How to achieve 10x returns with Soulful Investing

It seems every investor that I encounter is obsessed with achieving 10x returns for social enterprise investing, by leveraging the power of technology. The thinking is that if we only throw some innovative technology at the problem, we can restore the social and environmental balance and achieve a high return on investment. The idea of just throwing more technology at problems and flipping a switch will fix the problem and generate high returns, seems out of touch with reality. I have another idea. Why not investing in social enterprises that target the soul?

We have more than enough technology. Another widget or software alone is not enough. There is far too much focus on this strategy and the “quick fix”. Hunting vs. farming. Ribbon cutting vs digging holes. What we lack is compassion.

I was thinking of my father, who was a tailor. He made custom made clothes for women and had a small store on the Madison Ave and E. 77th street in Manhattan, NY. He worked very hard and loved his work, as well as life. When the rent was increased by 400%, he saw that the financial model didn’t work, so he closed the store and worked from home. I would see him cutting material on the floor at home and working at the sewing machine, late into the night. I told him he was charging too little for the quality he was providing. “Raise the price”, I said. He said “If I do that I might have less work and more money, but I like what I am doing and don’t want to work less”. When I looked at him working and the passion and quality that he put into his work, you could see that the end product was soulful.

When I look at my wife and what she is doing in turning the hospitality concept on its head with her focus on “conscious travel”.  She combines cultural authenticity and sustainability by establishing a chain of Eco Lodges, in Bhutan. To support that and develop the hospitality sector, she created a hotel school (Bongde Insitute for Hospitality and Tourism) with Lausanne Hotel School alumni. Her focus was not technology, but the basics and values. It is working extremely well and was up and running in less than 4 months and generating revenue in less than 6 months.  If you look at the video of the students learning how to make bread, pasta, taste tatin, set tables, making beds, etc. you see the soul in their eyes. This was not achieved with an iPad and an ap but through love, dedication, and commitment.

Technology can be helpful in some situations but it has become the end all and be all. Why don’t we focus on supporting soulful enterprises and give them the wings to fly.

“The most powerful weapon on earth is the human soul on fire.”

Ferdinand Foch

Support our soulful work

Sustainable Investment has no value

Since the financial crisis, it seems that no one wants to compensate anyone for services provided. TBLI is inundated with requests for introductions to investors, advice on ESG and Impact Investing, requests for management briefings, strategic partners, job openings, etc. It has reached epic proportions and it is not limited to us. Nearly everyone I speak to confirms they experience the same epidemic of requests for free advice or payment for success.

Why does it seem that anything related to sustainability is not valued and should be given away for free. Other traditional advisors (lawyers, accountants, strategy consultants) are compensated. Do people believe that sustainable investment (ESG and Impact) doesn’t offer any value, so doesn’t need to be compensated?  There doesn’t seem to be any difference between asset owners (family offices, HNW, pension funds), asset managers, social entrepreneurs, etc. All ask the same? “Let’s meet to share experiences”. ” Do you have time for coffee so I can pick your brain?” “I would like to talk to you about a great investment opportunity and would like to access your network and knowledge”.

Some of the Strategy Consultants are a bit more subtle by reaching out at a cocktail party or through an introduction. Then the seduction starts with the ultimate goal of sucking power point slides out of your brain to cut and paste later and sell to clients.

Recently I was approached by a large company asking for help meeting Impact Investors for a large water investment in Europe. I said we could help and would know who they should meet and asked for our time and knowledge to be compensated. They said “We don’t do that. We would be willing to compensate should something happen.” I told him “if you have a backache and you go to a massage therapist, do you say, if my back pain doesn’t come back in 6 months I will pay you.” He laughed and got the message. Still wouldn’t compensate but he got the message.

Sustainable Investment advice has value and needs to be compensated, particularly if you want someone to commit their time and energy.

Time is the most valuable thing a man can spend.

Theophrastus

TBLI Impact

Recently at our TBLI CONFERENCE Asia in Singapore I was approached by Pak Suwardi, owner of PT. Selo Kencana Energi, a private company focused on developing Hydro Electric Power plants in Indonesia.

His business story caught me off guard. During the TBLI CONFERENCE held in Amsterdam in 2009 he saw the keynote speaker who spoke of the devastating effects of climate change to the Arctic melting glaciers.

At that time, Pak Suwardi had investments in coal energy but none in renewable energy because he believed the return would be lower than that of coal fire and the development stages to be more complicated with renewable energy.

Following TBLI Amsterdam, he sold his coal fire portfolio to another company and decided to make their renewable pipeline (hydro power plants) a real project by signing a power purchase agreement with the local authority in 2010.

With his own capital and loans from a local bank, they have completed construction and started to deliver the electricity to the grid in Spring 2014.

