Luxembourg Funds Intelligence Briefing (10/26/2020)










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Commission consults on possible restrictions to delegation outside EU after Brexit, and other business-critical fund industry news




Luxembourg Funds Intelligence Briefing
26th October 2020

The European Commission has taken a step closer to the possibility of changing rules on delegation of functions such as portfolio management for alternative and perhaps other funds. Following ESMA’s call last summer for tighter rules on outsourcing of key functions to non-EU entities after Brexit, the Commission has launched a consultation on possible amendments to the AIFMD, such as quantitative limits on delegation or a list of core critical functions that should be carried out in the EU. Currently rules merely say delegation should be for clear business reasons and not undermine the effectiveness of national supervision, without prescribing specific limits. The consultation also invites comment on whether further restrictions are needed on letterbox entities controlled by delegates abroad, and whether investor protection rules should take account of delegates’ location.

— Simon Gray, Editor in Chief

Sustainable Finance
Investment funds without ESG label will soon disappear from market: PwC Luxembourg

Investment funds that do not carry an environmental, social and governance label will no longer be attractive to investors within the next couple of years, with seven out of 10 asset managers saying they will stop selling non-ESG products in 2022, according to a report by PwC Luxembourg on the potential of sustainable investments in Europe. The analysts forecast that European ESG assets will make up between 41% and 57% of total fund assets in Europe by 2025, up from 15% at the end of 2019.

Best source: Finews (in German)

Fund Services
Switzerland’s Kieger chooses Northern Trust to provide services to Luxembourg funds

Swiss asset manager  Kieger has chosen Northern Trust to provide a full range of back-office services for its Luxembourg-domiciled corporate and contractual funds, including fund administration, global custody, depositary and currency management services.  Founded in 2000, Kieger manages several billion euros in assets for funds focused on healthcare and sustainability as well as private equity investments and multi-asset portfolios aligned with environmental, social responsibility and governance criteria. Established in the grand duchy in 2004, Northern Trust acquired the fund administration operations of UBS Asset Management in Switzerland and Luxembourg in 2017.

Best source: Global Custody
See also: Global Custodian
See also: Asset Servicing Times

Regulation
Commission launches consultation on possible restrictions to EU alternative fund delegation

The European Commission has taken up a suggestion by the European Securities and Markets Authority to examine whether the EU should increase oversight or introduce restrictions on delegation of portfolio management by alternative funds to entities outside the union. The move, part of a review of the Alternative Investment Fund Managers Directive, has been prompted by the UK’s future status as a third country on the expiry of its Brexit transition at the end of December. A Commission consultation paper invites comment on whether the EU should set quantitative limits on delegation or designate critical functions that must be performed in the EU. Current rules say delegation should not hinder supervision by regulators, but imposes no specific requirements.

Best source: Financial Times (subscription required)

Irish regulator warns fund groups over ManCos’ staffing and risk management failings

The Central Bank of Ireland has warned asset managers to correct significant shortcomings in the governance of their Irish management company entities, saying a significant proportion of the country’s 358 management companies have failed to comply with rules governing staffing levels, oversight and risk management imposed three years ago to make the sector more robust. Derville Rowland, director of financial conduct at the regulator, says the shortcomings observed in the €3trn fund sector are unacceptable amid pressure on Ireland’s cross-border fund industry model. The European Securities and Markets Authority has proposed changes to EU rules on delegation, which allows funds’ portfolio management to be carried out outside the country in which they are domiciled.

Best source: Financial Times (subscription required)

EU regulators urge further reform of money market fund rules

European regulators say problems experienced by money market funds earlier this year amid market stress stemming from the Covid-19 pandemic have revived concern about systemic risks arising from the asset management sector. Robert Ophèle, head of France’s Autorité des Marchés Financiers, European Securities and Markets Authority chairman Steven Maijoor and Gerry Cross, a director at the Central Bank of Ireland, have urged further reforms after the market suffered turmoil in March at the onset of the pandemic, despite changes to improve the sector’s robustness after the 2008 financial crisis.

Best source: Financial Time (subscription required)

Crime and Litigation
Authorities receive more Panama Papers documents with connection to Luxembourg

The authorities in the grand duchy have received additional documents from Germany that form part of the April 2016 Panama Papers disclosures that contain references to Luxembourg individuals or entities. The leaked documents contained details of more than 10,000 companies, many used for alleged tax avoidance and evasion, established by Panama law firm Mossack Fonseca. Revelations that several Luxembourg companies were involved in creating complex international financial structures resulted in four banks and five investment firms in the grand duchy being sanctioned by the CSSF. Finance minister Pierre Gramegna says the authorities are examining the new batch of documents, which comprise e-mails, offshore company incorporation documents, trust contracts, shareholder resolutions and copies of passports.

Best source: Luxembourg Times (subscription required)

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Sustainability’s Surge To The Core Of The Fund Industry

Growing sustainable investment concept




Sustainability has been rising steadily up the to-do list of Europe’s fund industry for several years. But in 2020, as speakers at last month’s ALFI Rentrée conference made clear, ESG has become a priority in market segments ranging from exchange-traded funds to private equity. So what can we expect from sustainable funds?

In recent years, sustainability – a concept often used interchangeably with environmental, social responsibility and governance inputs into investment processes and operations – has been a regular theme of ALFI’s fund industry conferences and other deliberations on the future of the sector.

Like Ernest Hemingway’s line about how a character went bankrupt, its move from the sector’s periphery to its mainstream has come gradually, then suddenly.

It’s not easy to pinpoint exactly when sustainably shifted from a desirable option for ideologically engaged (or conscience-stricken) investors to a critical element in risk-return equations.

But the steady drumbeat of mostly dismal news about global warming has certainly helped.

So has evidence that tolerating mistreatment of employees or misuse of natural resources and habitats, even far down the supply chain, can lead to rapid, devastating and costly reputational damage, fanned by social media

And this year’s collapse of one-time German stock market darling Wirecard is merely the latest, particularly graphic illustration of how corporate governance failings are a red flag often signalling imminent investor losses.









Sustainable funds through the regulatory pipeline





Environmental and broader sustainability requirements for the financial services industry have been flowing through the legislative and regulatory pipeline for some time, especially in Europe. Now they are at hand, from reporting requirements on climate-related risks for investment funds and pension schemes to the EU’s Taxonomy Regulation, centrepiece of the European Commission’s sustainable finance action plan, which took effect in July.

But the shift toward sustainability has been accelerated by the ‘black swan’ of the Covid-19 pandemic. That includes evidence that destruction of natural habitats has heightened our vulnerability to virus-borne diseases, but also the perception that the economic reconstruction offers an opportunity to incorporate environmental and social concerns into long-term planning decisions.

It’s against this backdrop that speakers at last month’s ALFI Rentrée digital conference underlined how far sustainability has seeped into the outlook, strategies and practices of the fund industry, ranging from UCITS retail funds to long-term private equity investments.









Luxembourg’s ambitions writ larger





One person who needs no convincing is Claude Marx, CEO of the grand duchy’s financial regulator CSSF. He told conference participants: “Luxembourg’s fund industry has nearly €5 trillion in assets. If just 20% is placed in sustainable investments, €1 trillion, that will definitely place us on the map as a centre of the European Green Deal. It would present organisational challenges, but it’s definitely achievable.”

The government also says it’s committed to making Luxembourg a sustainable investment hub.

Finance minister Pierre Gramegna pointed out that in September the state launched the first sustainable – as opposed to green – sovereign bond to be issued by an EU member state or a triple-A rated country. Proceeds from the €1.5 billion bond, which was more than 10 times oversubscribed, will fund spending aligned with the United Nations’ Sustainable Development Goals.

