We want to make sure our grandchildren, and yours, inherit a Planet Earth that is liveable – and investing is a powerful tool for shaping that future. We want to empower people to grow their wealth, while investing in companies that improve the environment and humanity. Yova CEO Tillmann Lang has recently taken the stage at the Tedx event organised by the FHNW School of Business to speak about this approach and share his ideas on how investing can help solve some of the world’s most urgent problems. We hope you enjoy it!
This is my son Jonathan. He’s a bit more than a year old and he’s quite full of life. And as you can imagine, I really care about his future. And I’ll tell you why that’s important: So I’m quite a normal guy. I’m a dad now, I’m a husband. I really like eating good food but I’m not very good at preparing it. I ride my bike to work. I’m a techie, so I like to play around with stuff and explore what it can do. But importantly, I’m an optimist. So, I actually enjoy thinking about the future and I get really excited by change and possibility.
But even for an optimistic guy like me it’s quite easy to feel daunted and maybe even a bit scared when I think about the big changes, the big trends and some of the big problems of our time. So, think about climate change, for example. Would Jonathan be living in a world that is shaped by an ecological crisis, by climate refugees, by uninhabitable lands? What about the parallels that come along with all the opportunities in biotechnology and in artificial intelligence? Will Jonathan be competing with machines and what will that mean for his life?
It’s quite easy to feel daunted and powerless when you think about these big changes, these big problems, these big trends. They can be problems – they can be opportunities. And often, when we think about them, we feel at the mercy of politicians or big organisations and big companies. Why won’t the politicians do something to stop this, to put an end to this or to maybe start doing that. And why won’t companies act more in a way that benefits all of us instead of only some.
But, it’s important to remember that, in reality, you and I, and all of us individuals actually have a lot of power too – maybe even most of the power. And if you think about it, most of the things we cherish most were not created by politicians, or companies, or organisations. They were created by individuals that felt strongly about something. So strong that they teamed up and formed a movement and took action – and changed the future.
And there are many examples of that in history. Take the civil rights movement, for example, in the United States. So, of course Martin Luther King was one of the most inspirational leaders that we know of. But ultimately, it was individuals that made up the movement that fought for the rights and that made the civil rights movement a success.
Or also if you think and go back a bit earlier in time, think about the Suffragette movement: Women won the right to vote and to work by standing up for themselves again, and again, and again. Woman by woman by woman.
So these things that we cherish so much: They weren’t created, they weren’t invented by visionary politicians or brought into life by companies or organisations. They were brought into life by individuals that felt strongly about something. So strongly that they took action, formed the movement and made things happen.
And also today, against the background of the trends that I discussed before, people do a lot of things. So, a lot of people are very excited about the prospects of electric mobility and the sharing economy. And people, I’m sure here in the room – many of you consume bio products, fair trade products, locally produced products or maybe try to save energy here and there. And people do that because they care, they generally care about humans, about society, about nature and about the future. And while there’s so many things that we do, there’s one thing that not many people do yet in order to help create a better future. And that’s investing. That’s right, investing.
Investing money for financial returns because that’s actually a good way, a great way to create a better future. So let’s see how that can work. When I discuss this idea with people often the reaction that I get is “I know you’re not talking about investing, you’re talking about charity, you’re talking about donating money”. But that’s not what I’m talking about. I’m talking about investing money for a financial return and in this case also in order to create a better world. And, to understand how that can work, let’s think a bit about what an investment does or what an investment is.
Investing means giving money to a team, or a company, or an idea, a project or a technology – so that the people that work on the idea, that work on the technology have the resources that they need to make it big. And if things turn out well and the technology does get big, then it can really change the future and there are many many examples of that in history too.
So just think about the automobile, for example. At the end of the 19th century, streets were still filled with horses and carriages. Imagine living in a world where the way to get to faraway places is by riding a horse, maybe by taking a boat, maybe by taking a train. But most likely by walking there on your own feet. And then, all of a sudden somebody comes along and tells you: “You know what, in a couple of decades we’ll all be riding around in these big funny metallic animals and it’ll be safer and cheaper and more convenient”. I mean, how crazy of an idea is that? The car became a mass medium of transport because entrepreneurs like Gottlieb Daimler and Henry Ford were able to gather the capital, were able to gather the investment that they needed to make it big. And of course now, more than 100 years later we know that we need to reinvent mobility all over again. There’s no doubt the car was a big leap forward for humanity and the quality of living.
And there’s more examples. Think about solar energy. So just ten years ago, many people still said solar energy is a crazy idea. In 2012, the CEO of a large German energy company famously said that promoting solar in Germany makes as much sense as growing pineapples in Alaska. Now, that was 2012, only seven years ago, and today most people would argue that solar is part of our future. It’s not a crazy idea.
And how did this happen? Well, there was a regulatory scheme put in place to incentive people to invest in solar and a lot of people did so. In fact so many that the technology got deployed and developed more and more. And until it became so cheap that nowadays not only the environmentalists put it on the roofs, but the business sharks do it too, because it makes economic sense. So in this example, a regulator was there to help, but it shows the power of putting capital to technology that you believe might be making our lives better in the future.
And there are many more examples that didn’t even need regulation. So just think about how the light bulb changed our lives. Well, the light bulb was brought into live and made big by Thomas Edison with the money of JP Morgan. A technology that doesn’t get funded, that doesn’t get investments never makes it into the real world. But if the right idea has the right people, the right team working on it and these people get the resources that they need then true magic, true amazing things can really happen.
