Responsible Investor

bargain. Who could have guessed? What a novel idea! I would argue that Mr. Gates has been beaten to the punch on this by innumerable previous initiatives, including the Global Compact, the UN Principles for Responsible Investment, the Access to Medicines Index, the Base of the Pyramid Index, and literally dozens of other, similar initiatives around the world with which he seems to have little or no familiarity. Be that as it may; the real tragedy of Mr. Gates’ remarks is the fact that his own personal family foundation has over $33bn in assets, and he has already explicitly dismissed the idea that any of it could be reviewed for negative social or environmental impacts, quite apart from using it as a catalyst for positive change. (I make an enormous distinction here between the investment of foundation’s principal or corpus on the one hand and its stellar grantmaking activities on the other – typically 5% of the former. Unfortunately, the foundation – and virtually all of its peer group – make precisely the same distinction – to a fault. The two halves of the organization are, literally, two solitudes.) The empirical stock market evidence suggests that this lack of incorporating ESG insights and research into their investment strategies may well be causing foundations to leave risk-adjusted financial returns on the table.

What may be even worse, they are also leaving positive program impact on the table as well. Apparently, old investment habits die hard.
Sovereign wealth funds were, of course, another major topic of discussion, at Davos, in both public and private sessions. Once again, however, no one joined up the dots and acknowledged that the funds could improve both their financial returns and their image by adopting responsible investment strategies, and thereby possibly defuse or preempt the deep suspicion with which many of them are currently viewed in the West.
In short, sustainability concerns seemed to me to get somewhat shorter shrift at Davos this year than last. Perhaps that means that global conditions are improving faster than I thought, and further discussion is unnecessary.
At the risk of sounding excessively curmudgeonly, I will close with a wonderful quote from Professor Henry Mintzberg, one of the world’s leading business strategy and management gurus: “Davos is the place where the same bunch who spend 51 weeks a year creating all these problems join with the rest of us to spend one week trying to figure out how to solve them.”
Dr. Matthew Kiernan is founder & chief executive of Innovest Strategic Value Advisors

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