Meanwhile, the Luxembourg Stock Exchange has just unveiled the LGX DataHub, a centralised database for green and sustainable bonds that will structure currently unstructured data and by year-end cover the entire sustainable bond universe.

Luxembourg’s ambitions mesh with the success of the EU in establishing itself as a standard-setter in sustainable finance. Pablo Portugal, director of the Association for Financial Markets in Europe, noted that this is one of the successes of the otherwise unfinished strategy to create an EU Capital Markets Union.

“The EU has become a global regulatory and market leader, for example with the adoption of the Taxonomy Regulation,” he said. “Several member states have led the way with ESG bonds in response to Covid-19.”









Passing the test





At the onset of the pandemic, sustainable investment advocates worried that a desire for returns from any source might become a higher priority – and that governments might abandon green ambitions for fear of complicating economic recovery.

In fact, according to Deloitte partner François-Kim Hugé, “Covid-19 was the first big test of ESG investing, and it proved equal to it: in the first quarter, sustainable funds worldwide saw inflows of $45.7 billion, while the fund industry as a whole saw outflows of $384.7 billion.”

Alain Mandy, chief operating officer for funds at Wellington Management, says demand from institutional clients has accelerated this year for greater clarity on the sustainability of investment portfolios and for screening solutions.

However, he says the industry will be tested by new disclosure requirements due to a lack of consistency in rules among EU countries, differences among sustainability data providers and the idiosyncrasies of investors own preferences.

Industry members had become increasingly concerned about the March 2021 deadline for compliance with the EU’s Sustainable Finance Disclosure Regulation, requiring asset managers to report on their sustainably risks.

The measure has been billed as an important tool to combat greenwashing. At the conference, Luxembourg Stock Exchange deputy CEO Julie Becker urged that the compliance deadline should not be postponed, “even if we accept that the first batch of disclosures will be imperfect”.

But the European Commission has now indicated that while the legislation will still take effect on schedule in March, asset managers will have more time – potentially until 2022 – to comply with the disclosure requirements, in part because Covid-19 considerations have pushed back finalisation of the detailed rules.









Investor confidence on sustainable funds’ performance





Nevertheless, Sean O’Driscoll, Universal-Investment’s country head for Luxembourg, says the trend is inescapable: “No onboarding of new clients takes place without discussions on ESG.”

Table showing ESG Fund assets globally and per region

That’s down in part to increasing confidence among investors that sustainable investment doesn’t entail a penalty in performance; indeed, growing evidence shows that incorporating ESG into strategies can actively enhance returns.

And, says Commerz Real head of impact investing Tobias Huzarski, that doesn’t take into account the broader costs of businesses such as fossil fuel extraction and energy generation borne by society as a whole: “If non-sustainable activities had to internalise their environmental and social costs, their returns would be much lower.”

According to Peter Veldman, head of fund management for EQT Partners, sustainability today is an integral element of the private equity industry’s investment process and operations: “It’s not just about a particular investment, but everything we do. Businesses that resort to greenwashing will be gone before long.”









Change is fast

Karim Khairallah, a portfolio manager at distressed debt specialist Oaktree Capital Management, agrees:”It’s critical to have sustainability in a firm’s DNA. A lot of it is common sense – we were previously 95% there already, but now we have processes in place to manage and monitor compliance, and to identify and fix issues at portfolio companies we acquire.”

Industry members say the speed of the shift toward sustainability is particularly striking.

Jamie Broderick, a former JPMorgan Asset Management managing director and now a board member of the non-profit Impact Investing Institute, argues that the advent of Covid-19 has shifted the focus from exclusively climate change to a broader range of environmental and social issues – for example, how to achieve a ‘just transition’ to a low-carbon world.

Broderick told the ALFI Rentrée audience that sustainability is “unfolding faster than anything I’ve ever seen in asset management. We used to think of sustainability as something philosophical, emotional or ideological, but if you follow the money, the flows of capital show it’s a challenge for managers whatever their personal stance.”














If you’re interested in sustainability, finance, and the funds sector, you should read:

LuxFLAG’s Denise Voss: “The EU Has A Will To Make The Climate Transition Just And Inclusive For All”

LuxFLAG, which for 14 years has pioneered the concept of fund labelling to provide investors with transparency about ESG and other sustainability criteria, is about to stage its second Sustainable Investment Week from October 12 to 16. Chairwoman Denise Voss says the Covid-19 pandemic has helped to focus attention on issues such as inequality and exploitative labour practices – and that the need for transparency and education on ESG matters extends beyond investors and the public to the fund industry itself.

Headshot of Denise Voss, LuxFLAG chairwoman
Denise Voss, Chairwoman of LuxFLAG





VB: What role has LuxFLAG played in the evolution of sustainable finance over the past 15 years?




Denise Voss: The Luxembourg Finance Labelling Agency is an independent and international non-profit organisation, founded in 2006 to promote the raising of capital for sustainable investment by awarding a recognisable label to eligible investment products.

LuxFLAG labels are recognised for their high standards and a rigorous assessment of the investment product’s investment holdings, strategy and procedures with respect to environment, social and governance matters as well as an affirmation of their transparency to investors – key components of the LuxFLAG eligibility criteria.

As of September 22, 2020, LuxFLAG had awarded labels to 303 investment products domiciled in 10 jurisdictions  – Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands and Spain – managed by 98 asset managers in 17 countries and representing approximately €128.2 billion of assets under management.

Sustainable finance has emerged as a major trend in the past couple of years. Through the award of labels to compliant investment products, LuxFLAG has played an important role in enhancing transparency and adding credibility toward investors.  These in turn have increased their investment in ESG or sustainable funds, resulting considerable growth in assets of sustainable products, which saw $71 billion of inflows during the second quarter of 2020.





Lack of common standards





VB: How can the fund sector and sustainable finance more broadly deal with the problem of ‘greenwashing’? Should the rules on what activities can be financed by green bonds be drawn more strictly?




DV: By contrast to traditional bonds, green bonds are intended to finance or re-finance ‘green’ projects such as renewables, energy efficiency, bioenergy and sustainable urban transport, water and waste. Investors have traditionally been cautious about investing in these instruments primarily due to a lack of transparency on the use of proceeds and the very nature of those underlying assets, often leading to the risk of greenwashing.

Part of the challenge has also been a lack of common understanding and standards around what we mean by green investments. Initiatives such as the voluntary guidelines issued by the International Capital Market Association in its Green Bond Principles have promoted best market practice and standards on the use of proceeds, project evaluation, selection, and management of proceeds and reporting.

The GBPs are widely accepted and used by bond issuers, but still on a voluntary basis. Obligatory requirements on adherence to the GBPs or similar initiatives could help prevent greenwashing, but given the early stage of market development and lack of commonly accepted frameworks, one also could consider their gradual implementation.





VB: The volume of assets in ESG funds has been increasing rapidly in the past couple of years and particularly in 2020. What factors are driving this growth?




DV: In my opinion, investors – traditionally institutions but now retail investors as well – and regulators are key drivers of this recent growth, in addition to increased awareness of issues such as climate change among the general public. Covid-19 has also focused investors’ attention on social issues such as inequality, and the challenges for many people to access food, clean water and a living wage.





Embracing the EU regulatory framework





VB: How is LuxFLAG aiming to establish itself as a standard for certification of ESG and other varieties of sustainable funds? Will its processes and certification be aligned with the EU’s sustainable finance rules?




