By Michael Muyot, President & Founder, CRD Analytics and Fellow, G&A Institute
I recently traveled to Sydney, Australia to attend the Green Leaders Summit held at the Sofitel and the Investing in Responsibility Conference: Enhanced ESG Analysis and Engagement held at the Credit Suisse Conference Hall. It was a lengthy journey albeit well worth the extended travel hours to see firsthand how Sydney is becoming a genuine gateway into the rest of Australia, China and other Asian countries. The current Five Year Plan for China is a “Going Out” & “Going West” & Going Green Strategy, which states that business leaders, entrepreneurs and high net worth investors should actively seek outside investments into stable western economies that will have a positive impact on the Chinese economy. These investments will help accelerate their mission to become a more modern and clean economy. Sydney is a natural launching pad. It has a strong, stable economy, favorable interest rates, myriad of commercial & residential investment opportunities and plenty of room for expansion across multiple industries and geographies. China currently has USD$3.31 Trillion in foreign reserves of which 54% are in US Dollar Holdings, primarily US Treasury Bonds. The Five Year Plan identifies expansion into the following industries abroad: Energy, Clean Energy, Technology, Healthcare, Education Financial Services and Tourism.
GTQ International’s 2013 Australian ‘Investing in Responsibility’ Conference
My first speaking engagement was on a panel at the Investing in Responsibility Conference: Enhanced ESG Analysis and Engagement held at the Credit Suisse Conference Hall next to the Sydney Harbor. As a speaker, we were challenged to deliver unbiased insights and encouraged to be daring and committed. It was an invite-only event for a group of delegates (primarily at the Portfolio and Fund Manger levels) committed to generating new directions, advantages and proprietary strategies around ESG practice. The opening Keynote was delivered by Erika Karp, CEO of Cornerstone Capital, Inc., and previously Head of Global Sector Research at UBS Investment Bank (USA). Erika kicked it off with a call to arms based on Aristotle’s premise that Perfect is the Enemy of the Good. Erika’s Keynote as well as the following panel on the myriad of definitions — Sustainability, ESG, Responsible Investment, Ethical Investing, which I was a part of — focused more on tangible examples, practical applications. The discussion delved deeper into how experts consistently navigate towards true North and how they re-calibrate along the way. Erika gave some great examples for the audience of how her weekly calls with top investment analysts were used as a challenge to go well beyond the surface to earn their spot on the Call. Erika rounded out the panel with a similar question to each of us, asking, What is the one thing that you don’t know but would really want to know if possible? My wish list was quite long. As an investment analyst and “Quant” who builds algorithms and rules-based methodologies to power financial indexes like the NASDAQ CRD Global Sustainability Index and the SeaCrest Global Clean Energy Portfolio, my mind was racing with dozens of metrics and indicators that I have not been able to easily get publicly. In the final analysis, what I settled on was actually more qualitative in nature. I would like to know what each of the 1000+ global public companies in our SmartView 360 platform have mapped out as their Overarching Sustainable Development Strategic Framework for the next 3-5 years. This is cruicial as it clearly defines where they are in their operational maturity curve and drives 80% of the other 141 ESG metrics in our platform. We generally see less than 10% of the 1000+ companies disclose this in a meaningful way and it would be very illuminating to discover whether that is by design to keep things close to their vest, or if it is just a lack of having a mid-term Strategic Plan. Amongst the majority of the speakers and audience, there was an overall recognition of ESG’s potential to uncover diversifiable risk in a portfolio or investment opportunity; there was also a general consensus of the impact of ESG on overall corporate performance and the investor stakeholder relationship. The conversations and panels were free flowing and very lively.
The Green Leaders Summit
The Green Leaders Summit was organized by the Green World City. The co-producers of the event were Sein-Way Tan, Chairman & Group CEO of Green World City Organisation and on the Steering Committee for the UN Habitat World Urban Campaign, and Alexandra Sokol a Managing Partner of the Ecotelligence™ Catalyst Group. What makes the Green Leaders Summit different is that at their core they are involved in mega green projects, sustainable initiatives and clean technologies. The Green Leaders Summit is not only a gathering of global green leaders but also:
- The Venue to find out how the world is going to evolve and how that links to future opportunities,
- The Platform to establish alliances with leaders in the sustainable industry,
- The Launchpad for Mega Green Projects, Green Initiatives, Green Technologies with global significance,
- The Platform for Green companies to meet Institutional and High-net-worth investors.
Nigel Blair, Director of the EnvestGroup has two different companies working towards creating tangible results across major areas of Sustainable Development that could each have a very positive multiplier effect if properly funded and executed. This is an example of the solution based approach that the speakers embodied, The first company is Ecocity. The Eco City project is a research, training, innovation and commercialisation precinct which is being undertaken in Western Victoria in conjunction with Victoria University. It addresses the themes of energy & water efficiency and urban food security. The second company Greenco Water, a water company founded with its primary areas of operation in Australia, China and South East Asia. It delivers clean water solutions throughout Asia and has developed the world’s first HDPE flat pack water tank. It’s strong, light weight and very versatile – able to be shipped at much lower logistic cost and retrofitted in tight locations.