“During one year of operation I saw several positive impacts such as reducing national fuel subsidy, an increase in economic activity among the communities in the area and a reduction in poverty and deforestation. We are now doing our own research on social impact measurement,” says Pak Suwardi.

What a testament. Thank you Pak Suwardi for sharing your story of inspiration and how TBLI impacted your life. I imagine there to be so many great ones like this over the years. If you have a story we would love to hear it.

Contact us at conference@tbligroup.com

Come join us at TBLI CONFERENCE NORDIC, June 15-16, in Copenhagen to have your own TBLI Experience.

Too many thought leaders, not enough thought

Impact Investing has been experiencing quite an explosion of interest by asset owners, asset managers and service providers. Parallel with this there has been a dramatic increase in the number of “thought leaders” or “experts” on Impact Investing. You see them on TV, in newspapers, magazines, blogs, etc. Many only started in this space a few years ago. When I read or listen to what they say, I find a lack of deep thought or reflection.

Why don’t we see more of Lester Brown, the yoda of sustainable thinking, as it relates to investment risk and opportunity. Lester Brown and his team, don’t get the attention they so richly deserve.  His writings, research, efforts have been a great inspiration to me and to many others working in the financial, policy, and industry. I recently received a summary of developments regarding “Fuel Free” or Renewable Energy. Take a look and then you will understand what a thought leader is.

Better to remain silent and be thought a fool than to speak out and remove all doubt.

Abraham Lincoln

Seven Surprising Realities Behind The Great Transition to Renewable Energy © Earth Policy Release May 13, 2015

The global transition to clean, renewable energy and away from nuclear and fossils is well under way, with remarkable developments happening every day. The Great Transitionby Lester Brown, Janet Larsen, Matt Roney, and Emily Adams lays out a tremendous range of these developments.

1.Solar is now so cheap that global adoption appears unstoppable.
• The price of solar photovoltaic panels has declined 99 percent over the last four decades, from $74 a watt in 1972 to less than 70 cents a watt in 2014.
• Between 2009 and 2014, solar panel prices dropped by three fourths, helping global PV installations grow 50 percent per year.

2.Wind power adoption is rapidly altering energy portfolios around the world.
• Over the past decade, world wind power capacity grew more than 20 percent a year, its increase driven by its many attractive features, by public policies supporting its expansion, and by falling costs.
• By the end of 2014, global wind generating capacity totaled 369,000 megawatts, enough to power more than 90 million U.S. homes. Wind currently has a big lead on solar PV, which has enough worldwide capacity to power roughly 30 million U.S. homes.

3.National and subnational energy policies are promoting renewables, and many geographies are considering a price on carbon.
• Unfortunately, governments worldwide still subsidized the fossil fuel industry with over $600 billion, giving this aging industry five times the subsidy that went to renewables.
• But by the start of 2014, some 70 countries, including many in Europe, were using feed-in tariffs to encourage investment in renewables.
4.The financial sector is embracing renewables – and starting to turn against fossils and nuclear.
• The financial services firm Barclays downgraded the entire U.S. electricity sector in 2014, in part because in its view U.S. utilities are generally unprepared for the challenges posed by distributed solar power and battery storage.
• In January 2013, Warren Buffett gave solar energy a huge financial boost when his MidAmerican Energy Holdings Company announced an investment of up to $2.5 billion in California in what is now known as the Solar Star project..

5.Coal use is in decline in the United States and will likely fall at the global level far sooner than once thought possible.
• U.S. coal use is dropping – it fell 21 percent between 2007 and 2014  and more than one-third of the nation’s coal plants have already closed or announced plans for future closure in the last five years.
• Major U.S. coal producers, such as Peabody Energy and Arch Coal, have seen their market values drop by 61 and 94 percent, respectively, as of September 2014.

6.Transportation will move away from oil as electric vehicle fleets expand rapidly and bike- and car-sharing spreads.
• Bike-sharing programs have sprung up worldwide in recent years. More than 800 cities in 56 countries now have fully operational bike-share programs, with over 1 million bikes.
• The share of carless households increased in 84 out of 100 U.S. urban areas surveyed between 2006 and 2011. And as urbanization increases, this share will only rise.

7.Nuclear is on the rocks thanks to rising costs and widespread safety concerns.
• For the world as a whole, nuclear power generation peaked in 2006, and dropped by nearly 14 percent by 2014.
• In the United States, the country with the most reactors, nuclear generation peaked in 2010 and is now also on the decline.

Chapter 1 of The Great Transition: Shifting from Fossil Fuels to Solar and Wind Energy is available online

Two weeks to go. First TBLI CONFERENCE LATIN AMERICA, hosted by Mayor’s Office Buenos Aires. Program

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