So what this shows us is that investing actually has a huge influence on where we go as a society. Whether we promote clean and green technologies or whether we promote dirty ones. And whether we support businesses and business models that are there to make all of us better off or just some of us. So this then raises two questions. If investing is a way to promote a better future then the first question is: Can you actually influence the impact of your investment when you do invest? The second question is: Can you do it? Can I do it?
And the answer to both questions is yes. You can influence the impact that your investment has on the world and you can do it. Everyone here in this room can do it. That’s the power of impact investing.
An impact investment is an investment that fulfils three criteria. The first criteria that it fulfils is, it’s designed to make you money so you can provide for your family, maybe for your kids’ education or for whatever you want to. And there’s nothing wrong with that. But the second criteria that defines an impact investment is that it’s designed also to have a positive impact on the world. It should make the world a better place. So that’s what an impact investment is. It’s an investment that’s designed to make your money and to make the world a better place.
And the good news is nowadays that’s possible for everybody. And that wasn’t always the case because in the past there were basically three types of people: You had the very wealthy people. They could always just pay a financial professional, you know, to care about their finances and do what they want with them for them. They didn’t have to worry about it themselves. Then you had the financially savvy people like maybe your crazy uncle Alfred that just loves to trade on the stock markets. And then tells you all about how he anticipated this-and-that market movement at the next family gathering. Trading on the stock market you can only do if you really know what you’re doing because otherwise it’s just gambling.
And the third category of people are most of us. We’re not rich and we don’t have the knowledge or maybe just not the willingness to spend our time trading stocks on the stock markets. So in the past we were stuck with the option to invest in funds, mutual funds. And the reason is quite simple: It used to be very costly to do individualised investments. And funds were a way to pull together the money from a lot of individuals to save costs. And that was a great invention because it gave many people the opportunity to invest. But there’s a big downside with funds and that’s that they’re one size-fits-all. So if you invest in funds chances are quite high that it’s not tailored to your specific financial situation and almost never will it be tailored to the wishes that you have for the future.
Because investing in a fund means delegating the decision of what you invest in to somebody else’s hands. And in almost all cases that ‘someone’ will not have the world’s future in their mind when they take the decision what to invest in. So if you’re invested in a fund, the chance is very high that your money is promoting something that you do not want in the future, like more climate change or like business practices that exploit parts of humanity or parts of nature.
So I assume that at this point in time, I’ve lost half the audience. That’s what usually happens when I start talking about something technical and complex like a fund. So let me give you the good news: Funds are a thing of the past. They’re not needed anymore because with modern technology everybody can become an impact investor. Because technology help you do two things: First of all, it can help you identify the companies and the projects that have the impact on the world that you want, that you hope for. And secondly, they can combine these things into an investment that makes financial sense for you at an appropriate risk level.
So this is big news today: You can be an impact investor even if you’re not very wealthy and even if you have no clue about finance. So this was a lot of stuff. Investing is one of the things that really influenced where we go as a society and you can become an impact investor to contribute to the future that you want.
So let me tell you what that might mean for you. There are four things that I hope you can take away from this talk today. The first thing is to just simply remind yourself that every investment has an impact. There’s no such thing as an investment without an impact and it’s up to you to make sure that that impact is what you want it to be. The second thing is: You should do it! You should become an impact investor!
If you’re a very wealthy person, tell whoever manages your money, your bank that you want it to be invested in sustainable things, and things that promote the future that you want. If your bank is not up for this, refuses to it or simply lacks the knowledge then change your bank. Because there are good banks out there. They’re just a little bit more difficult to find.
If you’re not super wealthy, find a provider online that offers impact investing. Make sure that they invest in individual companies or projects, not in funds. You can do that by googling terms like “impact investing” or googling terms like “sustainable finance” to find a provider in your country. Make sure that they know what they’re talking about, so you’re not being green-washed. You can do that, for example, by checking whether they publish expertise on the things that they do such as investing sustainably. And also by checking whether they work with academic institutions, universities and sustainability organisations such as Greenpeace or the World Wildlife Fund.
The third thing that you should take away is that you should start as soon as you can – ideally today. Because impact investing works, it’s actually one of the easiest things you can do to promote a better future. And you, if you live in one of those countries in the world where you can no longer expect to get a secured state pension for your future – and by the way, that is the case for most of the developed parts of the world – then you need to start investing money anyway. So why not do it in a sustainable way? Where you’re not giving anything up, you’re just making sure that it promotes the future that you want.
And the fourth thing that you should takeaway is: You should talk about it! Remember the power of individuals when they strongly believe about something and form a movement? Impact investing is the thing for us that we can all use to create a better future. So let us all use this power and you can help that this happens by talking about it.
So for me impact investing is actually one of the things that helps me uphold my optimism for the future. Because I really hope that when Jonathan spends time with his own kids, that he can do all the things that my wife and I are doing with him today: Live in a world where there’s clean air and beautiful nature with mountains and rivers and oceans and forests. A world where more and more people move out of poverty every day. And a world where we can use technology to make all of us better off.
So impact investing surely is not the only thing that needs to happen for this vision to become true but it certainly is a part of it. So it’s part of the things that makes me really optimistic about the future because my investments and the investments of my wife don’t only make sure that we can provide for our son but they also help contribute to the fact that there’s a great world for him and maybe his siblings to live in, once he’s older.
Thank you very much!