Interview with Dr Madhav Mehra
Governance, March 2002, UK
http://madhavmehra.com/dr-madhav-mehra/press8.hm
Tuesday, 11 May 2010
Wednesday, 5 August 2009
WHY FRAUDS CONTINUE TO TAKE PLACE?
Sir David Walker is a leading City grandee and was the chairman of Morgan Stanley, the investment bank. In 2007 Walker was commissioned to produce a report into the then hugely controversial private equity business. His findings on transparency were rated toothless and in the eyes of many paved the way for the excessive opacity of markets that in turn engendered the current crisis. Sir David identifies four fundamental flaws:
1. The boards of the bank failed to understand the scale and type of risk they were running
2. Non-executive directors were hopeless in holding powerful executives to account
3. Bonus schemes rewarded short term performance and therefore encouraged dangerous risk taking.
4. Institutional shareholders caught up in exuberance of skyrocketing returns failed to exercise proper stewardship.
These flaws are no different from the ones exposed in the dotcom debacle of 2000 and the raft of scandals such as ENRON, WorldCom, Tyco etc that followed. Indeed these transgressions are now enshrined as standard text in books such as "Corporate Governance" (McGraw-Hill Executive MBA Series, New York, 2003, p. 229):
1. Executive compensation grossly disproportionate to corporate results;
2. Stock promotion, such as initial public offerings (IPO), that has gone to an extreme in the creation of very questionable or unproven business concepts;
3. Misuse of corporate funds;
4. Trading on insider information, particularly by managers exercising stock options that have rewarded short-term thinking;
5. Misrepresentation of the true earnings and financial condition of too many companies; and
6. Obstruction of justice by concealing activities or destroying evidence.
1. The boards of the bank failed to understand the scale and type of risk they were running
2. Non-executive directors were hopeless in holding powerful executives to account
3. Bonus schemes rewarded short term performance and therefore encouraged dangerous risk taking.
4. Institutional shareholders caught up in exuberance of skyrocketing returns failed to exercise proper stewardship.
These flaws are no different from the ones exposed in the dotcom debacle of 2000 and the raft of scandals such as ENRON, WorldCom, Tyco etc that followed. Indeed these transgressions are now enshrined as standard text in books such as "Corporate Governance" (McGraw-Hill Executive MBA Series, New York, 2003, p. 229):
1. Executive compensation grossly disproportionate to corporate results;
2. Stock promotion, such as initial public offerings (IPO), that has gone to an extreme in the creation of very questionable or unproven business concepts;
3. Misuse of corporate funds;
4. Trading on insider information, particularly by managers exercising stock options that have rewarded short-term thinking;
5. Misrepresentation of the true earnings and financial condition of too many companies; and
6. Obstruction of justice by concealing activities or destroying evidence.
WHAT IS IT THAT IS DIFFERENT AND NEW AND WILL WORK NOW THAT HAS BEEN PROMISED BY SIR DAVID WALKER?
It is, therefore, not surprising that Sir David’s recommendations while welcomed by the government that appointed him have met with adverse reactions both from bankers and investors. In a show of untamed arrogance and audacity, reminiscent of heyday of Wall Street, Goldman Sachs has declared record profits in the second quarter of 2009 and announced hefty bonuses for its staff - equivalent to a US$ million for each staff. The public was furious at bankers’ irresponsibility in forgetting that they were in business because of tax payer had bailed them out with – a stunning sum of £904 billion in UK alone. Banks had cheated to raise their stock values in order to get bonuses which are in vast multiples of the remuneration of ordinary, but equally hard working and honest people. They criticised recommendations as "pretty similar to the countless others before it. We need radical thinking - but we got tinkering".
Sir David claims his proposals - taken with those put forward by the Financial Services Authority - would be the "toughest remuneration regime in the world". Sir David warns, "there is no reason why his proposals - with the exception of the suggestions on risk - could not be applied to "any other listed company board". But looked at from the most eye-catching of Walker’s proposals: that the compensation of all highly-paid bankers should be publicly disclosed, have no teeth. The highly paid would not actually be named; their compensation would just be disclosed in bands. Besides these proposals cannot be implemented until adopted in the Combined Code and subjected to the same Comply or Explain regime.