DV: Labels are voluntary today and are often investor-driven. However, initiatives such as the EU Ecolabel will likely enhance and perhaps help drive the demand for labels. In any case, the EU Action Plan for Sustainable Finance has established a regulatory framework to which the financial industry is adapting. Labelling agencies such as LuxFLAG are also having to adapt to these EU standards.





VB: ESG, sustainable finance, responsible investment, ethical investment and impact investing remain confused in the minds of many members of the public. Several of LuxFLAG’s own labels appear to overlap. Can the establishment of European and global definitions and rules bring clarity? How does sustainable finance tie in with your own long-standing efforts to develop investor education?




DV: Agreed, there is a lot of terminology in the sustainable finance sphere, and it can be confusing. It’s very important, for example, to distinguish between ESG investing and impact investment. ESG investing involves taking into account ESG factors as well as financial considerations when deciding which companies to invest in – really looking at the entire picture when it comes to a company and what it could look like in the future.

Impact investing is a subset of ESG investing, but goes even further by choosing companies that are actively seeking to make tangible improvements, for instance in the quality of drinking water for communities. Investors usually expect a profit from such a company, but its impact will be as important or even more so for the impact investor.

LuxFLAG has five labels, of which four are impact labels (Microfinance, Environment, Climate and Green Bond) and one ESG label. The difference between the labels is highlighted in the criteria for each label, available on LuxFLAG’s website.

When it comes to sustainable finance, education is really critical for investors to understand the terminology, for example ESG investment versus impact investing. Education about sustainable finance is also very important within the industry itself, given the topic is relatively new for some asset managers and other financial actors. It’s important that sustainable finance is understood throughout an asset manager’s organisation, given there is an impact not only for portfolio management but for the fund accounting, client service, legal and compliance teams, to name but a few.





Sustainability priorities after Covid-19





VB: The Covid-19 pandemic has left economies struggling throughout the world and presented governments with the challenge of stimulating a rebound. How can we expect the coronavirus pandemic to impact sustainability? Is there a risk that sustainability priorities will be put on the back burner? Or is it an opportunity to build ESG criteria into the economic structures of the future?




DV: Covid-19 is also focusing our attention on the ‘S’ in ESG – social issues. In fact it has lifted the lid on issues that already existed in our society but were not recognised by many of us, for instance widespread inequality and unfair labour practices. I’m hopeful that sustainability priorities will be an important part of “building back better” during and after Covid-19.

Europe is certainly trying to keep it on the front burner: for example the European Green Deal, the programme of the current European Commission which is “striving to be the first climate-neutral continent”. There is a will to make the transition just and inclusive for all, especially since climate change clearly impacts more severely communities that suffer from the greatest inequality.

In addition, the EU Action Plan for Sustainable Finance will continue to require financial players to consider and be transparent about environmental and social issues, for instance through the Sustainable Finance Disclosure Regulation. One requirement will be disclosure of ‘principal adverse impacts’ which means’, for example, firms having to disclose whether and how they take environmental, social and governance factors into account in their investment decision-making process, information that must be available on their website.





VB: As the world’s largest hub for cross-border funds, Luxembourg is seeking to carve out a central role in sustainable finance. What key steps has the country taken toward this goal and what does it still have to do?




DV: Sustainable finance has been top on Luxembourg’s agenda for several years as a result a number of public and private initiatives. To mention just a few, Luxembourg has become the first European country to launch a Sustainability Bond Framework.

There’s also the EIB-Luxembourg platform to support investment in climate finance; the International Climate Finance Accelerator, which supports managers in the creation of financial instruments to finance climate action; LuxFLAG labels to add further transparency and credibility to investment products, and the Luxembourg Green Exchange, which facilitates investor choice through green bond listings.














If you’re interested in sustainability, finance, and the funds sector, you should read:






Covid-19 Misinformation: How Donald Trump Has Made Lying The New Normal

Coronavirus lies and covid-19 misinformation being spread as a long nose metaphor with 3D illustration elements.

We are living a global pandemic of massive proportions that has disrupted our politics, societies and economies, threatening our lives every day and throwing the future of the planet into ever-more-serious doubt. I’m not talking about Covid-19, although that pandemic has been instrumental in highlighting the threat we face from this one: an “infodemic” of covid misinformation.

And, according to a new study, one source has been involved in pushing or spreading an astonishing 38% of the misinformation circulating about the disease.

Have you guessed by now what – or who – that is?

Yes, President Donald J. Trump, the single most powerful voice on the planet, the man whose every word, tweet and appearance has the potential to move markets, break or make careers and most frightening of all, determine public policy.

Cornell University’s study represents the first comprehensive survey of traditional and digital media about the Covid-19 pandemic. The researchers’ results are based on a search and subsequent analysis of 38 million English-language stories published in traditional media around the world from January 1 to May 26, 2020.

No expert would argue with them that “misinformation about COVID-19 is a serious threat to global public health.”

“We conclude that the President of the United States was likely the largest driver of the COVID-19 misinformation ‘infodemic,'” they found in examining the 1,116,952 stories with Covid misinformation.

“Only 16.4% of the misinformation conversation was ‘fact- checking’ in nature, suggesting that the majority of COVID misinformation is conveyed by the media without question or correction.”

(The lapses by mainstream media in fact-checking and correcting that coronavirus misinformation is a subject for another day. That’s just one reason my co-founder, an ex President of Thomson Reuters, and I created VitalBriefing: to ensure that our clients could get reliable and trustworthy information that adhere to longstanding journalistic standards.)









The shape of Covid misinformation





Infographic Donald Trump's coronavirus lies and misinformation

They organized the misinformation into 11 categories in order of frequency:

  • Miracle cures
  • New World Order/Deep State
  • Democratic Party Hoax
  • Wuhan Lab/Bioweapen
  • Bill Gates
  • 5G
  • Antisemitic Conspiracies
  • Population Control
  • Dr. Anthony Fauci
  • Plandemic
  • Bat Soup




And if any doubt remains about the mortal implications of this problem, consider this: According to the Cornell researchers, in prior pandemics, including HIV/AIDS, the cost of misinformation and its impact on public policy was estimated to be an additional 300,000 deaths in just one country alone — South Africa. 

Given that the ultimate cost of pandemic misinformation is death, dwell for a moment on that thought: The single factor most responsible for misinformation in the current pandemic is the president of the United States.

Naïveté is not among my many faults. As a journalist and foreign correspondent, I’ve covered lying politicians and officials at the local, state, national and international levels.

American presidents have lied or misinformed countless times — Lyndon Johnson on Vietnam, Richard Nixon on Watergate, Bill Clinton about Monica Lewinsky, George W. Bush about Iraq, to name a few — but I never would have envisioned the current degree of open and repeated mendacity on the part of the country’s leader.





It is especially notable that while misinformation and conspiracy theories promulgated by ostensibly grassroots sources, such as anti- vaccination groups, 5G opponents, and political extremists, do appear in our analysis in several of the topics, they contributed far less to the overall volume of misinformation than more powerful actors, in particular the US President.

The Cornell Alliance for Science, Department of Global Development, Cornell UniversitY








A lifetime of lying





Trump built his entire career on lies — an aspect of his personality that’s been well documented. His presidency started in character, with his insistence that his inauguration drew record crowds. As of July, according to The Washington Post, the president had made more than 20,000 false or misleading claims — an average of 23 every day — since taking office in January 2017.

And we know there have been many, many more since then.

It’s a short walk from “alternative facts” to outright lying. Clearly, in his flouting of medical advice about mask-wearing and social distancing — despite the efforts of various American doctors to address Covid misinformation, including most notably Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases — Trump believed the web of falsehoods he has been spinning throughout the pandemic.

