Gates Foundation needs vaccine for infectious optimism


The Annual Letter of the Bill and Melinda Gates Foundation is an offspring of the Berkshire Hathaway annual newsletter for investors, famously produced by Warren Buffet who is now a co-trustee alongside the Gates.

Whereas the Sage of Omaha read the runes of wealth and capital, Bill and Melinda inform us what’s trending in their thoughts about global poverty. Any international NGO jostling for crumbs of the Foundation’s largesse ignores the Letter at its peril.

Key headlines of the 2015 Gates Letter convey a rather breathless faith in unhindered global poverty reduction. “Our big bet for the future” asserts that “the lives of people in poor countries will improve faster in the next 15 years than at any other time in history. And their lives will improve more than anyone else’s.” The section on Farming predicts that “Africa will be able to feed itself” by 2030.

I have no quarrel with these statements, either as credible predictions or as desirable outcomes. I do worry that the wording reflects a shallow interpretation of the UN’s draft Sustainable Development Goals (SDGs), with which the Gates Letter associates, encouraging us all to do likewise as Global Citizens.

The new Goals have a rights-based sting in their tail that was missing from their predecessor, the Millennium Development Goals, and which is not recognised in the Letter. If approved in their current form, the 2030 Goals will anticipate availability of water and sanitation for all, sustainable energy for all, decent work for all – and above all, the end of extreme poverty and hunger.

Most development professionals believe that the encouraging progress of recent years does not alter the reality that elimination of poverty and hunger will be incredibly difficult. There’s simply not enough evidence that economic growth, as currently measured, reaches out to the “bottom billion”.

As for Africa feeding itself, we know that India is currently self-sufficient in food grains but nevertheless wrestles with appalling statistics for hunger and malnutrition. Hunger represents a failure of distribution, not productivity.

The broad-brush acceleration of better lives predicted by the Gates Letter is exhilarating but it won’t be enough to achieve the SDGs.

These Goals deserve our support because they will leverage governments into deploying economic tools that proactively assist the most disadvantaged households. The elimination of poverty and hunger compels the rebalancing of government spending priorities in both rich and poor countries in ways that are currently unfashionable. It compels intervention and compromise to calm conflict situations to an extent for which the international community shows little appetite.

The big bet therefore involves a very big ask. The Gates Letter skirts around that inconvenience; indeed it’s possible that this reality is unpalatable to the Gates Trustees and the Davos elite that were encouraged to sign up last week.

This is a shame because every word of the Letter’s final section, the “A Call for Global Citizens” is pitch perfect in its appeal to individuals to sign up to do something, however modest, in support of the SDGs. But a global movement to call governments to account for their promises to achieve the Goals will falter if it’s unprepared for the inevitable setbacks.

Let’s hope that future Gates Letters will gently introduce the political elephant in the room, rather as the Sage of Omaha had to break the news in 2009 that investment in his shares was not after all a utopian casino.

Painfully aware that griping at the natural optimism of philanthropy is unwelcome, I sought refuge in a very different report in my inbox. Subtitled Food Riots and Food Rights – and funded somewhat improbably by the UK government – the research analyses the causes and consequences of food-related riots that brought the 2007/08 crisis of rising food prices to a head.

It was the title page image that instantly resolved my dilemmas over optimism versus caution in human development goals. Like Gates, the Food Riots report adopts the imagery of African children to turbocharge its message. There the similarity ends.

Gates annual letter 2015

Them Belly Full

Which of these images* tells us more about the challenge of eliminating poverty and hunger in Africa in the next 15 years?

*I’ve been unable to trace a photo credit or copyright statement in either report. I hope it’s self-evident that the reproduction here is for purpose of debate and not to derive any personal benefit.

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2015 Gates Annual Letter

Them Belly Full but We Hungry: Food Riots and Food Rights

Open Working Group Proposal for Sustainable Development Goals

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Oil price collapse fuels case for divestment


“Economists have been thrown into confusion. Almost no-one in the profession predicted the oil price collapse in advance.”

The folks at 350.org might chuckle at this pre-Christmas self-flagellation from the Financial Times blog. Since embarking on its “Do The Math” divestment roadshow in November 2012, the environmental campaign group has noisily predicted the eventual collapse in value of fossil fuel reserves that underpin oil and gas company share prices. As the group’s then Chair, Bill McKibben, said at the time: “you can have a healthy fossil-fuel balance sheet, or a relatively healthy planet …. you can’t have both.”

Hundreds of institutional funds, including the Rockefeller Brothers Fund, have since opted for a healthy planet and started to offload dirty energy stocks. Many more fund trustees will be wishing they had followed suit. The energy sector of the US S&P index fell 16.5% over 2014, missing out on the all-time highs in other sectors. The oil and gas sector performance in the UK stock market was even worse.

