The Decade of transitioning from Responsible Investment to Investing 2.0
For several decades, ESG and Impact Investing has been heralded as the way to address societal and environmental challenges. Present state of affairs must bring into question the efficacy of this strategy. The following challenges seem insurmountable.
Climate Change Destruction
Health Crisis (Diabetes)
Threat of War
List goes on.
One can only conclude that ESG and Impact are either too weak and not effective, or they are not large enough, or the entire methodology of environmental, social, governance, and financial risk and reward need to be redesigned.
That is a fact, although in a time of fake facts it doesn’t matter.
Why is there not a single bank, wealth manager, or major financial institution the leader in the “race for values investors”. We keep hearing how ESG and Impact is booming and trillions are pouring into the space. If that was true, then why is it that not a single bank is perceived as the leader, the champion, THE IMPACT BANK for UHNW(Ultra High Net Worth) or HNW (High Net Worth) Investors.
One only needs to engage with the Private Banks, Wealth Managers, or Mega Banks to understand the issue here. These institutions are spending nothing on ESG and Impact Investing capacity building. Spending is going to the following:
With this lack of commitment financially, psychologically and emotionally, ESG and Impact are just new products to add to the list of offerings to clients. It is not an important strategy!
It seems that the financial institutions are schizophrenic. All of them don’t want to be seen as a Sustainable, Impact or Values Bank, because they are afraid that clients or staff might leave . However, they also don’t want to be seen as a Bank not embracing ESG, Impact and Values Investing. Make up your mind. You can’t be partially pregnant. To paraphrase Danny Ocean asking Linus Caldwell in Ocean’s 11. “Your either in our out.”
I have met with many Private Banks and Wealth Managers. Nearly all seem to be really out of touch with clients wishes, particularly nextgen clients. The lack of commitment to see the opportunity for clients and the bank is beyond belief. Most of the time it is lip service and most of the time the banks just want to learn some tricks to convince their clients that they understand enough. However, when we (TBLI Group) speak to clients, they are keen, looking and open to a Values Investing strategy. When we ask “do you want a financial return with a social and environmental added values”, they all say, “absolutely. Can you do that?” If you want to you can. No one ever said to me “No I want all my money to make life miserable for everyone and I am working at that 24 hours a day.”
I have heard for years that the problem is the client. They are not interested. I don’t believe that anymore. Sure there are some clients that don’t believe or are not convinced. That is an educational exercise. Do the work to convince. When TBLI started, nearly 25 years ago, educating asset owners and managers, there was no PRI, CDP, EVPA, AVPN, Eurosif. No infrastructure at all. However, TBLI was still able to make inroads, and help build that infrastructure, because we were committed.
Recently, I was at FT seminar on ESG and Japan. The entire day was taken up with complaints by asset managers complaining that ESG date is not good enough. Over and over and over. They kept repeating “ESG is not Good Enough”. I have heard this for 25 years. The moderator asked are there any questions from the audience. I raised my hand and said that “I have heard for 25 years this complaint that ESG Data is not good enough. Why don’t you ever say that the financial data is not good enough? We have gone through a financial meltdown, Maddoff, Worldcom, Parmelat, Enron, etc. The financial sector has lost trillions of dollars and there has never been a single company that went bankrupt on questionable esg data.” I was told that my comment was not a question and we moved on.
Perhaps no one will take a leadership role to own the Values Investing space. That’s fine, but the market or clients are there. Particularly when we dispel the myth that there are no deals. There is no shortage of deals. There is a lack of infrastructure to find illiquid opportunities, at scale. They exist but they are not to be found in traditional places. Different neighbourhood. Doesn’t mean they don’t exists.
TBLI has spent 25 years educating asset owners and managers about ESG and Impact Investing. Convincing has never been a challenge, particularly when you speak to wealth holders. Banks need to allocate the resources needed to dominate the space and grow the industry. They need to approach this as they would if it was an M&A. Until that time, the only big story will be the press releases coming out about how such and such a bank is committed to Values Investing .
To paraphrase Yoda “Do or do not, there is no try”.
A pig and a chicken were walking down the road. As they passed a church, they notice that a potluck charity breakfast was under way. Caught up in the spirit, the pig suggested to the chicken that they each make a contribution.
“Great Idea!” the chicken cried. “Let’s offer them ham and eggs!”
“Not so fast.” said the pig. “For you, that’s just a contribution, but for me, it’s a total commitment.”
I want to thank all those who have decided to support TBLI Foundation and help us scale up our activities of educational outreach, awareness raising and building a global community of ESG And Impact Investors.
TBLI goes further in creating an economy based upon well being by creating an ecosystem and community of Value(s) Based Investors. There are loads of inspirational talks around on youtube. What we need is:
How to implement?
How to empower investors?
How to execute?
How to Deliver?
Who can help me?
Where do I find the funding?
How can I make the dream a reality?
What tools do I need?
How can I educate myself about values based investing?
TBLI Foundation through TBLI Conference achieves this.
I saw this inspiring video about the down side of social media and smartphones. Wonderful, inspiring, and very clear. Look up, reach out, connect and interact with real people face to face. That is how we grow and create a community.