ESG Celebration-The Most Successful Failure in History!

According to the UN Principles for Responsible Investing, there are over 5000 signatories, who signed the PRI (Principles for Responsible Investing) with an estimated AUM of US$130 trillion committing to ESG principles. Started in 2005, at the invitation of United Nations Secretary-General Kofi Annan, who invited a group of the world’s largest institutional investors to join a process to develop the Principles for Responsible Investment. This led to Principles for Responsible Investing. These are the principles:

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

Principle 6: We will each report on our activities and progress towards implementing the Principles.

On any scale, one would consider this a massive achievement in realigning investment to restore the social and environmental balance, as well as achieve a financial return, with good governance. However, if we look at the outcome, not the money flows based upon a vague definition of ESG, one can only conclude that this has been a monumental failure. Few, if any of the environmental or social challenges facing the world, which the PRI was intended to address have been met. We have seen lots of fees for service providers and asset managers, but society and the earth has suffered deeply.

Responsible Investment is not working!

Social and Environmental Challenges not addressed.

Climate Change Destruction

Biodiversity loss

Water Shortage

Food shortage

Health Crisis (Diabetes)

Income Inequality (Living Wage)

Pollution

Threat of War

Many have benefited financially and all seem happy to enjoy the party on the sinking titanic, earning their fees, and accolades, toasting to selfies, press releases, and other photo ops. There are few serious conversations or questioning of present ESG 1.0 have been held. In the eyes of many, ESG, as it is done now, has become a “death march in the wrong direction but slower“. That is the progress part.

Next week. PRI will be hosting the PRI in Person Summit, in Barcelona on Nov. 30th, with over 2000 attending, including asset owners, asset managers, and service providers. If we look at the program, there is little serious open discussion questioning the status quo. Nearly no serious independent thinker who is questioning ESG methodology has been invited to speak. It has become a love-in for all those eating from the pig trough of fees, and benefiting financially from the present status quo.

Where are the true critical independent thinkers like Mark Campanale, Prof. Paul Watchman, Desire Fixler, Glenn Frommer, Bonnie Lorraine Smith, Angelica Lips da Cruz, Mats Andersson, Geoff Kendall, Leesa Soulodre, Paul Clements-Hunt Dr Raj Thamotheram, Wouter van Dieren, Kate Raworth, Alexandra Mihailescu Cichon, Alexandra Pittman, Alexandra Smith, Andrew Behar, Andrew Gazal, Andrey Bogdanov, Anne-Marie Brook,Antoine Mach, Arthur Wood, Bertrand Gacon, Bob Willard, Brett Wallington, Daniel Klier, Gabe Rissman, Gabriel Thoumi, Gabriela Gaby Herculano, Jennifer Rae Pierce, Kai Chen, Kevin Franklin, Linda Nemec, Luke Wilcox, Mark Tulay, Martin G. Viehoever, Matt Moscardi, Meeta Misra, Michael Bogosyan, Ned Harvey, Paul Allard, Paul Herman, Pavan Sukhdev, Peppi-Emilia Airike, Philip Sugai, Ralph Thurm, Reid Thomas, Richard Rothenberg, Sonia Zugel,Stefania Di Bartolomeo, Tee Ganbold, Tim Nicolle

How can you ever fix a totally bankrupt and broken system with only those that are supporting, financing and benefiting from this environmental and social destruction on stage. We need critical dialogue, not a cheerleading section saying who great we are when we aren’t

As I said, financially ESG with the PRI at the forefront has been successful beyond our wildest dreams, but some of us actually want the earth and society to improve and the balance restored so we can thrive. We need a financial system that works for all stake holders and not just investors.

“I’m worried about greenwashing. I think we should come down on it very, very hard, whether it’s with criminal intent or actively deceptive.” John Elkington

If you feel that ESG needs significant fixing, and want to hear many of the independent critical thinkers mentioned above, help us stop the greenwashing and vote during the Better World Prize on Dec. 1.

November 27, 2022 2019, 2022, ESG Investing, Impact Investing, Investment, Sustainability, TBLI Conference No Comments on ESG Celebration-The Most Successful Failure in History!

Are you an Impact Investor or Unicorn Hunter?

Thank you to Annie Spratt for this photo.

Have you noticed how many investment funds have been created in last 5-10 years all claiming to have Impact Investing focus. It is overwhelming to see so many investment professionals raise money, govt. institutions allocate money , or asset owners invest their own to fix or improve society. Admirable and noble. Billions have been raised to help fix societal and environmental challenges. This is inspiring at first glance, until you actually look under the hood.

Take a look at the mission statements or ambitions of several of the funds created recently.

