Luxembourg Funds Intelligence Briefing (11/23/2020)










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Luxembourg Funds Intelligence Briefing
16th November 2020

Many investment funds increased their cash buffers in March in response to substantial large redemption requests at the onset of the Covid-19 pandemic, but cash positions have since sunk back to pre-lockdown levels as funds have invested in booming stock markets, according to data provider eVestment. Equity funds’ median cash holdings fell to 1.8% of total portfolio assets at the end of September, the lowest level recorded by eVestment in 13 years, down from 2.5% six months earlier. However, analysts fear portfolio managers are discounting the risk of fresh market turbulence if bankruptcies soar and government support for the economy is scaled back. Gabriela Figueiredo Dias, chairwoman of Portuguese regulator CMVM, warns that recent fund inflows have not been matched by higher liquidity positions.

— Simon Gray, Editor in Chief

Asset Management
Active ownership critical to maintaining sustainable investment portfolio: Quintet’s James Purcell

Asset managers must take an activist approach to help drive a more sustainable economy, argues James Purcell, group head of investment at Quintet Private Bank, saying that to exclude the securities of firms with the lowest levels of ESG or sustainability compliance is insufficient. He believes the short- to medium-term impact of the exclusionary approach is often minimal. although ultimately it will make it harder for companies to raise capital. Instead, Purcell says shareholders need to engage fully with companies to ensure they understand the need for a transition to increased sustainability in their activities. He says Quintet’s sustainable investment engagement specialist helps the bank to establish a dialogue and vote at the shareholder meetings of companies whose securities it recommends to clients. Quintet voted on 8,988 management and shareholder resolutions relating to ESG issues at 592 AGMs during the first nine months of this year.

Best source: Delano

Fund Services
ManCo Allegro rebrands as Ocorian Fund Management

Luxembourg-based third-party management company and fund administrator Allegro has been rebranded as Ocorian Fund Management, following its acquisition by Ocorian in April. The group now employs nearly 150 people in Luxembourg, where it provides services to corporate clients, investment managers, institutional investors and high-net-worth individuals in Europe and elsewhere. Ocorian Fund Management managing director Thomas Fahl says that as part of the Ocorian group, which has $260bn in assets under administration and 1,250 employees, the company, which is licensed to provide services to both UCITS and alternative funds, will be able to draw on the group’s international footprint and offer clients a wider range of fund and fiduciary solutions.

Best source: Luxembourg Chronicle

Sanne appoints Jan Barre as director of business development

Alternative asset and corporate service provider Sanne has appointed Jan Barre as director of business development, focusing on the company’s key areas of focus such as private equity, real assets, private debt, capital markets and hedge funds. Barre has more than 15 years’ experience in the financial sector and held senior business development positions at Clearstream Banking Luxembourg and most recently at International Fund Services and Asset Management, where he specialised in fund services platforms.

Best source: Paperjam (in French)
See also: Luxembourg Chronicle

Regulation
Fund cash reserves decline to pre-pandemic levels, increasing risk in second Covid-19 wave: regulator

Gabriela Figueiredo Dias, head of Portuguese regulator CMVM and chairwoman of the investment management standing committee at the European Securities and Markets Authority, has warned that liquidity cushions at European investment funds have not kept pace with inflows, risking leaving them exposed to the economic impact of the second wave of Covid-19 infections. Funds had built up cash reserves of 2.5% early in the pandemic at the end of March to cope with redemptions, but market research firm eVestment says liquidity has fallen to pre-pandemic levels at 1.8% at the end of September.

Best source: Financial Times (subscription required)

Facts and Figures
Most financial service providers expect revenue to be lower than forecast this year

Around 60% of financial service providers expect their revenue this year to be lower than forecast, according to a survey of 400 executives carried out by Luxembourg for Finance last month. Around 75% of respondents do not expect an increase in international investment in 2021, with 31% expecting investment to be down from this year. While 55% say they are somewhat confident about increasing revenue next year, only 9% are completely confident, and 56% plan to reduce their operating budgets. Three-quarters of respondents favour the designation of at least one home-working day per week, and a third would be willing to accept two or three days.