Green Projects & Technology Investors Den
On the final day many high net worth investors from China attended an Investors Den. Jean Dong, Ambassador and TV Presenter for Tourism Victoria and former Miss China Australia, moderated our panel. We had a dynamic discussion about financing sustainable development through green technology solutions and renewable energy sources. We discussed numerous social challenges around the globe and how green, sustainability solutions could play a critical role in elevating the plight of many people, especially girls and women as a major pillar in the UN Millennium Development Goals. The panel concluded the supply clearly outweighed the demand. Although the challenges of political will, consolidating wealth in the hands of just a few corporations, large banks and inefficient market tools for increasing deal flow. The overarching needs of solutions will eventually drive the implementation of better, cleaner technologies in urban environments first, followed by new commercial and residential buildings and supporting systems. During one of my responses to a question I stressed the untapped investment opportunities that could be realized via cross pollination between the innovative and successful US entrepreneurial market that gave the world Apple, Facebook and Tesla, the stability of the Australian markets, along with the robustness and depth of the Chinese Investment markets. This has led to a plan forward with two other CEOs to explore how to expedite a technology platform to make said connections and series of events to bring the crème de la crème together in a unique and action-oriented way. Richard Yuan, CEO of ABC World PTY and Chairman of the ABC Business Club, is a wonderful example of entrepreneurial success. Mr. Yuan is someone who is giving back to the community to help them navigate the complex business migration system that he personally found so cumbersome. It is now a core part of ABC World’s offerings. Richard is playing a pivotal role in helping more than 1000 families migrate to Australia and many of them are opening up businesses and creating sustainable economic growth. There was also a healthy discussion of the missed opportunities to invest more in Human Capital, especially girls and women around the world. With incredibly brave girls like Malala Yousafzai, from Swat Valley near the Pakistan-Afghanistan border, who stood up to the Taliban and literally put her life on the line to fight for education for all girls around the world. The discussion of Human Capital can no longer be ignored. Educating girls raises lifetime incomes for them, their families and their countries. The World Bank found in a study of 100 countries that every 1% increase in the proportion of women with secondary education boosted a country’s annual per capita income growth rate by approximately 0.3 percentage points. Also, If mothers have a primary school education, the mortality rate for their children under 5 is halved: each additional year of schooling for girls reduces infant mortality for their offspring by up to 10%. The World Health Report estimated the annual global price tag to scale up maternal interventions to be $1 billion in 2006 and will increase to $6.1 billion in 2016. Avoiding addressing the issue of education for girls and women carries a very high price tag for all of us, both economically and socially. I spoke with Richard Yuan after the event and he proudly stated, “It was great to be part of this wonderful panel and thank you, Jean Dong, for being a good moderator for the event…Erika was particularly sharp and quick in her response to those interesting comments about Human capital!”
I also caught up with Erika Karp, Founder & CEO of Cornerstone Capital, Inc., a couple of days after the event. Referring to key takeaways from the Green Leaders Summit, Erika said, “The event was notable in terms of bringing together a diverse group of experts with a truly global perspective. There was a particularly well-articulated sense of the urgency associated with meeting the financing demands of today’s environmental imperatives. It was also striking to see the pragmatic business and technology solutions already at hand.”
Two Great Examples of Practical Technology Solutions
Presented by: Dr. Evan Stephens, Queensland International Fellow and Manager of the Solar Biofuels Research Centre at the Institute for Molecular Bioscience at the University of Queensland and Robert Vancina, Entrepreneur / Inventor of Exothermic ‘0’ Emission Hydrogen Generation and CEO of HOPE Cell Technologies. Dr. Stephens work at the University of Queensland in Australia is part of an international consortium of researchers and industry partners in the development of sustainable solutions for production of fuels, food products, and high value products. His work also includes water treatment and utilizing high productivity microalgae. The main focus for the development of these systems, which have long been touted as promising due to a number of technological advantages (e.g. high productivity, locating on marginal lands, low requirement for fresh water, and high nutrient efficiency), is increasing the economic viability of Algae as significant source of renewable fuel. In the session of Emerging Technologies, CEO Robert Vancina presented an advanced technology of clean hydrogen generation. The awarded Hope Cell Technology concept can employ wind or solar generated energy with the highest efficiency and is projected to serve a scalable utilization with fuel cell and combustion. This patented technology can be adapted to many existing devices and utilities, while minimizing the need for grid or expensive infrastructure. Robert is seeking a partner, with global market presence aspiration and ability, to take it to the next level of commercialization. After personally forging several great new relationships filled with opportunities (and one very serious new business partnership), I look forward to returning to Sydney next year as we all continue our journey to make progress on Navigating Towards True North, leveraging ESG to make better investment decisions, increasing deal flow into cutting edge Green Mega Projects and Technologies, and as Erika Karp loves to say, “accelerate the velocity of money™ flowing to winning business solutions”!
Michael is an acknowledged leader in Sustainable Investment Analytics and Innovative Algorithms. Michael has developed a unique set of tools that are helping to build the industry. He designed the SmartView 360 Platform, which powers sustainability indexes, rankings and research reports; including the NASDAQ CRD Global Sustainability Index (NASDAQ: QCRD), the Sustainability Leadership Report and the Southeastern Sunbelt Sustainability Rankings. Michael Muyot was the executive producer of the SmartView 360 Roundtable on Sustainable Investing in May 2010 hosted at the NASDAQ MarketSite. Michael brought together global thought leaders to “Crack the Code” of accelerating Sustainable Investing in the United States, culminating with the Global Reporting Initiative’s Vice Chairman of the Board Sean Harrigan ringing the Closing Bell. Michael was chosen by Ford Motors to provide his Forward-thinking Perspective for their 2010/11 Sustainability report, http://myfrd.co/m5erKf. Michael is an Advisory Board Member of the Sustainability Accounting Standards Boards’ (SASB) and is part of their Financial Services Industry Working Group. We are pleased to have a long-term relationship with Michael, who is a Fellow of the Institute.