It’s all in keeping with “a regime rotten with mendacity,” as New York Times columnist Michelle Goldberg wrote this week, following on the paper’s reporting of how the White House culture as set by the president placed multitudes of staff and visitors at risk — and resulting in the infection of Trump, his wife, and multiple members of the administration. 









The Bard Enters 2020





So it’s somehow fitting — Shakespearean, even — that the former reality television star who thought he could define his own reality and bend nature to it found himself in hospital with a life-threatening condition.

The best medical care in the world won’t save him against a virus that doesn’t adhere to “alternate facts.” Playing fast and loose with the truth by purveying pandemic misinformation is lost on nature.

The credibility of this administration and all things Trump is so shredded that there was a dubious reaction globally to the initial news of the Trumps’ infection (Melania Trump also tested positive), and widespread disbelief of official updates on his health.

“What we’re seeing is a very healthy scepticism about anything that comes from the White House,” Kurt Badella, an advisor to the anti-Trump Republican organization The Lincoln Project, tweeted. “These are the same people who have been lying about everybody else’s health in terms of the impact of Covid-19, so why would we expect any differently when they’re talking about themselves?”

“We have an administration that long ago squandered its credibility,” agreed Dan Rather, a senior television journalist covering politics since the early 1960s.









I Don’t Get It





In 2016, as an American expat for most of my adult life, I no longer understood a country that could elect a president whose reliance on lies had been abundantly documented by reputable sources. Now, as a Luxembourg citizen and European, I understand still less a country where, according to polls, some 43% of the electorate still supports him — a man who lies to them as easily as he breathes.

If for no other reason — and there are many — his legitimisation of lying alone disqualifies him for the post of the world’s most powerful figure. Forget “The Art of the Deal,” as his bestselling book was titled. He has made lying an open and acceptable practice, not least for the Republican Party that defends, supports and rallies around him.

His lying gives new cover to autocrats and political elites around the world who routinely mislead their people in an effort to maintain their control, both economically and politically. No longer can America even pretend a veneer of honesty regarding the dissemination of information from its top officials when every day brings fresh examples of their leadership by mendacity, starting with POTUS himself.





“Trump has built what might seem to many people a ridiculous, completely fabricated image on a mountain of lies.”

– Mark Salter, former aide to John McCain




“Trump has built what might seem to many people a ridiculous, completely fabricated image on a mountain of lies,” Mark Salter, a former aide and speechwriter for the late Senator John McCain, told the New York Times. “But that’s his story, and he’s sticking by it.” 









Hope for the Future





When the age of Trump is in the rear-view mirror at last, politicians will still lie and officials will still misinform and mislead. My hope, though, is that this bizarre, unreal and surreal epoch, when so many people stopped caring about the difference between the real and the imagined, won’t define the future.

The public’s health — and survival — depend on it.

Again, we founded VitalBriefing to battle misinformation by providing market intelligence that our clients can trust. You can apply the same standards we do in your own consumption of media — especially important regarding Covid-19 and especially when a figure as important as the American president, and his administration, ignores those standards for their political gain.

So, here are six questions to ask when you’re judging the quality of that information and deciding what’s fake news and what’s real:

  • Is the publisher credible?
  • Is the writer/author/creator credible?
  • Is the story itself credible?
  • Who is actually in the story?
  • Is the story timely?
  • How’s the quality of the writing/presentation?




Finally, this video provides a nice textbook example of how not to get fooled. Enjoy:

Don’t miss LuxFLAG’s Sustainable Investment Week 2020

Banner ad for LuxFLAG Sustainable Investment Week 2020








As sustainable finance catches fire around the world, propelled in part by the social and economic needs created by the global Covid-19 pandemic — and as a central pillar, of VitalBriefing’s economic coverage — we are proud to be media sponsors of the upcoming LuxFLAG Sustainable Investment Week 2020, a follow-up to its successful debut conference last year.

Over five days, starting on October 12, distinguished speakers who are immersed and versed in the issues will present 21 digital events covering, among other topics, Climate Finance, ESG (Environment/Social/Governance), Impact Investing and Sustainable Development Goals — all topics that are central to our own work at VitalBriefing.

Unlike most other Luxembourg-based conferences, this one is free not only for professionals in the financial industry – who will hear experts discuss issues ranging from portfolio decarbonisation and preparing sustainable finance action plans for investment funds to measuring the impacts of social investments and understanding relevant European regulation – but also the general public.

LuxFLAG was founded in 2006 by seven public and private founding partners and whose charter members include VitalBriefing clients such as Luxembourg for Finance, the European Investment Bank, ALFI and the Luxembourg Ministry of the Environment, Climate and Sustainable Development. It has steadily grown in influence, recently granting 100 funds the right to use its label, raising the total of such investment products to 303, representing €128 billion in assets under management – and extending its reach to Denmark, Finland and Spain, in addition to Belgium, France, Germany, Italy, Ireland, the Netherlands and the Grand Duchy.

LuxFLAG awards its label to eligible investment vehicles in Climate Finance, ESG, Environment, Microfinance and Green bonds. The label must be renewed after one year, ensuring that the products maintain their validity as sustainability vehicles.

Don’t miss out! For more information and to register for the LuxFLAG Sustainable Investment Week 2020 conference, click here.

This Is Why We Need High-Quality News Sources

ball of generic newspapers with the word NEWS visible

Take a quick scan of online news and you might conclude that the internet has played an important role in democratising the spread of information.

Makes sense. There appear to be more news providers than ever, liberated by the near-zero cost of digital publishing.

No longer is the flow of news restricted by the time, trouble and, above all, cost of printing and distributing news content to readers.

Instead, the process of publishing news is reduced mainly to its essentials: gathering, selecting and collating.

Certainly the proliferation of information sources complicates our task at VitalBriefing of searching, curating and summarising relevant news to distribute to our clients. The volume of online information relating to a particular topic or issue has exploded massively in recent decades. As such, it significantly increases the importance of our role in assessing and selecting the sources we use to find the news our clients need.

Yet, what we’ve found is that even as the number of news sources rises each year — and in a multitude of languages — the proportion of those that are high-quality and reliable is diminishing. And not only as a proportion of the overall information flow, but in absolute terms.

In short, as quantity is swelling, quality is waning.

Shrinking pool of experience

There’s no secret behind this. Gathering news in a serious way is an expensive business. Across Europe and other parts of the world, the number of news organisations with the resources to provide comprehensive coverage of current affairs at a national and international level is shrinking.

The erosion of newspapers’ advertising base (not to mention those of TV and radio stations) by competition from internet platforms has undermined their ability to employ journalists and editors of the highest quality.

Experience is a particularly expensive quality, and many news organisations find they cannot afford much, if any, or at least not as much as in the past. And many news businesses have struggled to really understand the internet, its business models, audience behaviour — and to compete successfully for revenues there.

An aspect of the shrinking of breadth and depth in the news business long predates the internet. Until some 20 years ago, many newspapers employed teams of foreign correspondents, bringing their readers first-hand accounts of international news.

Starting in the 1970s and accelerating, however, their numbers have steadily been shrinking as media instead turn to news agencies such as Reuters, the Associated Press, dpa and Agence France-Presse.

The wire services strive to provide a good service but they are not immune to budgetary headwinds. This has an impact on the number, experience and expertise of the journalists they employ, and even more the editors who act as gatekeepers of the quality of their work.

Over the past couple of decades, I have seen numerous examples of how these constraints are eroding quality and accuracy.