We are unlikely to find effective answers unless we self-introspect and ask ourselves why despite a rash of regulations, the world economy has again been thrown into turmoil? What is it that is new and different that we can do now that will be more effective to secure it? The irony is that everyone knows the problem. Greed is a given in human nature. It is beyond class, creed, clan, caste or calling. It is the key driver of business. Economists refer to it as self-interest. But businesses when questioned are often in a muddled state of self denial.
The holy cow of corporate governance is that It is board process that most impacts board performance. The key criteria constitute the number of outside directors, the separation of the role of chair and of chief executive officer, the size of the board, the composition of committees, the independence of directors and so on. Since directorship of boards was confined to a small elite the selection was invariably restricted to the same gene pool.
So let us examine board membership of Goldman Sachs, Lehman Brothers, Merrill Lynch and City Group Smith Barney. These boards consisted of some of the leading business leaders in the United States. Indeed, the approximate 61 members of the boards of these companies also were on the boards of approximately 183 leading U. S. corporations -- most of them on more than one. In other words, the boards of directors of these leading financial institutions were primarily made up of directors of major business corporations.
These boards were constituted according to best accepted board practice -- they averaged about 14 members, had one or two prominent women members, they drew some of their membership from institutions of higher learning -- the Ivy League schools seemed to be a fertile place to find directors -- and there was not an excessive amount of interlocking among directors. So why were these boards so totally ineffective in preventing malfeasance.
Having come from similar backgrounds – class, creed, education, schools, even the independent outside director had the same values, the same standards, the same attitudes about running an enterprise and board functioning emphasized uniformity, cohesiveness and consensus. Group dynamics -- not board structure-- was the determining factor in how the boards operated.
It does not need rocket science to prove that such a process would have very little impact on the financial performance of a company. Nonetheless regulators have continued constantly to advocate and provide protection for shareholders by concentrating on board structure.
Groupthink, a term coined by social psychologist Irving Janis (1972), occurs when a group makes faulty decisions because group pressures lead to a deterioration of "mental efficiency, reality testing, and moral judgment" . Groups affected by groupthink ignore alternatives and tend to take irrational actions that dehumanize other groups. A group is especially vulnerable to groupthink when its members have similar background, the group is insulated from outside opinions, and there are no clear rules or incentives for departure from norm.
In the past quarter-century, a dramatic shift in the thinking about the goals of the corporation took place and measurement of its value. In their book "Stakeholder Corporation" published in 1997, Wheeler and Seelampa established that stakeholder focused corporations outperformed shareholder focused corporations. The principal purpose of publicly traded corporations was to maximise value of their shares on the stock market and not the bottom line results. Rewards to the directors and management began to be determined not by the quality of a company's products or services, but by the performance of company shares.
The acceptance of this concept has been catastrophic, particularly for institutions in the financial sector. With the ever-greater complexity of the financial needs of companies and their clients, investment banks started using "financial engineering" to manufacture an array of complex financial products that have no intrinsic economic value, but which when properly (or improperly) manipulated can generate fees and profits . This is deception and is precisely what made subprime mortgage lending calamity -- the genesis for the current man-made economic meltdown--possible. Changing the structure of boards won't make any difference . What will is a transformation in corporate culture that prevents Groupthink.values dissent in the boardroom and encourages free and frank dialogue.
Sir David claims his proposals - taken with those put forward by the Financial Services Authority - would be the "toughest remuneration regime in the world". Sir David warns, "there is no reason why his proposals - with the exception of the suggestions on risk - could not be applied to "any other listed company board". But looked at from the most eye-catching of Walker’s proposals: that the compensation of all highly-paid bankers should be publicly disclosed, have no teeth. The highly paid would not actually be named; their compensation would just be disclosed in bands. Besides these proposals cannot be implemented until adopted in the Combined Code and subjected to the same Comply or Explain regime.
We are unlikely to find effective answers unless we self-introspect and ask ourselves why despite a rash of regulations, the world economy has again been thrown into turmoil? What is it that is new and different that we can do now that will be more effective to secure it? The irony is that everyone knows the problem. Greed is a given in human nature. It is beyond class, creed, clan, caste or calling. It is the key driver of business. Economists refer to it as self-interest. But businesses when questioned are often in a muddled state of self denial.
