needs to have an an open mind, look around and do the math. Do you want a financial return with a social and environmental added value? If so, why are you waiting for more research, when the opportunities are overwhelming?

 There are people who have money and people who are rich.

Coco Chanel

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

Donald Trump, Success and TBLI Hero

Alain de Botin gave a very good Ted Talk about success, particularly how it impacts Americans. Having grown up in Brooklyn, New York I always struggled with the incessant pressure to win and compete. It never motivated me, but always demotivated me. Alain’s description about how people are viewed as winners and losers, in America, was brilliant.  His talk, made in July 2009, resonated with me because of my own personal experiences and the current US Presidential election.

Donald Trump campaigning and his success in the polls is a joy,(entertainment) and depressing. Trump has offered no concrete solutions, insulted many, has been against most progressive initiatives that help many and he is very  proud of the fact that he fights very hard to pay as little taxes as possible. His tv show The Apprentice, which I really disliked, taught nothing of value. The focus was quick fix, short term, zero sum game, ego, winners and LOSERS, and no added value at all to the contestant or society. Trump is about  “success”. It is about the ribbon cutting, ego, cash, and no fulfilment and WINNERS and LOSERS. Unfortunately, we all become the losers with winners like that.

Try not to become a man of success, but rather try to become a man of value.

Albert Einstein

Come to TBLI CONFERENCE EUROPE 2015, November 19-20, in Zurich and meet the thought leaders of value.

TBLI Hero

I have known George Curuby for quite a long time. He was one of the few people who came from Japan for our inaugural launch of TBLI CONFERENCE in Rotterdam, in 1998. A quiet man who doesn’t push himself forward when everyone wants to be in the ribbon cutting photo. George never seeks to claim credit for great accomplishments or to pump up his ego. He just gets on with the work at hand. Theodore Roosevelt speech The Man in the Arena describes George.

George has always been extremely supportive of TBLI and our efforts. TBLI CONFERENCE ASIA 2011 was held in Tokyo. Due to the nuclear disaster at Fukushima, most sponsors and guests pulled out.  This created a huge problem for TBLI. George was the only one who came forward and helped TBLI making the Conference a success. His support for our work has continued to this day.

I was impressed with a recent revelation. He left Japan to move back to the USA to take care of his mother, as primary care giver.  I will never forget his kindness, generosity or authenticity, and neither should you.

He is a true mensch. Thank you George.

TBLI in the Press

Thanks to Family Office Magazine for publishing this article in their South East Asia Edition.