  • “investment platform focused on generating superior returns aligned with sustainable principles”
  • “Assist great entrepreneurs developing products and services for the three billion people in the bottom half of the world’s economic pyramid.”
  • “We invest to build more inclusive and equitable societies.”
  • “We back founders on a mission to build a better world”
  • “dedicated to startups leveraging exponentially accelerating technologies to address humanity’s grand challenges.”
  • “investing into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.”
  • “seeking deeper positive net impact across the spectrum of capital”
  • “We believe that investment capital can help meet large-scale global challenges”
  • “enables private sector investment in projects aimed at climate adaptation and mitigation in developing countries.”
  • “We back entrepreneurs building climate tech for a regenerative world.”
  • “Our ambition is to identify and invest in high-impact solutions for climate mitigation, as well as to catalyse and multiply capital to scale them.”
  • “family office investing in regenerative food systems”
  • “vision to invest in entrepreneurs building sustainable enterprises that can catalyze development impact for excluded communities and remote geographies across the globe.”
  • “support promising entrepreneurs, with growth capital and proven business tools to reach their full potential and enable them to achieve systemic change.”
  • “backs technology businesses committed to having a positive impact that answers the most pressing social and ecological challenges of our time, in a way that is both scalable and sustainable.”
  • “invests in companies driving measurable social impact alongside business performance and strong returns.”
  • “we believe that we can address and alleviate some of the world’s challenges by investing with purpose. “

These are all fine and important aspirations but are these investment funds or investors really purpose driven or do they revert to traditional investment mind set of “hunting unicorns”. Those companies that will have a 1 billion dollar valuation. Isn’t that the purpose of investments to maximise returns for the investor. I don’t have a problem with that. I have a problem with the false packaging. If you are just hunting unicorns, just say so, so the entrepreneur won’t lose any time who’s mission is not to be a unicorn, but a zebra (focussed on improving society and environment, not exponential growth) . Most investments will never be unicorns.

It is hard to start and run a company and do the continuous capital raise. They should not be wasting their time with investors that want to be entertained, informed or are pretending to be interested when they are just researching competitive investments. Perhaps the most important question to ask an investor “are you a unicorn hunter?”. If they are and your ambition is to drawdown carbon by improving the soil and livelihoods of small holder farmers, without any apps, then the fit is wrong. If you want to create meaningful jobs for unemployed youth by doing vocational hospitality training then unicorn hunters are not going to help or invest. If you are a long term developer to de-commoditise the food system then don’t bother with unicorn hunters. If the mission or purpose is your raison d’être, then you are not helped and won’t get money from unicorn hunters. They are looking for an app, few employees, super fast scaling, warp speed growth and monopoly. It is a win-lose approach mindset.

Many investors and most vc’s are fund managers driven by achieving the carry, asap. Few ever ran a company. Growth, Market share, IPO’s are the mantra. They are looking for that big payoff asap. Zebras won’t do that, unicorns will. Maybe they will. At least in the eyes of unicorn hunters they will.

If you are looking to fundamentally restore the social and environmental balance first and foremost, as well as make a profit to fund all your activities and growth, avoid unicorn hunters; especially those pretending to be impact Investors. Those are the worst. They wrap themselves in something that is important to you, but has no value at all to them. Be discerning. Ask them are you a UH (unicorn hunter) or II (Impact Investor) .

The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.

Groucho Marx

November 7, 2021 2019 No Comments on Are you an Impact Investor or Unicorn Hunter?

Covid-19 is a breakthrough not a breakdown!

Corona Virus clearly shows the balance in the world is awful, and how vulnerable the capitalist system is. Impact investing is investing in a healthy world. A world that is less vulnerable. We all benefit from that.

We all need to use this time to heal, regenerate and plan for rebuilding and retooling our society. One can already see the benefits of moving slower, less haste, less co2, less air and water pollution and less crime. Sure, we are locked up our home, but we finally have time to actually connect and communicate with our family. People avoiding each other to maintain social distancing is a new experience. That is true. Just smile, instead of shaking hands or hugging or give the Wai (Thai Greeting). If possible, go for long walk and enjoy quiet.

There is a fundamental shift in how the financial system should be structured and who should benefit. To quote a HNW Sikh friend of mine. “Unsustainable paths are no longer feasible whether for the billionaires, Wall Street or Main Street. Our collective destructive behaviours need to stop and Covid-19 has shown us how damaging we are to ourselves and the planet.” Here we see a billionaire shouting loudly that the billionaires should not be bailed out. “Billionaires deserve to get wiped out”. This would have been unheard of a short while ago.

TBLI is expanding its 25 year mission of creating a financial system that works for all. Ultimately, all investments should have multiple returns for the investor, the environment and society (Triple Bottom Line-Social, Environmental and Financial).

If you want to learn more about TBLI and how this strategy will help deal with a Covid-19 World, listen to our weekly webinar Shareholders for A Better World. Every week we will have discussions and interviews with thought leaders who are truly working to create an inclusive financial system.

Next week April 22-14:00 CET- Impact Investing and Climate Change in the world of a Global Pandemic with Stephen Brenninkmeijer, Private Investor and Chair, Supervisory Board of European Climate Foundation Register here

April 17, 2020 2019 No Comments on Covid-19 is a breakthrough not a breakdown!