The holy cow of corporate governance is that It is board process that most impacts board performance. The key criteria constitute the number of outside directors, the separation of the role of chair and of chief executive officer, the size of the board, the composition of committees, the independence of directors and so on. Since directorship of boards was confined to a small elite the selection was invariably restricted to the same gene pool.
So let us examine board membership of Goldman Sachs, Lehman Brothers, Merrill Lynch and City Group Smith Barney. These boards consisted of some of the leading business leaders in the United States. Indeed, the approximate 61 members of the boards of these companies also were on the boards of approximately 183 leading U. S. corporations -- most of them on more than one. In other words, the boards of directors of these leading financial institutions were primarily made up of directors of major business corporations.
These boards were constituted according to best accepted board practice -- they averaged about 14 members, had one or two prominent women members, they drew some of their membership from institutions of higher learning -- the Ivy League schools seemed to be a fertile place to find directors -- and there was not an excessive amount of interlocking among directors. So why were these boards so totally ineffective in preventing malfeasance.
Having come from similar backgrounds – class, creed, education, schools, even the independent outside director had the same values, the same standards, the same attitudes about running an enterprise and board functioning emphasized uniformity, cohesiveness and consensus. Group dynamics -- not board structure-- was the determining factor in how the boards operated.
It does not need rocket science to prove that such a process would have very little impact on the financial performance of a company. Nonetheless regulators have continued constantly to advocate and provide protection for shareholders by concentrating on board structure.
Groupthink, a term coined by social psychologist Irving Janis (1972), occurs when a group makes faulty decisions because group pressures lead to a deterioration of "mental efficiency, reality testing, and moral judgment" . Groups affected by groupthink ignore alternatives and tend to take irrational actions that dehumanize other groups. A group is especially vulnerable to groupthink when its members have similar background, the group is insulated from outside opinions, and there are no clear rules or incentives for departure from norm.
In the past quarter-century, a dramatic shift in the thinking about the goals of the corporation took place and measurement of its value. In their book "Stakeholder Corporation" published in 1997, Wheeler and Seelampa established that stakeholder focused corporations outperformed shareholder focused corporations. The principal purpose of publicly traded corporations was to maximise value of their shares on the stock market and not the bottom line results. Rewards to the directors and management began to be determined not by the quality of a company's products or services, but by the performance of company shares.
The acceptance of this concept has been catastrophic, particularly for institutions in the financial sector. With the ever-greater complexity of the financial needs of companies and their clients, investment banks started using "financial engineering" to manufacture an array of complex financial products that have no intrinsic economic value, but which when properly (or improperly) manipulated can generate fees and profits . This is deception and is precisely what made subprime mortgage lending calamity -- the genesis for the current man-made economic meltdown--possible. Changing the structure of boards won't make any difference . What will is a transformation in corporate culture that prevents Groupthink.values dissent in the boardroom and encourages free and frank dialogue.
Sunday, 7 June 2009
Dematerialising Growth is Humanity’s Greatest Challenge
The most harrowing challenge confronting the humanity today is whether the growth we have been used to since the second world war is sustainable. Is Thomas Malthus going to have the last laugh? Will the 21st century be a century of peace, prosperity and promise or of doom, desperation and despair? Charles Dumas of London-based Lombard Street Research notes that, at purchasing power parity, China now generates a little over a quarter of world economic growth in a normal year, while emerging and developing countries together generate 70 per cent. Even at market exchange rates, the growth of China’s gross domestic product is as big as that of the US in normal years for both countries.
Today, almost two-thirds of humanity lives in high-income or high-growth countries. That proportion is up from less than a fifth 30 years ago. Unfortunately, the remaining 2 billion live in countries with stagnant, or even declining, incomes. Even within countries and within regions there are stark disparities that have sharpened since globalisation. What makes this really worrying is the accentuation of inequity with the rise in population. World population would rise by 30% and the income 4 ½ times by 2050. Some twothirds of the 3 billion increase in global population expected will live in countries today enjoying little or no growth.