When information matters

It doesn’t help that news information as a commodity is significantly less valuable than financial data — which is important, but to large segments of the public, even among decision-makers in business and politics, often means little without expert and cogent analysis.

Not that financial and business news are exempt from the overall trend toward erosion of expertise and quality. Quite the contrary: Many more lucrative activities can be performed with a sound knowledge of finance, economics and business than to write about it.

That shows in the output. The result is a diminishing pool of capability and understanding in areas in which it matters greatly.

I see too many young journalists trying to deal with complex topics for which they lack sufficient grounding. I should know — I was one of them. But I was fortunate to benefit from the guidance of mentors and editors who taught me over the years. I fear there are far fewer such influences around today. As noted, they’re expensive.

And the quality of coverage is all the poorer for it.

Original content and press releases

In the absence of sufficient journalistic expertise to create valuable original content, the void is filled by official information and press releases.

True, thanks to Google and its peers it’s so much easier today to seek out information online than by making phone calls or, perish the thought, visiting libraries. But scraping data from companies’ websites is no substitute for critical analysis and asking difficult questions.

The notion of press releases takes us full circle to the issue of the proliferation of what appear to be online news sources. A substantial proportion of the information found online is simply that — recycled press releases begging for clicks that bring revenue from advertisers.

Yes, it’s information of a sort. But journalism it isn’t.

So you’re thrown back to a diminishing circle of news organisations that still remain dedicated to reporting and analysis that enhances the knowledge and understanding of its audience. In many cases they support themselves through subscription plans that inevitably restrict the availability of that high-quality information.

Some, bravely, are trying to avoid this fate. I’m thinking of outlets such as the left-of-centre UK newspaper The Guardian, which asks readers to donate what they can, or The Washington Post, that found a high-rolling saviour in the form of Jeff Bezos.

Why quality matters

If you ever doubt the value of high-quality news sources, consider the more than five years spent by the Financial Times (full disclosure: I have worked for the FT from time to time over many years) investigating the credibility of the financial statements of Germany’s fintech stock market darling of the 2010s, payment processor Wirecard.

For years, the newspaper’s journalists kept nagging away at inconsistencies and discrepancies in Wirecard’s accounts that pretty much wholly escaped the company’s regulators. Wirecard dismissed the FT’s reporting as lies encouraged by the company’s rivals and short-sellers — right up until June 18 this year, when it acknowledged that €1.9 billion on its balance sheet was non-existent and it collapsed into bankruptcy.

As an illustration of what makes high-quality news sources valuable amid so much online noise, it’s hard to improve on that.

What We Must Learn From Covid About Lies And Misinformation

doctor and the text infodemic in a tablet

In the classic, ever-relevant 1976 movie, Network, deranged television news anchor Howard Beale exhorts his viewers to stand up, go to the window, open it and yell for all to hear: “I’m as mad as hell and I’m not gonna take this anymore.”

That’s how I feel these days — endlessly angry, frustrated and heartsick over so many aspects of our current global reality.

But at the top of my personal list is the horrifying ascendence of deliberate lying by political and government leaders, their spreading of false and misleading information, and the steady and wilful erosion of critical thinking among people who should know better than to ignore or subvert undisputed facts in favor of unproved, dangerous or hateful beliefs.

I’m a native citizen of the United States and a recent citizen of Luxembourg. and Europe. I promise that I’m putting my politics aside for this piece.

Flashing Lights, Screaming Sirens and Covid Misinformation

With that caveat in mind, to me there is no greater signal of just how dangerous these times are than the persistent and consistent disavowal of fact-based thinking by President Donald Trump and many of the officials and advisors around him as they confront the Covid-19 pandemic. (I’m leaving aside the many other issues to which this thought applies — for example, climate change, or the use and abuse of the pandemic for political advantage, like taking credit for a vaccine that doesn’t even exist yet, or promising miracle cures where there are no miracles.)

Bleach injection, anyone? Blood plasma treatment? Perhaps a hydroxychloroquine cocktail? Or the ‘exemplary’ way they say they have managed the pandemic as people continue to die?

For me, it’s the loudest indication — deafening-siren, blinding-flashing-light loud — of these dark times and the threats to our global future.

Life Was Simpler

I once co-authored a general health book with an American doctor who hosted nationwide television and radio shows aimed at debunking phony medical stories. “The biggest threat out there,” we wrote, “is wrong or distorted information.”

That was in 1999, during the quaint days of widely-read, responsible, mainstream newspapers and news magazines and massively-watched television talk shows. Also, it was long before Facebook, Twitter, QAnon, and all manner of Internet-propagated lies and conspiracy theories were believed and traded by tens of millions of allegedly sentient people.

Yet, we felt compelled to devote a chapter entitled “Trust the Media at Your Peril” to the kind of problem that today literally threatens lives and undercuts responsible governance.

Little did we imagine the world we’d be facing now, where the traffic in life-threatening untruth rides an Internet superhighway into the minds of millions of the too-easily-fooled.

Sounding the Alarm

Last week, two doctors, Seema Yasmin and Craig Spencer, wrote an opinion piece in The New York Times about their efforts to counter the Covid misinformation epidemic hampering efforts to beat the pandemic. “We’ve been working to dissect and debunk the many myths about this new virus, its potential treatments and the possibility of a vaccine. We read the mistruths on our patient’s phones, listen to theories borrowed from internet chat rooms and watch as friends and family scroll through Facebook saying, “Here — it says that this was definitely created in a Chinese laboratory.”

They cite a chilling report by the citizen activist group Avaaz that lays significant responsibility for the massive spread of Covid misinformation at Facebook’s door, calling its algorithm “a major threat to public health” and charging, among other things, that networks in five countries spread global health misinformation that attracted some 3.8 billion views in 2019, clocked 460 million views in April 2020 alone, and that top health-misinformation sites got four times as many views as organisations including the World Health Organization and US Centers for Disease Control.

Covid misinformation has been cited by a variety of medical experts as an ongoing threat. In February, the World Health Organization issued a “Coronavirus Situation Report” in which it warned that the pandemic “has been accompanied by a massive ‘infodemic’ – an over-abundance of information – some accurate and some not – that makes it hard for people to find trustworthy sources and reliable guidance when they need it” and that “the most prevalent rumours…can potentially harm the public’s health, such as false prevention measures or cures.”

Yasmin and Spencer, who are a clinician and an emergency room doctor, see the consequences of this Covid misinformation every day in their workplaces. “Patients question our evidence-based medical guidance, refuse safe treatments and vaccines, and cite Facebook posts as ‘proof’ that Covid-19 is not real.”

And while they’re right that “purveyors of false news will always exist” and that “for as long as there have been epidemics there have been snake oil salespeople exploiting fear and peddling false hope,” social media as a channel for its propagation and magnification takes it to a new level of destructiveness.

'Hoax' spray painted over Covid-19 information sign

Looking for Hope

I find it hard to be optimistic that after four years of deliberate lies and misinformation — not to mention breathtaking managerial incompetence — Donald Trump has a very real chance of reelection.

All other issues aside, the fact is that his boldface denial of scientific fact and evidence isn’t in itself enough to guarantee that voters will turn him out. How depressing is that?

In the New York Review of Books, the terrific British journalist Jonathan Freedland lays out in Disinformed to Death the price we pay for deliberate ignorance.

“When a pandemic is raging, it becomes harder to deny that rigorous, truthful information is a mortal necessity. No one need explain the risks of false information when one can point to, say, the likely consequences of Americans’ coming to believe they can deflect the virus by injecting themselves with bleach.”

