Robert Rubinstein, Chairman and Founder of the Triple Bottom Line (TBLI) Group, speaks about the investment opportunities and the winning game of a value-based economy.
Highlights of the conversation:
- Public value is about thinking further than just yourself. The sustainable approach can bring trillions of growth opportunities, but most companies do not yet embrace this approach, because of incentivised short-term behaviour.
- The financial sector is also incentivised for short-term behaviour. We would have a very different financial system if it were based on long-term incentives. It is however in their own financial interest to adopt long-term strategies.
- Take China’s growth, either 6% or 8% on average a year, depending on sources. It means that China will reach the US consumption levels most probably before 2030 with a totally inefficient use of resources. If we extrapolate these figure to all commodities, China will need most of the grain on the planet, wood, coal, oil and gas. The same will happen with India and the other 3 billion people in emerging markets. This linear economic growth will soon reach an end and there won’t be enough for everyone at the current level of growth.
- The opportunity is massive resource efficiency and it is an investment opportunity and a big macro driver for the financial sector. Our work has been to educate the financial sector by changing the mindset of investors and showing them that change is in their interest. Sustainable investment is the wining game.
- Policy works less well. There is an international agreement against taxes on air flights, but one still pay VAT when purchasing a bicycle. It is mission impossible to convince millions of people to change their behaviour, and far easier to convince the much fewer and healthier that sustainable investment is in their interest. Looking at the social, environmental and financial risks, they have power and leverage on the economic system.
- There are two pressure points to change the economic system: sustainable finance and personal reputation. Reputation is hard to manipulate and does not bring change if it used alone. Focusing on investment opportunities can be more impactful. It’s easier to convince people who concentrate wealth and influence to invest following values. Closing off the money flows is more powerful.
- The TBLI conferences are a tool to educate asset owners and managers, and change behaviours. We look at investment opportunities and money flows to attract the financial sector or those who are engaging with the financial sector. There are enormous opportunities in fields like public transport and public infrastructure, solar and wind, but there is also a lack of platforms to help investors find the right investment.
- Trust will continue to be a crucial factor. Algorithms will never replace the trust investors can place in the due diligence reports and meeting the leaders of the companies they are interested in. The next generation is particularly prone to invest in sustainable companies.