Best source: Paperjam (in French)

See also: Wort (in German)

Technology
BGL BNP Paribas invests in KYC automation start-up i-Hub

BGL BNP Paribas has subscribed to KYC automation start-up i-Hub KYC services, and taken a shareholding in the firm, which was established by Post Luxembourg in 2019. I-Hub is developing a centralised hub through which customers can access a centralised information repository, where they can deposit or update identification documents, access public information and share files with other financial institutions in order to improve the effectiveness and reduce the costs of anti-money laundering procedures.

Best source: Paperjam (in French)
See also: BGL BNP Paribas

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Don’t Be Another ‘Greenwasher’

Window cleaner using a sponge to wash a window with clear blue sky

The term ‘greenwashing’ was first coined in 1986 to describe outlandish and unsubstantiated claims and promises that corporations were spreading about themselves.

In brief, greenwashing describes disinformation efforts to convince audiences that an organisation is doing more to protect the environment than in reality, presenting an inaccurate image of environmental responsibility.

Now, 35 years later, greenwashing has accelerated into a widespread and prevalent issue plaguing virtually every industry. Many corporations are willing to bend the truth — and in some cases lie — in order to con consumers who increasingly question the ecological footprint and impact of companies they patronise.









Greenwashing sells moral values





With belief-driven buying at an all-time high, the ‘green angle’ offers a highly effective marketing opportunity. According to marketing firm Edelman, three out of five consumers’ purchase decisions are significantly impacted by an organisation’s social or political stance. This lines up with a recent ING report that found 61% of people agree they would be less likely to buy a product if the company was performing poorly on environmental practices.

Indeed, in the current climate, pitching moral values can help a company sell its products and services. Unfortunately, many businesses have found that making such assertions, regardless of their veracity, can propel many consumers over the finish line.

The old adage “doing good is good for business” certainly rings true. However, for many companies, looking like you’re doing good is, well, good enough.

Despite regulations and trade associations policing the issue, it’s still relatively easy to pump illusion over reality. “Many companies have adapted greenwashing tactics which carefully sidestep federal regulations regarding false advertising and work to provide a counter argument for the part of your brain telling you it isn’t worth the potential costs,” warns Giovanni Lopez-Quezada.

How, then, can a company prove reality-based green credentials without looking like just another greenwasher? What can marketers do to showcase their employers’ green initiatives and/or values without appearing to be just another perpetrator of greenwashing?









Be transparent





The public is getting better at spotting the type of wishy-washy language marketers use to make a company or product seem authentic. The answer in this case, is to be honest and transparent.

If you are positioning your company — or even simply a specific initiative or programme — as green, describe openly its full benefits. Moreover, don’t be afraid of exposing aspects of your operations that aren’t so green. In fact, doing so opens the door to discuss how you plan to improve in the future.

While that level of honesty and genuineness with customers traditionally has been considered a liability in business, consumers today appreciate and reward transparency and accountability, attributes that help build a stronger, more loyal bond with clients.

Be warned, however: This degree of transparency requires accuracy. In the era of social media, digital audiences are quick to ferret out misinformation and just one or two slip-ups — even if accidental or unintentional — can tarnish a brand’s credibility.

Ditto cherry-picking information in a way that could convey a false impression.

Instead, focus on making strong statements you can support. Any claims should be provable. And avoid using a self-aggrandising tone at all costs.









Impact is the enemy of greenwashing





Greenwashing 101: Companies too often are laser-focused on showing the world that they are indeed green-friendly. The marketing campaign becomes the most important element.

Rather, to communicate a message about sustainability aspects of your products or services, showcase real, substantial impact.

Look for data points — tangible facts — that showcase what has actually been achieved. Rather than publicising what you’re company has done or is doing to help the environment (and how amazing you are), focus instead on the programme, initiative and/or its positive impact.

Show (don’t tell) consumers why the issue is important to your company — and why they should care. Then use those data points to reinforce your assertions.

As Business for Social Responsibility (BSR), a non-profit whose mission is to “build a just and sustainable world,” writes in its Understanding and Preventing Greenwash report, “if the initiative is a small portion of the company’s efforts done for the sake of reputation…it’s greenwash.”

BSR suggests asking the following questions before embarking on a marketing campaign in order to ensure the impact comes first:

Is the topic of your message a significant environmental achievement?

As BSR warns, “if you reach the conclusion that the initiative is not making a significant change, don’t communicate it, or at least hone the scope of your message. Chances are people will see through inflated words and you will risk losing trust. Take a step back and develop an impactful initiative that is worthy of communication.”

