“Venture Philanthropy” and “ESG-Ratings” – reports from LISDAR (1)

Andreas Price, COO, Kaiser Ritter Partner Trust Services:

We had a very lively, well led and stimulating discussion in the “Venture Philanthropy” workshop. The first task was to define venture philanthropy: the term “venture capital” is very much focused on financial return, while conventional charity projects focus on precisely the opposite. Venture philanthropy occupies a space somewhere between the two – perhaps more on the negative profit side, but certainly in a space where there are positive returns on the social and environmental side.

The point of venture philanthropy is not simply to give money to the needy, but to make the beneficiaries into participants and thus ensure they retain their dignity. For instance, when a new school is built, the local people are asked to pay a symbolic monthly sum for their children’s education. This ensures that the school is not just built, but also maintained and cared for. The beneficiaries become co-owners, which is much more sustainable. Discussions kept returning to the question of whether we have the right to intervene in and help other countries and cultures. This question prompted a heated but very stimulating discussion that never found a definitive answer. Successful practical examples showed that poverty could be fought, education could be encouraged and the health of poor people could be improved. Clean water and ensuring sustainable maintenance of infrastructure by involving local organizations and managers were the common factors in all the successful projects.

Finally, the group asked what investors get from such commitments. Do they want publicity or a positive reputation, are they using the investment for marketing purposes, or do they just want to give some of their wealth bank? The answer was the last of these. Wealthy people tend not to want any publicity and do not want to use their commitment for any other purposes. They want to give something back to poor people because there is money available in the family, because we have had better opportunities and have enjoyed a good education and have more than met our basic needs.

Markus Brandl, Portfolio Manager, Kaiser Ritter Partner Privatbank

At the “Rating Systems for Investment Vehicles” workshop there was a lively discussion and, unfortunately, too little time. What pleased me is that it was a realistic discussion – not just at the strategic level but with regard to the practical problems and limits on implementation. My view is that we have made a good start, but that there is still a long way to go before ESG ratings become standard.

Susanne Streule, Risk Management, Kaiser Ritter Partner Privatbank AG:

The discussion in the “Rating Systems for Investment Vehicles” workshop was definitely lively. From the risk management point of view, the reliability of the ratings is still questionable because they depend on many, often subjectively chosen soft factors. But we will see how things develop in future. The session finished with an interesting discussion about how the theory could be implemented in practice.

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