Beyond the Search for Alpha: The Global Economy and its Destructive Assault

What do you say to a group of people who come from an industry—the financial sector—who consider themselves the “Masters of the Universe”?

This was the first question I posed to the audience last week at the Responsible Investor Asia 2024 conference (https://www.peievents.com/en/event/ri-asia/), where I had the honour of delivering the keynote speech titled "Beyond the Search for Alpha: The Global Economy and its Destructive Assault."

As the keynote speaker, I felt it was essential to challenge an industry that has crafted sophisticated yet dangerously misleading narratives about sustainability issues—from climate change to biodiversity loss and food security. These narratives have become so obviously self-serving and ultimately serve one purpose: to reinforce the industry's power and influence so as to grow and seek bigger rewards for its participants.

Here is a summary of the key points I raised:

• Global crises are existential in nature. The industry requires experts, such as scientists, who can provide real insights for practical solutions. In a room of several hundred, a show of hands revealed that there were fewer than five scientists present.
• Many attendees at the conference are well-compensated professionals hired to push the agenda of the financial sector, yet most lack a deeper understanding of the root causes of the global sustainability crisis. They are, in essence, the frontline of an elaborate hoax / deception, and many aren’t even aware of it. Six-figure salaries can do wonders in silencing critical thought processes.
• I urged them to stop mindlessly referring to "net zero” and instead to assess whether these approaches provide practical solutions for the climate crisis and to understand the underlying agendas they promote. https://www.clubofrome.org/blog-post/nair-carbon-neutrality/
• While there was considerable discussion about "transition," there was little emphasis on the need for a fundamental redesign of society in light of ongoing crises. Despite access to the latest reports on the impending catastrophic meltdown, the focus remains on incremental changes. It raises the question: Where has the conversation about innovation and disruption gone?
• A dominant theme was that investments must lead to “bankable” projects. I suggested that it’s time for intellectual honesty about what truly constitutes a “good deal” in the context of climate and biodiversity.
• I encouraged critical thinking around the concept of “return on investment." Conventional returns are often misaligned with real-world impacts as they externalise true cost to ensure fat returns. It’s dangerous to fully defer to the finance industry’s narrow vision of impact. https://t.ly/muZ99
• As expected, much of the agenda focused on the much-loved topic of impact investing, with a session discussing the search for "alpha." I reminded the audience that there is no “alpha” in impact investing. It contradicts the very purpose of creating meaningful change.

False narratives about sustainability are extremely harmful. They create a misleading sense of security regarding the existential threat we face. It is crucial for most in business and especially the master of the universe to critically examine these concepts and understand their underlying agendas to foster genuine progress in sustainability efforts. Conference organisers too need to stop having a conference just for the sake of it and instead focus on intellectually robust content.

Responsible Investor PEI