He hopes for a receptive audience that, as a result of the pandemic, “has seen all too starkly that information is a resource essential for public health and well-being—and that our information supply is being deliberately, constantly, and severely contaminated.” 

I have to admit that it’s a challenge not to despair that the counter-efforts seem not to get a sufficient foothold.

Global Scope, America First

Much as I obsess over the tragic sinking of my native country into a sea of disinformation and deliberate lies, the issue — like climate change — is truly global. Freedland cites work by Oxford Internet Studies professor Philip N. Howard that documents 70 governments with “dedicated social media misinformation teams, committed to the task of spreading lies or concealing truth.”

This includes two million Chinese whose jobs are to grind out some 450 million messages each year, Vietnam’s 10,000 students dedicated to pushing the government line, and Russian bots generating nearly half the discussion on Twitter in that country.

data on global use of disinformation and misinformation
Source: OII / University of Oxford

Yet, in a recently-published book, Howard argues that the United States has seen disinformation spread more widely and deeply than anywhere else. With the “highest level of junk news circulation…during the presidential election of 2016…there was a one-to-one ratio of junk news to professional news shared by voters over Twitter.”

Howard calls them “lie machines,” while another author, Thomas Rid, calls them direct threats to a “political system that places its trust in essential custodians of factual authority,” in which he includes science, the academy, journalism, public administration, and the justice system. 

When I co-founded VitalBriefing in 2011, our tag line was “the cure for information overload.” We had seen a need in the marketplace for reliable, trustworthy information authored by credible professional journalists — calling on a notion I had written in the 1999 book: “Legitimate journalists would never report something that they knew to be untrue.”

We have seen a growing market need both in the private and public sectors for information our clients and prospects can trust. I’m immensely proud of the small part we can play to counter the massive and deliberate attack on facts.

Like Freedland, my hope is that the global pandemic will lead to a re-set for audiences around the world as they confront the reality of a pandemic that doesn’t care what lies Trump, Vladimir Putin, Jair Bolsonaro and other irresponsible and immoral leaders tell about it.

Because bad information can kill you, or someone you love.

Media Monitoring: The Cure For Information Overload

Conducting business would be unimaginable without access to the internet, particularly for news and critical information.

wave concept infographic of how much data processed online

Today, your favourite search engine delivers every catalogued article, review or social media posting in nanoseconds, rendering competitive intelligence and media monitoring easier than ever before.

Which begs the questions: which links should you trust?

The tsunami of articles, blogs, reports, studies and data – content – being published online is overwhelming. The Washington Post, for example, posts 500 articles every day; the New York Times, 230; the Wall Street Journal, 240; and BuzzFeed, 222.

And that’s from a few legitimate news sources. More than 2 billion blog posts were published — 5.76 million every day — in 2018 alone.

Knowing how to cut through all that noise efficiently and effectively to identify the most critical news and updates — the ‘news you can really use’ — is must-have.  The current context, when disinformation, ‘fake news’, and political agendas are constant threats to fact-based reporting, the task is still more complicated by the need to identify and assess the sources you can trust.

Bottom line: effective media monitoring has never been more difficult. There is too much industry-related information for many companies to sift through.

Not new, just bigger

Information overload is not a new concept.

According to the Harvard Business Review, it’s been an issue for at least 2,300 years. There’s even a reference in the Bible to the growing menace of the printed word.

In the digital era, research shows that information overload is bad for business — and for your employees. When unfiltered, business and competitive intelligence are at best ineffective, at worst harmful.

From sales data to media reports, the value of that information declines sharply when recipients aren’t guided to what matters most. Information overload – a.k.a “infobesity” and “infoxication” – quickly leads to infoxiety (information anxiety).

As business psychologist Tomas Chamorro-Premuzic argues, information and news filters may simply confirm our own biases based on what Big Tech knows about us already.

Too much information also inhibits our ability to digest and process information.

Gamechanger: media monitoring

Even so, media and competitor monitoring can’t be overlooked as a crucial element in decision-making.

That information is a key component of any business and competitive intelligence and analytics architecture. A well-designed system will follow the latest news about your specific subjects, competitors, products, legal and regulatory developments.

Sounds like common sense. Yet designing an effective monitoring system is hard.

Even conducting your own internet search will quickly swamp you.

VitalBriefing is hardly the world’s largest multinational (for the moment), but a quick Google search for us tosses out 5 370 results.

Try a bigger media outfit, like the BBC or New York Times, and the results run into the billions.

Online notification services such as Google Alerts are free and easy to create. Yet the results can prove frustrating: complaints have been growing since 2013 that alerts are more about driving traffic to specific websites than about delivering relevant news.

Free filtering tools are fairly basic. For example, no matter how carefully you tailor them, alerts set for the ECB — European Central Bank — are just as likely to deliver match results and player news from the England and Wales Cricket Board (also the ECB).

At best, Google Alerts is a back-up when all else fails.

Competitive intelligence quality matters

Bain & Company’s consultants call infobesity the enemy of good decisions.

They suggest taking a step back, reviewing exactly what you need from your data, focusing on the important elements and standardising the output – in an internal email, on an intranet or in a corporate knowledge management system, for example — making it easier to digest.

They also suggest that timing is everything. With big data ever more accessible, the tendency may be to deliver too much information, too often.

But perhaps the most significant insight from Bain & Company is on ‘quantity’ and ‘source’. Not every executive decision needs every single news article on a successful product launch or the impact of a new regulation.

If the views are fairly uniform, then one or at most two will do, especially if the second adds new information.

For ‘source’, read quality. Algorithms and artificial intelligence aren’t always best at discerning quality media. Their filters often are founded on momentum and traffic volumes.

In entertainment, ‘clickbait’ articles create tremendous amounts of traffic (and advertising revenue), so popularity could be said to equal success of sorts.

But in business, law and finance, the most insightful articles may be hosted on trade-news websites, government or agency sites or hidden behind subscription paywalls.

Then there’s fake news, particularly regarding politics and current affairs. In the 2016 US presidential election and the UK’s Brexit referendum, fake news often was published on new and virtually unknown websites, their reach amplified by social media retweets and “likes”.

The human touch

Fake news is no longer confined to politics.

It can strike businesses big and small, often with a real financial and reputational impact.

That’s why media and competitor monitoring, news curation, competitive intelligence, and high-value business intelligence continue to require a human element.

As Andrew Koek explains, “The expert doing the curation takes the time to meticulously review all sources and carefully determine which material is most relevant and valuable. Even when you’re using automated tools, you still need someone in place to identify what’s most important and then translate it into usable insights.”

At VitalBriefing, we’ve assembled a growing team of journalists around the world with expertise in their chosen fields, from financial services to logistics to sustainable development to the space industry and beyond. Their experience and knowledge of what’s important to your business — and what’s credible — is an invaluable resource.

Here’s an example of ROI: for one of our global clients, whose 63,000 employees get our daily competitor monitoring (after the CEO and his direct reports), we noted from Tagalog-language newspapers in the Philippines that a competitor was building a new manufacturing plant. With that information, our client’s specialists were able to reverse engineer the technology being developed and to answer the threat with their own products. 

Software and automation just can’t substitute for the human expertise and insight into what you specifically need to know to protect – and grow – your business.

We’re betting that will be the case for a long time to come.

Private Equity In The Covid-19 World: Hero Or Villain?

Covid-19 impacts economies across the globe

The private equity industry has long struggled to overcome a public reputation for maximising profit and jeopardising healthy businesses by loading them with unsupportable debt and charges. In light of the new world we live in, can the sector restore its image by helping to relaunch economies after the Covid-19 pandemic?