Is the issue you are addressing material to your business?

If your impact doesn’t align with your core business, it may not necessarily matter to your stakeholders. Plus, if you are getting involved in environmental issues that don’t relate to your core business, it can come off as an attempt to distract from the primary environmental issues that are associated with your company.

Have you invested significant resources? Have you spent more money on the marketing than the activity?

This should be obvious. If you haven’t invested substantial resources in the green initiative or activity, it’s likely it will fail to achieve an environmental success worth sharing. In other words, focus on impact, not reputation.

Have you already achieved the results you are claiming?

At times, it’s better not to talk about what you are planning to do or what your green initiative or eco-friendly product/service will achieve. Wait for measurable, tangible results, or at least change your messaging so that it shines the spotlight on what has already been achieved.






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EIB’s Hakan Lucius: “Agreeing on a common language about sustainable finance is key”

Headshot of sustainable finance expert Dr. Hakan Lucius, European Investment Bank's Head of Corporate Responsibility

Long before sustainability and sustainable finance were on, well, everyone’s minds, Hakan Lucius was pounding the drum for the world to pay attention.

Over his two decades in the field – and now in his current role as Head of Corporate Responsibility at the European Investment Bank (a new client of VitalBriefing’s services in Sustainable Finance), Dr. Lucius has amassed a stellar background as a leading authority in the field, structuring billions in investments, loans and equity for multinational teams negotiating sustainable initiatives with governments, businesses and civic organisations.

In this interview with VitalBriefing CEO David Schrieberg, he discusses the EIB’s role as a global sustainability leader and the challenges in a field that is catching fire at a time the world never needed it more.






What are the key criteria for distinguishing between genuine ESG, green or sustainable financial instruments or products and those whose promoters are seeking to jump on the bandwagon?




It is important to look behind the headlines, into the actual activities, standards and appraisal processes. The European Investment Bank (EIB) is the world’s largest multilateral lender.  Ensuring that sustainability is embedded in all our work means three things:

  1. A number of activities are excluded from EIB lending because they are incompatible with our sustainability objectives.
  2. All projects and investments have to comply with the EIB’s Environmental and Social Principles and Standards to incorporate environmental and social sustainability considerations into our investments.
  3. We perform a separate economic appraisal to assess the cost and benefits of our investment projects to society.

While embedding sustainability into our processes, we are also one of the biggest providers of climate finance. 

We have been Europe’s climate bank for a long time. 2015 was a milestone year in this field, when the EIB Climate Strategy was launched and EIB Climate Action finance had reached a record high of EUR 20.7 billion, representing 27% of overall EIB financing.

Now the EIB has decided to make a quantum leap in its ambition, becoming the EU climate bank. We will stop financing energy projects reliant on fossil fuels and we will increase our ambitions in climate action and environmental sustainability.

Our approach builds on three pillars: The first is to increase our own financing; we are aiming at 50% for climate and environmental sustainability by 2025.

The second pillar is a commitment to support €1 trillion of investment for climate action and environmental sustainability by working with our public and private partners in the decade to 2030.

The third pillar is to align all our activities with the principles and goals of the Paris Agreement starting by the end of this year.

This new ambition will help unlock the massive investments that will be needed for the decarbonisation of our economies. In this regard, the EIB is a central piece in the implementation of the European Green Deal to make Europe the first carbon-neutral continent by 2050.

— — —









How big a problem do you believe greenwashing really is, as opposed to honest confusion or differences between conflicting sets of sustainability criteria?




We put sustainability at the heart of what we do. The ultimate goal of projects and investments financed by the EIB Group is to improve people’s lives by promoting sustainable and inclusive growth within the European Union and beyond. We focus on four priorities areas: innovation and skills, access to finance for smaller businesses, infrastructure and climate and environment.

Being a policy-driven Bank, the EIB appraises and monitors all the projects it finances with regard to their sustainability credentials. We only finance projects that pass our financial and sustainability due diligence.

Appraisal and monitoring ensure that projects comply with the stringent EIB Environmental and Social Standards based on the EU legal framework. In addition, we also measure and publish the carbon footprint of all projects with a significant impact.

On the borrowing side, sustainability plays a major role in our fundraising activities.Two debt products stand out for their very specific sustainability criteria: Climate Awareness Bonds (CABs) and Sustainability Awareness Bonds (SABs).

