WHAT IS SUSTAINABLE IN THE FINANCIAL MARKET?
The discussions around this seem endless and has so far only led to a very limited number of satisfactory outcomes and product offerings. Moreover, the discussion focuses heavily on the "E" in ESG. A study by Finanzwende Recherche [2] on "sustainable" equity funds available in Germany shows that, overall, their investments hardly differ from those of conventional funds.
There is also disagreement in the assessment of equities with regard to their ESG contribution. While Standard & Poor's excluded Tesla from its ESG index a few days ago but left Exxon Mobil in the index, the ESG rating of the rating competitor MSCI is more positive for Tesla than for Exxon Mobil.
MSCI gives Tesla a better ESG rating than its rating competitor Standard & Poors, which recently excluded Tesla from its S&P 500 ESG index. [3]
Nor do we see the EU policy of classifying natural gas and nuclear power as sustainable economic activities under the EU taxonomy as having any positive effect on achieving sustainability goals. Topsy-turvy world? All in all, current efforts to solve the most pressing environmental and social problems are insufficient.
"We don't have time" is the title of what is claimed to be the world's largest digital platform for climate solutions [4], founded by the "Greta Thunberg discoverer", Ingmar Rentzhog. That is precisely the problem. Time is money, and the more time that passes, the more expensive the global damage is for everyone (taxpayers).
WHAT IS ALPHA FOR IMPACT?
While there is still much debate, we at Intalcon have asked ourselves what our contribution to solving environmental and social challenges could be. The premise here was that our contribution must have an immediate and direct impact. That is why we founded Intalcon and the Intalcon Foundation and started to implement our mission "Alpha for Impact".
On the one hand, it is about managing liquid investments such as equities and bonds more efficiently in order to achieve an above-average return - a so-called outperformance; also called "alpha" in technical terms. Fund managers and asset managers very rarely achieve above-average returns. Less than 2 out of 10 actively managed funds are able to outperform over a period of 10 years. Over 5 years, the figure is still only 4 out of 10. [5]
Less than 2 out of 10 actively managed funds in Europe are better than average. Incidentally, the same is true for the USA. [5]
On the other hand, it is about directly supporting sustainable projects with a part of the above-average return from asset management (performance fee and management fee) and so immediately generating an effect (impact).
This is precisely our contribution: to generate the impact on SGDs that is so urgently needed from a portion of the alpha generated. To promote projects that combat global warming, that aim to protect species and promote biodiversity, and projects that secure social peace and help reduce inequalities. These are our goals at Mission Alpha for Impact.