Over the past two decades the private equity sector has evolved from a marginal and mostly obscure corner of the investment industry into a core element of the financial system.

Now the Covid-19 pandemic and its aftermath poses unique challenges for private equity firms and their investors living in a world where company valuations are fluid and volatile, creditworthiness is cloudy and governments seem set to play a far more prominent role in economic management than at any time this century.

In terms of financial heft, private equity should be well placed for a leading more in economic recovery. Worldwide, the industry is flush with cash — or at least commitments.

Private equity funds have a record $2.5 trillion available in ‘dry powder,’ money pledged by investors that firms have not yet drawn down.

The environment promises to be welcoming for firms with money to spend, especially those specialising in distressed debt, of which there is plenty expected to emerge over the coming months and years, or those seeking to build industry-leading portfolio companies through bolt-on acquisitions that add scale.

Alternative to turbulent public markets

True, the market environment for private equity investment was looking less favourable before the pandemic emerged and lockdowns began. The huge pile of dry powder reflects in part an increasing shortage of suitable investment targets, which had been pushing up prices.

But private equity, along with other types of more complex and longer-term investment, looks more attractive to institutional investors than turbulent public equity markets, cash earning next to nothing in interest and bond markets yoked to the imperatives of central bank monetary easing strategies.

Not to mention the clouds gathering over that staple of institutional investment portfolios, commercial real estate.

However, private equity has its own hurdles to overcome to position itself as a saviour of struggling companies and stuttering economies.

First and foremost? A wretched public image, fuelled by both misunderstanding of what private equity is and does and by the industry’s frequent tone-deafness to wider concerns of society.

Private equity’s opaqueness, complexity and lack of public accountability is often placed in contrast with the (supposed) transparency of companies listed on public markets.

Critics such as Sheila Smith, a former senior economist at the UN Development Programme, describes the sector as “termite capitalism”, targeting a business model characterised by reliance on borrowed money rather than investors’ capital, asset stripping and job destruction, opaque fee structures, unsustainable extraction of returns through dividends funds by further borrowing and use of debt and offshore structures to reduce, often to zero, tax liabilities in the companies in which portfolio companies operate.

Investing for the long term?

In vain do private equity companies protest that their business involves not wanton extraction of assets but the creation of value through the restructuring and re-energising of struggling, directionless companies, the empowering of capable managers and the incentivisation of employees, and that they focus on companies’ long-term development, not just the next quarter’s bottom line.

Because it’s such an emotive phrase, they don’t like to speak of ‘creative destruction.’

But that’s a key driver of the private equity model: stripping away dead-end jobs and businesses and replacing them with new ones that are more productive and have a long-term future.

Some of the criticism is certainly unfair. The obsession with the offshore tax haven structures of private equity (and other alternative investment firms) tends to ignore the key classes of institutional investor that are non-taxpayers, such as university endowments and charitable organisations.

Rather than a pure creature of plutocratic vampire capitalists, the private equity industry is driven principally by the needs of their investors: pension funds to meet their commitments to retirees and insurance companies to meet policy-holder claims.

It’s against this unfavourable reputational backdrop that the private equity sector must face the challenges of the post-pandemic world.

What will it look like?

Swings and roundabouts

In the short to medium term, the industry is suffering similar hits to revenue and profit as other businesses. Antoine Drean, founder of private equity placement agency Palico and consultancy Triago, expects profit-sharing – carried interest – on above-benchmark returns to dry up, especially for firms with heavy exposure to the most vulnerable areas of the economy, such as the hospitality, travel and energy sectors.

Hugh MacArthur, Graham Elton and Brenda Rainey of consultancy Bain & Company argue that dealmaking is set for a slump while firms focus on the health of existing portfolio companies and bank lending to the sector is likely to be significantly constrained and subject to significantly tighter conditions (although this is likely to be offset by the sheer volume of dry powder and likely lower valuations of acquisition targets).

They say private lenders, a significant force in the market since the global financial crisis, should also help fill the gap while the need to exit mature portfolio companies in order to provide returns to investors will also spur deal flow.

The Bain & Co. partners also warn that some investors may find themselves financially squeezed if calls on existing capital commitments exceed private equity distributions.

This points to a reduction in fundraising, at least temporarily, after a decade of soaring inflows from investors looking to private equity’s historically higher levels of return to offset the impact of interest rates at rock-bottom or worse.

While the industry’s overall levels of return are likely to take a quick hit from lower valuations on existing investments, especially those made near the peak of the market, the recessionary environment should yield more profitable opportunities.

Private equity and Covid-19: Core role in institutional portfolios

Can we expect a better reputation for private equity in the months and years after Covid-19? There’s no guarantee that public perceptions will change radically in the near future.

Since the onset of the pandemic, the sector has drawn fire from politicians and others over the insolvency of venerable names of American retailing such as Neiman Marcus and J. Crew, although the critics tend to ignore that the businesses have been deteriorating for years in the face of changing consumer habits and growing internet competition.

However, with near-zero interest rates apparently locked in for years to come, barring an upsurge in inflation that stubbornly refused to materialise despite a decade of loose monetary policy, the core position of private equity in institutional asset portfolios seems more likely to strengthen than to diminish.

In a world where job preservation is now a central economic policy objective, private equity firms will also be under pressure to avoid wholesale layoffs and business closures.

They and their investors likely will have more skin in the game as the peaks of bank leverage of recent years recede and the days of egregious debt-driven dividend recapitalisations are probably mostly over for the foreseeable future. If private equity can claim to be playing a role in saving viable companies and jobs, it may become less of a bogeyman for critics of capitalism.

But it shouldn’t count on being better loved.







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Donald Trump, Despicable King of Content

Donald Trump supporters at a presidential campaign rally

It’s a long-standing joke – going back to early 2016 – among my family and friends: “Don’t ask David about Donald Trump.” 

So I want to get this clear at the start: I loathe the American president. No president in my lifetime has earned the degree of contempt I feel for this imposter. I believe he’s a force for evil — a “wicked stage master,” as American journalist George Packer calls him — the living representation of what I think is wrong with this world: racist, anti-semitic, xenophobic, narcissistic, misogynist, nationalistic, fascist, authoritarian, selfish, greedy, fraudulent, classist, arrogant, cruel, hypocritical, vain, cynical, pompous, domineering, inept, frivolous, materialistic…for more, go here.

And yet, I have to give him credit for a single skill. Honestly, I do. 

Before I’m deafened by the collective gasp from those family and friends — “Hypocrite, David!” — let me explain.

Donald, the content marketer

As a media professional, I have to acknowledge his mastery of one of the keys of effective content marketing:

He knows his audience. 

And he knows how to appeal to them. Again and again, despite howling opposition from all corners of his country and the entire planet. 

He is maddeningly consistent — even in the face of occasional and usually mild critiques from his allies — and loyal to that core base that may yet inch him to reelection in November, although I shudder at the thought of the havoc he will wreak if given another four years.

I’ve often likened him to the original Godzilla, made only stronger by the force of the bullets, missiles and electric lines lobbed at him by the Japanese military. 

Godzilla from the original film

And this modern Godzilla, with his “shrewd, reptilian brain” (Packer again) knows better than anyone how to play to his audience, calling on his singular skill with persistence and flair.

In a famous essay, philosopher Isaiah Berlin divided thinkers into two categories: hedgehogs and foxes. He drew the distinction from a saying by the ancient Greek poet Archilochus: “The fox knows many things, but the hedgehog knows one big thing.”

Donald Trump is a hedgehog, albeit one wearing an orange wig. He has nailed that one big thing.