The first question aptly asked by Jeffrey Sachs of the Earth Institute is whether the planet will have room enough for 7-10 billion people by 2050. The power of technology has helped the developing countries like India and China to grow phenomenally during the past decade and rightly so. The question is what is the cost of this growth? Our fundamental problem is that we have not been able to price the natural capital and account for the impact of human activity on it. Our economists and accountants simply write off the loss of natural resources from the base line growth analyses as externalities. Our economic system has price for everything we can do without but not for priceless things like air, greens, glaciers, rivers, forests and oceans. Despite all our talk of productivity we have not succeeded in getting more for less from nature but
destroyed the planet wantonly counting as income what in fact is blatant destruction of natural capital.
The result is massive glacier melt, ground water depletion, habitat destruction and more toxic chemical and pollutants.
The failure of the financial system after the sub prime crisis shows that the market forces are unable to solve the problem. The main problem is that the ideology of the market economics denies the very existence of these catastrophic problems. Hence we are short of even the practical tools to help solution. Market forces have never been the best guide as technological pathways often overlook the needs of the poorest of the poor.
The overriding challenge is to bring the billions living in developing countries to industrialized countries’ income levels as rapidly as possible and empower poor countries to earn their standing among the highgrowth category. This issue is addressed by the recently published Growth Report, product of a commission consisting mainly
Today, almost two-thirds of humanity lives in high-income or high-growth countries. That proportion is up from less than a fifth 30 years ago. Unfortunately, the remaining 2 billion live in countries with stagnant, or even declining, incomes. Even within countries and within regions there are stark disparities that have sharpened since globalisation. What makes this really worrying is the accentuation of inequity with the rise in population. World population would rise by 30% and the income 4 ½ times by 2050. Some twothirds of the 3 billion increase in global population expected will live in countries today enjoying little or no growth.
The first question aptly asked by Jeffrey Sachs of the Earth Institute is whether the planet will have room enough for 7-10 billion people by 2050. The power of technology has helped the developing countries like India and China to grow phenomenally during the past decade and rightly so. The question is what is the cost of this growth? Our fundamental problem is that we have not been able to price the natural capital and account for the impact of human activity on it. Our economists and accountants simply write off the loss of natural resources from the base line growth analyses as externalities. Our economic system has price for everything we can do without but not for priceless things like air, greens, glaciers, rivers, forests and oceans. Despite all our talk of productivity we have not succeeded in getting more for less from nature but
destroyed the planet wantonly counting as income what in fact is blatant destruction of natural capital.
The result is massive glacier melt, ground water depletion, habitat destruction and more toxic chemical and pollutants.
The failure of the financial system after the sub prime crisis shows that the market forces are unable to solve the problem. The main problem is that the ideology of the market economics denies the very existence of these catastrophic problems. Hence we are short of even the practical tools to help solution. Market forces have never been the best guide as technological pathways often overlook the needs of the poorest of the poor.
The overriding challenge is to bring the billions living in developing countries to industrialized countries’ income levels as rapidly as possible and empower poor countries to earn their standing among the highgrowth category. This issue is addressed by the recently published Growth Report, product of a commission consisting mainly
UK Boardrooms will take 73 years for gender
The business of attracting, appointing and retaining the best talent for our
corporate leadership has never been more critical. It is time we shed some of our
woolly, fuddy duddy and dangerous ideas.
Britain has one of the most deplorable ratios of women in boardrooms. While the
world has undergone transformational changes during the past 10 years UK’s
record of women in boardrooms has improved only niggardly by 5%.to 11.7%.
Meanwhile women’s representation as leaders of Norwegian business has risen from
6% to 44%. Rest of the Europe is moving equally fast. With the current rate of
change UK Boardrooms will take 73 years for gender balance.
Gender is not the only area where UK boardroom record is so poor. There are no
Black British female directors in FTSE 100 companies. There are only 8 ethnic
minority women directors in FTSE 100 companies.
It is In this context that Mr Miles Templeman’s resistance
corporate leadership has never been more critical. It is time we shed some of our
woolly, fuddy duddy and dangerous ideas.
Britain has one of the most deplorable ratios of women in boardrooms. While the
world has undergone transformational changes during the past 10 years UK’s
record of women in boardrooms has improved only niggardly by 5%.to 11.7%.
