Wolf Money(book recommendation)
“Invest For Good” a healthier world and a wealthier you by Greg Konieczny, Carlos von Hardenberg and Mark Möbius, the ex legendary Templeton fund manager discussed extensively the definition of ESG investing. The trio have more than a quarter century of investment experience combine discussed the subject of ESG investing and the positive impact on society and environment. What is ESG? The buzz on ESG had been on going for a couple of years. Statement on ESG are mostly found within listed company corporate social responsibilities or CSR report. ESG stands for Environmental, Social and Governance. The book started off pretty dry. Fund management company and investors can make a difference by investing in companies that meet good ESG standard. I personally think ESG focus investing is gaining traction and it will be the way of investing demanded by the current Gen Z. More people want to know if their coffee came from a sustainable source and whether that diamond ring they purchase came from non conflict zone. More and more funds are avoiding companies that doesn’t perform to the highest standard of ESG. I wouldn’t bore you with the technicality of ESG. All roads in ESG lead to sustainability of the company and the stakeholders it served. Sustainability report had been a key feature in sgx annual reporting.
A couple of chapters later, the author gave an interesting example of their investment in Botswana and how that investment pay back handsomely and in process help uplift the community. They invested in a micro finance company which gives out small loan to a tune of $10-$100 mostly to women in 10 African countries. Borrowers use those loan to set up small business to sell SIM cards or cooking equipments. Those micro loans improve the life of the borrowers through self employment and in process creating job opportunities among the community. The company had since listed on the stock exchange generating healthy return for investors.
Fund management company play a critical role in effecting improvement in corporate governance. Their investment in a Romanian company, Hidroelectrica, a hydroelectric power company was one such example. The company had little to show for in term of profitability. The main reason was the company had contracts to sell electricity to private electricity traders at 50 percent off market price. That weighs heavily on profitability. The traders are making good money out of the state run company. Fondul fund were able to do a restructuring with the blessing of the government to terminate the poorly negotiated contract. Profit came flowing back to a tune of 60m euro a year. The fund management company had push for improvement in corporate governance which resulted in achieving positive return for investors. The investment also bring about a positive image among international investors of investing in Romania.
Investors has a role in pressuring FMCG listed companies to reducing their carbon footprint on the environment too. One such positive company is Coke Cola which in 2018 pledged to reduce unnecessary plastic packaging by 2025.
The book ended with a positive outlook for investment in Africa and why it is the next frontier for ESG investing. The book goes onto Lone Wolf recommendation for the positives ESG focus investment can bring to all stakeholders. Happy reading!
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