Playing to the crowd

The signs of playing to his audience are legion. In the past few days alone, he insisted on holding his first campaign rally since the Covid-19 lockdown in Tulsa, Oklahoma — the site in 1921 of one the worst racial massacres in US history that left some 300 African-Americans dead — and on the same day as Juneteenth, an important holiday for black America, marking the anniversary of the day in 1865 when Union General Gordon Granger read out Abraham Lincoln’s emancipation proclamation in Texas, freeing slaves in the final holdout state.

In a nod to the outcry in a country torn by growing social protests over racial injustice, Trump agreed to reset the rally — for the next day. But he’d already won the points he was doubtlessly looking for from his diehard core supporters.

Donald Trump supporter holding pro-trump poster

Last week, his administration erased protections for transgender patients against discrimination — announcing the move on the four-year anniversary of the massacre at a gay nightclub in Orlando, Florida — and in the middle of Pride month, which commemorates the June 1969 Stonewall riots, an important date in the history of the movement for LGBTQ+ rights. 

In the midst of the protests, he suggested via tweet (with no evidence) that a 75-year-old protester in Buffalo, New York, who was seriously injured by police may been a “provocateur” who staged the event (and presumably his injury).

A day later, Trump argued against renaming American military bases named after Confederate leaders — even as military leaders themselves expressed support for the idea.

In a country roiled by the coronavirus pandemic and nationwide protests over the horrifying abuse of black Americans dating back since before the country’s founding, Trump stays true to his base.

Nationwide polls show that despite the fact that he’s losing against Democratic presidential candidate Joe Biden, he still holds on to 93% of his Republican base.

As CNN wrote recently, “Trump has made a clear play during his presidency of satisfying the Republican base, and the polling indicates that this effort is clearly paying off. His base is not abandoning him, even as his overall numbers remain weak.”

But while most Republicans would deny they’re racist — as Trump himself does repeatedly — the data would indicate otherwise. “Donald Trump’s support in the 2016 campaign was clearly driven by racism, sexism, and xenophobia,” researchers Vanssa Williamson and Isabella Gelfand wrote in a piece for the Brookings Institution. “While some observers have explained Trump’s success as a result of economic anxiety, the data demonstrate that anti-immigrant sentiment, racism, and sexism are much more strongly related to support for Trump.” 

You think I should learn from this?

As deplorable as is this element of his support, what’s the lesson for content marketers?

“The more you know about your audience, the more powerful your digital marketing efforts will become,” Mindy Weinstein wisely advises in Search Engine Journal. “It isn’t enough to know the demographics and location of your prospects. You have to know as much as possible about them, including their personality traits, interests, values, opinions.”

I would argue that Donald Trump is a master at that aspect of content marketing, instinctively and with a political organisation around him to reinforce and build on those instincts in their own communications with his supporters.

In our world as content marketers, Weinstein points out that the outcome of this exercise is practical and hard-edged, resulting in:

  • accurate topics and keywords to target;
  • information that helps you craft your pages to trigger more effective conversion;
  • a better user experience;
  • content optimisation;
  • messaging that leads to the specific action you seek from your audience;
  • leads to key influencers.




To get to know that audience, she recommends starting with the basics: Market research, compiling all the data and details about your targets that eventually will feed any personas you build. 

Two tools Weinstein recommends are YouGov, whose free version offers access to data pulled from more than 200,000 consumers, and Demographics Pro, which analyses Twitter and Instagram profiles for insights into their followers, starting with basics like age and gender, then digging deeper into brand affinities, audience interests and more.

She uses other tools such as qualitative interviews, quantitative surveys and personas.

Donald Trump’s content shapes a powerful ‘brand story’

For Trump, the “success” of his content inherently relates to the brand story that has evolved since his presidential campaign, and the impact it had then and still has on his target audience — those Americans most likely to vote for him.

His 2016 campaign aimed at specific concerns and prejudices of his likely pool of voters and presented Trump as the solution to those issues — “I alone can fix it,” as he famously claimed — through a brand story that presented him as a successful and experienced businessman who isn’t afraid to speak his mind or take on entrenched political and economic powers (fictional as that claim was).

Trump’s “content” consisted of his Tweets, declarations and actions. I know this isn’t traditional content marketing — but he’s not a traditional president.

The results for his candidacy? His base ate it up. They still do.

Agree with him or not, we’ve all been talking obsessively about him since 2016.

Some share and engage enthusiastically with him on social media, while others complain. Doesn’t matter what’s said. Ultimately, we (myself included) all have helped spread his brand story wider and wider, in the process helping him reach even more potential supporters.

Indeed, Donald Trump’s campaign received billions — yes, billions — of dollars worth of free media. In fact, according to data tracking firm mediaQuant, he amassed $5.6 billion in free earned media throughout his campaign, more than Hillary Clinton, Ted Cruz, Paul Ryan, Bernie Sanders and Marco Rubio combined.

Trump also got 50% more media coverage than Clinton during the election.

What he truly understands, better than most, is how to speak to his audience. He intuits how to offer them the kind of content that will appeal to them, get them emotionally charged and move them to consider the value he says he has to offer.

And therein beats the heart of content marketing.

Reading minds

As Benyamin Elias, director of Content Marketing at ActiveCampaign, puts it: “When you know your audience, you can pluck the words right out your customers’ mouths and use it in your marketing. You can read minds.”

Elias then draws a straight and convincing line to more leads (“because people feel you understand them”), more customers (“because leads feel like you understand them:) and more referrals (“because customers feel like you understand them.”). (Emphasis, mine.)

From there, he believes that conversion rates, social media shares, email opens and clicks and sales will all rise. 

By the way, this should not be because you’re trying to manipulate your audiences. Rather, its should be because you understand them, their needs and their desires in ways that enable you to bring them value with your product, service…or simply, information that helps guide them (which is the core of our business at VitalBriefing).

Interestingly, Elias also criticises the exercise of building personas if you’re missing the psychographic piece that must accompany the demographics in order to provide the “AIO” element – activities, interests and opinions.

Add to that data analytics to “help you send your messages to the right people at the right time.”

His ultimate point is that you need to arrive at the ability to speak (or write) in the language that your audience uses and understands.





Sound like a certain American president?

Of course, it’s fair to argue Trump is manipulating the public with false information — which he certainly does on a steady basis. (As of May 29, according to The Washington Post, Trump had made false or misleading claims 19,126 times in 1,226 days in office, an average of one per every waking hour of the day.)

Obviously, this is not an approach I endorse, recommend or advocate. In fact, I’m depressed by the fact that his behavior doesn’t send his support plummeting. But the reality that he maintains a considerable well of support indicates to me that he understands the kind of content that appeals to a significant portion of this base.

As Search Engine Optimisation guru Neil Patel says (not referring to Trump), knowing your audience is more critical than identifying keywords to stuff into your content: “Catering to a specific and defined audience is far more powerful than targeting keywords.”

Shares, engaged time and comments matter most to publishers when measuring audience engagement

It makes sense. As Patel notes, engagement is far more important than generating traffic to your website. Because if they get there and you can’t engage them, you’ve lost the battle, and the audience.

If they’re neither commenting, sharing or buying, bringing them there brought you (and them) nothing.

All those actions reflect an understanding by publishers that the game is about far more than attracting eyeballs. If they’re sharing your content, spending time with your content or on your website, commenting on what they read and see or visiting various pages, then you’ve connected with them in one way or another.

In short, you speak their language. You know your audience.

Just like the president I can’t stand to hear or see.

But still…I have to give him credit for that one big thing.