Meanwhile women’s representation as leaders of Norwegian business has risen from
6% to 44%. Rest of the Europe is moving equally fast. With the current rate of
change UK Boardrooms will take 73 years for gender balance.
Gender is not the only area where UK boardroom record is so poor. There are no
Black British female directors in FTSE 100 companies. There are only 8 ethnic
minority women directors in FTSE 100 companies.
It is In this context that Mr Miles Templeman’s resistance
The Satyam fraud has given unfortunate narrative to India’s so far positive story
Financial mess has become a complex affair. Good news is that the sting has created a public outcry and raised the bar in corporate governance. Never before even in the days of Enron whose impact on the market was much more significant has corporate governance become such a household word.
The government of India also needs to be complimented for moving quickly to punish the guilty and that includes the promoters, the auditors and independent directors.
It is not often that the public gets a full measure of an inside story. Satyam’s main contribution should be the unfolding of a soaded state of insider trading. The investigations reveal the large scale selling of the company’s shares by institutional investors days before Raju’s confession of cooking books.
What is unfolding in front of us is the market punishment to all the fraudsters. Satyam is a microcosm of the markets revolt against the fraudsters. Satyam fraud would have never come to light had it not been for the courage of a determined group of investors. The board had already passed the resolution on 16 December 2008 to acquire promoter’s son’s properties companies at an extortionate price of $1.6bn to cover the cash hole. The story has been repeated time and again in Wall Street during the past 18 months since the queues formed outside the Northern Rock, the British Bank and the French Bank BNP Paribas froze withdrawals from three of its funds.
Within a span of next 12 months the heads of world 5 biggest investment banks James Cane of Bear Stern, Lehamn Brother, Blankfine of Goldman Sachs, John Thain of Merryl Lynch and John Mack of Morgan Stanley lost combined personal wealth to the tune of $2.2bn.
The lead article in the journal tells the inside story of Wall Street greed which has led to the current meltdown. The scan show that Wall Street managers had been living in the world far removed from reality. John Thain who in October 2007 was appointed to rescue Merryl Lynch – Merryl Lynch has suffered loss of $6bn did not hesitate to pay himself salary and bonus of $83m. Story does not end here. He brought forward about $4bn indiscretionary bonuses after the sale of Merryl was agreed but days before the deal was actually closed. This was despite the record operating losses of $21.5bn in the fourth quarter which the tax payer have to fund through TARP (Troubled Asset Relief Programme).
These bonuses related to a year when Merryl’s total operating loss was $41.2bn. Mr Thane also spent $1.22m doing up his office which included $1400 on a rubbish bin. John Thain was the head of Goldman Sachs before he moved on to become the CEO of the New York Stock Exchange.
The current issue of Conde Nast carries an interesting story of ‘conspiracy’ of Goldman Sachs to take over the US financial system. Goldman Sachs has always been envied as the holy grail of investment banking and managed to remain one up.
Mr Bush’s Treasury Secretary Hank Poulson is a former Goldman CEO and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the EU is a former Goldman Vice Chairman. Ad Liddy, the new CEO of AIG, was Goldman’s Vice Chairman.
World Bank President Robert Zoellick was a Managing Director, Mr Niel Kashkari, 35 year old young man charged to oversee the $700 bn TARP was also a Vice President of Goldman.
In November, after Citi Group’s stock dropped more than 60% in one week, Poulson injected $20bn into the company adding to the $25m already committed.
The government of India also needs to be complimented for moving quickly to punish the guilty and that includes the promoters, the auditors and independent directors.
It is not often that the public gets a full measure of an inside story. Satyam’s main contribution should be the unfolding of a soaded state of insider trading. The investigations reveal the large scale selling of the company’s shares by institutional investors days before Raju’s confession of cooking books.
What is unfolding in front of us is the market punishment to all the fraudsters. Satyam is a microcosm of the markets revolt against the fraudsters. Satyam fraud would have never come to light had it not been for the courage of a determined group of investors. The board had already passed the resolution on 16 December 2008 to acquire promoter’s son’s properties companies at an extortionate price of $1.6bn to cover the cash hole. The story has been repeated time and again in Wall Street during the past 18 months since the queues formed outside the Northern Rock, the British Bank and the French Bank BNP Paribas froze withdrawals from three of its funds.
