04/09/18

From Features

Sustainable and Ethical Investing

Sustainability

"Beware of a pig in a frog suit"

L. Burke Files DDP CACM, President, Financial Examinations & Evaluations, Inc

As I was researching this article and making grumbling noises, my son asked me, "Dad, what are you writing about?" I cheerily replied, "Sustainability and the hedge fund industry." His further inquiry was – "What type of sustainability? Energy, environment, biodiversity, climate, gender parity, culture?" I smiled back and said, "Yes, I think all of those".

His comments clued me into seeing "sustainability," the way it is being used is a suitcase word. 

A suitcase word is a word that has packed into it a lot of multiple meanings and emotions such as consciousness, morality, experiences, and right and wrong. Suitcase words are the type of words that are most likely to cause misunderstandings and conflict. 

They also, when one tries to define them, are most likely to cause defensive reactions to any questioning.

Type in "Hedge Fund Sustainability" as a search term and what is displayed is a load of disambiguated thoughts, ideas, feelings, definitions, myopic viewpoints - in short, rebels without a clue. 

GREEN BONDS

WHAT COULD POSSIBLY GO WRONG?

Denis Kleinfeld
Kleinfeld Legal Advisors

The first principle of investment is there must be a return of principle before there is a return on principle. But a principle is not the same as an immutable law—especially when it comes to human beings. What someone expects investment to achieve may mean vastly different things to individual people and groups. For some, it’s money while others hope to buy peer respect, virtue, or to go along with the crowd.

Gustave Le Bon, a French Philosopher, wrote The Crowd: A Study of the Popular Mind. He observed. “…nothing is more fatal to a people than the mania for great reforms, however excellent these reforms may appear theoretically.” … “The parts played by the unconscious in all our acts is immense, and that played by reason very small”.

The realisation that people invest in a wide variety of reasons is now called behavioural economics. Long before that classification became of fashion, people just called it salesmanship and marketing---or even persuasion and propaganda. It recognises that human beings make decisions based on a mixture of facts and emotions. The stuff that makes up stories and gets masses of people to make what they think is an individual choice.

Let me tell you a few stories about Green financing.