While CAB proceeds are allocated to projects contributing to climate change mitigation, proceeds from SABs are allocated to projects contributing to environmental and social sustainability objectives beyond climate.

We are subject to an external assurance and we have a methodology which is harmonised with all the multilateral development banks on what can be called green. We report on the allocation of proceeds, transparently listing amounts disbursed to individual investments.

Transparency is key.

— — —









What kind of activities are ‘beyond the pale’ in terms of sustainability? What about fossil fuel energy producers or other carbon emitters investing to reduce their carbon footprint? How should one draw the line?




Firstly, I would like to highlight that we have a new Energy Lending Policy and we are stopping all financing for unabated fossil fuel projects. This means in the energy sector, lending for energy efficiency projects, renewable energy projects and for power distribution and interconnection.

A second aspect is the assessment of our projects. Our sustainability due diligence demonstrates how we ensure sustainability in carrying out our financing.

We support projects in sectors that make a significant contribution to growth, employment, regional cohesion and environmental sustainability in Europe and beyond.

The EIB can only support projects that (a) are eligible, (b) fulfil financial criteria, and (c) meet our separate sustainability due diligence.

— — —









Does the sustainable and responsible investment sector suffer from a lack of universally-recognised criteria and standards? Will the EU’s sustainable finance package fill the gap?




Agreeing on a common language about sustainable finance is key. The EU is taking the lead on defining the term, as well as the subsequent actions.

The EIB Group contributed to the EU Action Plan on Sustainable Finance, it helped develop an EU taxonomy for climate action and other environmentally sustainable economic activities.  It will provide specific technical screening criteria and determine which economic activities can qualify for each environmental objective.

Our contribution to the EU Taxonomy also includes the establishment of an EU Green Bond Standard. This technical work can bring about a significant increase of climate finance.

— — —









Do you believe that refinancing of existing projects or programmes through instruments designated as green or sustainable meets the spirit as well as the letter of ESG investment?




The EIB finances only new projects and does not refinance. We provide funding and expertise for sound, sustainable investment projects in support of EU policy objectives.

We focus on four priority goals: innovation, environment, infrastructure and SMEs with two cross-cutting goals: climate action and cohesion. We support projects that make a significant contribution to growth, employment, regional cohesion and environmental sustainability.

The EIB cannot do it alone, we need private investments. The EIB’s fundamental role is to attract private investors to the projects it finances. This is why current work to make the financial system greener is so important and we are contributing to current initiatives to make this happen.

— — —









How does the EIB strike a balance between the goal to promote sustainability worldwide and the pressing financial and investment needs of loan recipient countries, for example in the exploitation of natural resources or employment/working conditions?




The EIB was created to support economic and social cohesion in Europe. We dedicate at least 30% of our financing in the EU to increase cohesion and this will also support the transition to a sustainable economy.

In the current situation, the EIB is finding solutions for COVID-19, but we should not reduce our commitment toward climate and environmental issues. It is important that one sustainability goal is not pursued at the expense of other goals.

Public financing institutions like the EIB must play a leading role in that regard, facilitating the flow of private capital into sustainable investments at the needed scale globally by supporting the creation of the necessary enabling environment and partnering with the private sector.

— — —










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There Are Too Many Shades Of Grey In Green Finance

There’s no escaping the growth of green finance. Every quarter charts new records for issuance of green bonds or investment in funds that describe themselves as sustainable or that follow an investment policy guided by considerations of environmental, social responsibility and governance.

Meanwhile institutional investors around the world are using their weight as providers of corporate financing to push companies toward greater respect for the environment and the welfare of employees in their own operations and in supply chains and, increasingly, to commit to reduce carbon emissions in measurable ways or set a date to achieve net zero status.

This trend is now a fact of life in the financial industry, not least because of the role of institutions in pressing companies and financial service providers to embrace environmental and other sustainability goals, as well as the determination of the EU to implement legislation to increase public accountability.

Here’s a telling data point: the proportion of global investors that apply ESG criteria to at least a quarter of their total investments has risen from 48% in 2017 to 75% last year, according to Deloitte.









Open questions about the ‘green’ in green finance





Yet, the significance of this green finance trend in changing corporate and financial behaviour is less easy to measure.

In fact, the size of the market and its different segments is open to wildly different estimates, both in terms of current levels and projections into the future.