Within a span of next 12 months the heads of world 5 biggest investment banks James Cane of Bear Stern, Lehamn Brother, Blankfine of Goldman Sachs, John Thain of Merryl Lynch and John Mack of Morgan Stanley lost combined personal wealth to the tune of $2.2bn.
The lead article in the journal tells the inside story of Wall Street greed which has led to the current meltdown. The scan show that Wall Street managers had been living in the world far removed from reality. John Thain who in October 2007 was appointed to rescue Merryl Lynch – Merryl Lynch has suffered loss of $6bn did not hesitate to pay himself salary and bonus of $83m. Story does not end here. He brought forward about $4bn indiscretionary bonuses after the sale of Merryl was agreed but days before the deal was actually closed. This was despite the record operating losses of $21.5bn in the fourth quarter which the tax payer have to fund through TARP (Troubled Asset Relief Programme).
These bonuses related to a year when Merryl’s total operating loss was $41.2bn. Mr Thane also spent $1.22m doing up his office which included $1400 on a rubbish bin. John Thain was the head of Goldman Sachs before he moved on to become the CEO of the New York Stock Exchange.
The current issue of Conde Nast carries an interesting story of ‘conspiracy’ of Goldman Sachs to take over the US financial system. Goldman Sachs has always been envied as the holy grail of investment banking and managed to remain one up.
Mr Bush’s Treasury Secretary Hank Poulson is a former Goldman CEO and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the EU is a former Goldman Vice Chairman. Ad Liddy, the new CEO of AIG, was Goldman’s Vice Chairman.
World Bank President Robert Zoellick was a Managing Director, Mr Niel Kashkari, 35 year old young man charged to oversee the $700 bn TARP was also a Vice President of Goldman.
In November, after Citi Group’s stock dropped more than 60% in one week, Poulson injected $20bn into the company adding to the $25m already committed.
Climate Change – A business opportunity that knocks
Negotiators at UNFCCC are out of touch with real world of business
Oscar Wilde is supposed to have defined a pessimist as someone who complains of noise when opportunity knocks. While negotiators at UNFCCC (United National Framework Convention for Climate Change) are beckoning about the tiny levels of CO2 reductions, smart CEOs like Lee Scott of Wal-Mart and Marks Spencer, UK are turning out climate change as cash cow creating value for both customers & company in an unprecedented way while protecting environment.
The corporate social responsibility today has turned out to be corporate business opportunity. Businesses are burning midnight oil in showing how socially or environmentally responsible they are. While governments are struggling to cut CO2 by mere 7% below 1990 levels, some smart companies have achieved spectacular results in their bid to drive a low cost economy.
The global rich are going green as never before. This first Sunday Times Green Rich List published recently shows that the enthusiasm among the world’s wealthiest for investments in areas as diverse as electric cars, solar power and geothermal energy is unaffected by the recession.
The Green List has unearthed 100 tycoons or wealthy families worth £200m or more who have made either serious investments in green technology and businesses or hefty financial commitments to environmental causes. In total, the Green 100 are worth nearly £267 billion.
This enormous sum demonstrates that many of the world’s richest tycoons and entrepreneurs have embraced environmentalism. Indeed, our list is dominated by America’s wealthiest financiers and entrepreneurs such as Warren Buffett (worth £27 billion) and Bill Gates (worth £26 billion).
These smart investors, who regularly swap places at the top of Forbes magazine’s annual list of world billionaires, have spent some of their financial firepower on areas such as wind power and electric cars in Buffett’s case, while Gates has backed alternative fuels such as oil from algae. We are not talking trifling sums here. Buffett has invested $230m in the Hong Kong battery-maker BYD.
Of the rich list of 100, 35 are Americans drawn from Silicon Valley. Having made their first fortunes in microchips, the internet or software, the likes of Google’s Larry Page and Sergey Brin (each worth £7.5 billion) are turning to green investments with all the entrepreneurial zeal that made their first fortunes.
It helps that the Obama administration is committed to a huge stimulus package involving the very technologies that investors are focusing on.
