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TBLI is inevitable.
by Robert Rubinstein
When you speak to the mainstream financial sector, not involved in TBLI or triple bottom line investing, they all say that it is not relevant, too small, niche, not important. Investment, I am told by the City, New York, Tokyo, Frankfurt and Paris, should only be looking at the financial returns. It should not be bothered by social and environmental added value issues, or so called non-financial criteria. Doing that only hurts returns and breaks the solemn oath of fiduciary responsibility. In addition, the most commonly used line is "there is no demand", so the professional investors tell me. That might all be true or not. What I find so overwhelming is that, in spite of everything going against it, TBLI or sustainable investment just keeps on growing. No matter what is thrown in its path, it doesn't stop. I think it is the killer app.
TBLI which includes all form of investment that looks at social, environmental and financial returns covers public equity, private equity, bonds, real estate, carbon finance, microfinance, project finance, etc. If you look at all these fields, every single one of them is growing some are growing, by leaps and bounds. Institutional investors are embracing SRI engagement. Cleantech private equity in the United States is over 7% of the venture capital market. General Electric recently announced that it will put $ 2.5 billion investment in clean technologies in water and energy. Why, because the market is booming. Not for reputation. There is a clear opportunity. The amazing growth in commodity and energy demands, due to the growth in emerging markets, is creating a vast opportunity for resource efficiency. This will only increase as pressure on energy and commodities reaches limits of supply. Equator Principles which covers project finance over $ 50 million, requires social env. impact assesment before a loan is approved. 75% of the market had signed on within 16 months of starting of the project starting. Were all of the banks doing this for reputation, only. No, they saw that by reducing risk the investment was more appealing. In addition, they saw that their project finance departments could do this.
When you start looking at every hindrance to tbli's growth,for the last 5-10 years, the results are even more extraordinary. There are very few MBA schools that teach anything on sustainable finance. I know, because I have been teaching one of the few courses. All the schools, that I approached to offer the course, said NYET! Most universities have been teaching the same lessons on finance for the past 15 years. Few if any banks give incentives to their staff for tbli performance or targets. The CEO's are around pitifully short, so they have no incentive to create long term projects where someone else will benefit and cut the ribbon. The tax system externalizes all cost onto society and away from environmentally or societal beneficial/benign activities. Look at the airplane industry. If you buy a bicycle in the Netherlands, you pay 19% VAT. If you buy gasoline in most of Europe it costs Euros 1.30 or more per liter. When you buy an airplane ticket, no vat, no excise tax and kerosine (costs about Euro 0, 35-0,40). What level playing field? What market mechanism? We supposedly subsidize green energy and don't tax the true cost of fossil fuels for their societal impact. Anybody keep track of the cost of middle east wars, lately. I don't see that reflected in the cost of oil. Asset management employees only know what they know and are expected to know nothing else. Most media give attention to the least important bit of financial information, what did the DOW or the FTSE do today? Once in a while a token bit of information on tbli is provided, if it can be squeezed in an advertising special. The press is busy processing press releases and going to annual meetings, where nearly no one of the press asks "why isn't your carbon risk clearly stated", to a major industrial. THEY DON'T KNOW.The press came out of the same system that produced the rest. In the United States, there is even a serious campaign to discredit the CSR movement and SRI by the neo-cons (NGO WATCH) Most of the organizations that have a clear moral and ethical purpose(Church, Grant Making Foundtation, NGO's, and Trade Unions) don't manage their assets responsibly. Private banks intentionally keep their clients ignorant of the opportunities of sustainable alternative investments. This is mainly due to the fact that this sector is very new and they avoid like the plague any new product that they are no fully familiar with, like Enron, Worldcom, Parmalat, etc. This wall or barrier is high, thick and well guarded. TBLI was not intended to get through. But it did.
With an ignorant profession, reinforced by an educational system that processes the same, an institutional sector that only hides behind the fiduciary responsibility of maximize returns and not looking at all risks, a government that reinforces harmful behavior, a society fed on financial news that needs to entertain and not inform, and a wealth management that prefers to offer its clients a foundation to give away 10% when the principle is being invested in destructive industries, and hundreds of other road blocks, it is a miralce that we have come so far. Perhaps the force behind tbli was so powerful, that nothing could stop it. During the last 10 years, it felt like you were driving on a highway and five trucks lined up in front of you driving forward were dropping barrels in your path.
The industry that felt social and environmental issues matter as much as financial, in order to assure the financial return, continued, grew, prospered and are poised now to become the "mainstream". Why, because it is a smart professional way of managing money for the long term. TBLI is the Killer App.
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Founder & CEO Brooklyn Bridge-TBLI Group
"The World will benefit when economy supports well-being"
Robert Rubinstein
BB raises consciousness of self-interest to institutionalize sustainability.
The TBLI Group runs the Triple Bottom Line Investing Conference, which will be held for the seventh time in Frankfurt, Germany. http://www.tbli.org