And just how green or how sustainable some, or even most, of these investments or assets really are is an even more ‘known unknown’.

The problem is the absence of standardised, universally accepted definitions and rules setting out what constitutes sustainable or ESG investments, assets and projects — and similarly standardised mechanisms to measure compliance.

The EU’s Taxonomy Regulation, which seeks to define sustainable activities, should help to fill the gap, although it won’t be applicable until the beginning of 2022.

That’s why arguably ‘greenwashing’ — promoters awarding financial assets and products an environment-friendly or sustainable label they don’t warrant — is a lesser problem than the simple inability to determine what green (or sustainable) actually means.

The green bond market, which currently totals around €660 billion in outstanding debt, is forecast to rise to €1 trillion by the end of next year and €2 trillion two years later, according to the Netherlands’ NN Investment Partners.

However, it warns that only 85% of green bonds deserve the label; the rest are issued by companies that may be undertaking environment-friendly projects but whose practices in other areas breach environmental standards.

bar graph showing total number of new green bond issuers 2016-2019








Varying definitions of green finance





Take the investment funds numbers, for example.

Data provider Morningstar says European sustainable fund assets passed the milestone of $1 trillion during the third quarter, and global assets reached $1.26 trillion, while a record 166 new products were launched worldwide over the three months to the end of September, taking the total to 3,774 worldwide.

By contrast, the Global Sustainable Investment Alliance last year estimated that “some kind of environmental, social or governance analysis [in] investment decisions is now a factor” in $31 trillion of assets under management,

Meanwhile Optimas, a Boston-based capital markets consultancy, says the value of “global assets applying environmental, social and governance data to drive investment decisions” has almost doubled over four years, to $40.5 trillion this year. (By way of comparison, Boston Consulting Group estimates that the global asset management industry oversaw $89 trillion at the end of 2019.)

These numbers could conceivably all be correct, but it begs the question of what investments these very different totals include, how they are calculated, what constitutes the applicable sustainability or ESG principles, and how compliance with them is measured.









Misleading marketing

Some of the problems with the credibility of sustainable products are relatively easy to spot and have caught out major players like Fidelity Investments and State Street Global Advisors.

More broadly, the 2 Degrees Investing Initiative, a non-profit think-tank, has claimed that 85% of all “green-themed funds” have misleading marketing materials.

Together with the UN Principles for Responsible Investment network, the French-headquartered organisation has drawn up the Paris Agreement Capital Transition Assessment (PACTA), an online tool to measure the alignment of equity and fixed income portfolios with climate change scenarios. It says PACTA is used by more than 1,500 financial institutions worldwide, as well as by supervisors and central banks to assess the entities they oversee.

But it’s far from the only system in play and the credentials of providers aren’t always clear, notes Alessandro d’Eri, a senior policy officer at the European Securities and Markets Authority. “We have seen a boom in the number of..ESG rating and scoring providers, a largely unregulated area,” he says. “It is difficult for us to make sense of the scoring and rating if there is no clarity on the underlying methodology.”

Asset managers increasingly complain that some companies issuing green bonds are financing environment-friendly activities at the same time they’re involved or implicated in businesses whose impact is the contrary — like state-owned monopoly Saudi Electricity Company, which raised €1.3 billion from a green bond in September to install smart meters across its grid.









Constructive engagement





The Australian state of Queensland has issued bonds for initiatives including preserving the Great Barrier Reef, which is under threat from the impact of global warming, at the same time that it continues to promote expansion of its coal industry.

Others, like car manufacturers, are dressing up as green initiatives investment in production facilities for electric vehicles that they would be carrying out anyway. Still others are using green bonds to refinance investments they have already made.

Some equity investors in polluting companies or high carbon-emission industries justify their state on the grounds that it gives them the opportunity to engage with the businesses and encourage them to change their practices.

Maybe. But this, too, risks delivering an outcome that challenges quantification.

There’s no shortage of initiatives underway today to measure environmental and other sustainability factors to assist investment decision-making. The EU sustainable finance framework, which is well advanced, will progressively extend transparency requirements throughout the European financial industry, which could create the foundation for a standardised global rulebook.

Until then, though, when it comes to green finance, determining what is sustainable and what is not, what’s real and what’s greenwashing, is likely to remain as much art as science.














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

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.