Even tycoons who are not in President Barack Obama’s camp have moved into alternative energy, none more so than T Boone Pickens, oil explorer, corporate raider and a Texan Republican to his core. He is using part of his £1.8 billion fortune on filling the huge and windy Texas Panhandle with turbines as part of his Pickens Plan to wean America off its dependence on foreign energy.
"While American money is chasing smarter and greener technologies, the Chinese are concentrating a mass production of green technologies. The 17 Chinese tycoons in the Top 100 are at the bottom end of the list almost exclusively involved in solar and electric-car technology to cut. India figures no where in this league. India has a huge competitive advantage is solar energy. Almost every house in Europe has a solar panel. Why not in India, ask Dr Madhav Mehra President World Council for Corporate Governance, the brain behind the launch of the Global Human Chain to Pledge PROACTIVATE to combat change in climate. The chain will eventually extended each of the 213 countries from Australia to Alaska.
Dr Mehra added "On this World Environment Foundation while we have all come to pledge PROACTIVATE let us also resolve to ensure that every home in Bangalore has a solar panel".
Oscar Wilde is supposed to have defined a pessimist as someone who complains of noise when opportunity knocks. While negotiators at UNFCCC (United National Framework Convention for Climate Change) are beckoning about the tiny levels of CO2 reductions, smart CEOs like Lee Scott of Wal-Mart and Marks Spencer, UK are turning out climate change as cash cow creating value for both customers & company in an unprecedented way while protecting environment.
The corporate social responsibility today has turned out to be corporate business opportunity. Businesses are burning midnight oil in showing how socially or environmentally responsible they are. While governments are struggling to cut CO2 by mere 7% below 1990 levels, some smart companies have achieved spectacular results in their bid to drive a low cost economy.
The global rich are going green as never before. This first Sunday Times Green Rich List published recently shows that the enthusiasm among the world’s wealthiest for investments in areas as diverse as electric cars, solar power and geothermal energy is unaffected by the recession.
The Green List has unearthed 100 tycoons or wealthy families worth £200m or more who have made either serious investments in green technology and businesses or hefty financial commitments to environmental causes. In total, the Green 100 are worth nearly £267 billion.
This enormous sum demonstrates that many of the world’s richest tycoons and entrepreneurs have embraced environmentalism. Indeed, our list is dominated by America’s wealthiest financiers and entrepreneurs such as Warren Buffett (worth £27 billion) and Bill Gates (worth £26 billion).
These smart investors, who regularly swap places at the top of Forbes magazine’s annual list of world billionaires, have spent some of their financial firepower on areas such as wind power and electric cars in Buffett’s case, while Gates has backed alternative fuels such as oil from algae. We are not talking trifling sums here. Buffett has invested $230m in the Hong Kong battery-maker BYD.
Of the rich list of 100, 35 are Americans drawn from Silicon Valley. Having made their first fortunes in microchips, the internet or software, the likes of Google’s Larry Page and Sergey Brin (each worth £7.5 billion) are turning to green investments with all the entrepreneurial zeal that made their first fortunes.
It helps that the Obama administration is committed to a huge stimulus package involving the very technologies that investors are focusing on.
Even tycoons who are not in President Barack Obama’s camp have moved into alternative energy, none more so than T Boone Pickens, oil explorer, corporate raider and a Texan Republican to his core. He is using part of his £1.8 billion fortune on filling the huge and windy Texas Panhandle with turbines as part of his Pickens Plan to wean America off its dependence on foreign energy.
"While American money is chasing smarter and greener technologies, the Chinese are concentrating a mass production of green technologies. The 17 Chinese tycoons in the Top 100 are at the bottom end of the list almost exclusively involved in solar and electric-car technology to cut. India figures no where in this league. India has a huge competitive advantage is solar energy. Almost every house in Europe has a solar panel. Why not in India, ask Dr Madhav Mehra President World Council for Corporate Governance, the brain behind the launch of the Global Human Chain to Pledge PROACTIVATE to combat change in climate. The chain will eventually extended each of the 213 countries from Australia to Alaska.
Dr Mehra added "On this World Environment Foundation while we have all come to pledge PROACTIVATE let us also resolve to ensure that every home in Bangalore has a solar panel".
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