If divestment campaigners were trading as investment advisers, this would indeed be the month for industry awards and mega-bonuses. In reality, of course, the campaign targets the long term responsibilities of investment fund managers, with little suggestion that fossil fuel assets will become “stranded” in such a short timeframe.

Nonetheless, the unusual conjunction of a predicted trend in valuation and the floundering hopelessness of investment professionals elevates the divestment movement, if not exactly to financial wizardry, at least to a position of greater strength.

I sense there are two broad directions of travel opening up in this context. One is that divestment campaigns could evolve beyond the focus on fossil fuels. Companies whose asset ratings depend on stable availability and pricing of ecosystem resources, especially food and water, are vulnerable to long term degradation. Biodiversity campaign groups might hook into the work of 350.org and its partners.

The second lesson from 2014 might be to look ahead to the challenge of empirical demonstration that the divestment scenario is being fulfilled. How can we detect the DNA of action on climate change in the cauldron of oil markets? One or two commentators have suggested that greater efficiency of energy consumption has been a factor in recent price falls. But most economic commentary on the tumbling oil price has exploited tools of supply and demand that have barely changed since the 1973 oil crisis.

If it were possible to prove by economic analysis that a fraction of the 2014 dip in share prices for the oil and gas sector was attributable to mitigation of emissions, the case for divestment would be strengthened – just as the case for climate loss and damage litigation is boosted by scientific evidence that global warming has contributed to an extreme weather event.

There’s some tough research lining up here. But fund managers are accustomed to paying top dollar for their economic advice. Traditional economists now have two chronic failures of anticipation to account for – the 2008 banking collapse and the 2014 halving of the price of oil. The first failure has been viewed charitably as misfortune; this second oversight might vacate some corporate territory for new voices.

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Global Divestment Day (Feb 13/14)

The dark side of the oil shock – Gavyn Davies on FT.com

Climate Justice Briefing

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No favours for coffee farmers in Lima climate flop


My local railway station now boasts more staff selling coffee than tickets. Indeed, the best cappuccino in Winchester is to be found at a kiosk installed on the windswept wasteland of Platform 1, despite countless genteel establishments within the City.

During that pause at the station while the machine works its miracle on the beans, I’m always amused to sense the proximity of some of the world’s most topical problems – private sector management of public transport (doing a terrible job), the Eastern European migrant workers staffing the kiosk (doing a great job) and the ill-fated coffee beans, doomed by climate change to fail to meet exponential global demand for more cappuccinos.

Currently in crisis brought about by drought, rust (fungus) and berry borer (beetle), Latin American coffee growers might have hoped that the Peruvian venue for this year’s round of UN talks would crank up the action plan on climate change. Alas, the process moves inexorably towards an international agreement to do nothing very much in no particular hurry.

Coffee is significant because the plant is unusually sensitive to temperature change and erratic weather. Furthermore, the best beans grow in inland regions of East Africa (Uganda, Rwanda, Ethiopia) where warming may exceed the global average. The most recent IPCC report highlights the impact of climate change on coffee, warning that “the suitability for coffee crops in Costa Rica, Nicaragua, and El Salvador will be reduced by more than 40%.” I doubt that coffee growers subscribe to the collective wisdom that two degrees of warming is “safe”.

It’s therefore very possible that people even of my (middle-aged) generation will live to see the endgame of this particular impact of climate change. Will we shrug our shoulders and switch to tea? Will we be willing to pay more for lower quality, leaving pure Arabica coffee as a luxury for the rich? Will we allow the uncertain science of genetic modification to gain access through the soft underbelly of desperation for caffeine?

Who will be the winners and losers of this sorry case study of the Anthropocene living up to its name? In Ethiopia, where coffee has deep cultural significance, 95% of the national harvest is grown on small farms of less than five hectares. These farmers lack the financial or spatial capacity to adapt – already there’s news of a recent Saudi investment in 22,000 hectares of coffee plantation in Ethiopia.

It’s also difficult to imagine how wider African interests can remain in control of the coffee economy. Just two months ago, scientists announced the decoding of the Robusta genome, a stepping stone to the genetic secrets of Arabica beans. It may not be long before patents are sought for adapted strands of DNA, the applicants likely to be limited to a very small number of agribusiness corporations which are not based in Africa.

This picture of a scramble for coffee’s land and DNA, probably occurring under the radar of public awareness, may be speculative but it’s based on the solid precedent of maize, rice and other staple food production. These emerging scenarios go to the heart of the concept of climate justice which argues that countries which have contributed least to carbon pollution will be the biggest losers from the consequences.

Restitution of climate injustice was clearly framed in the original 1992 Convention on Climate Change, both in practical measures (steep emissions cuts by the richer countries together with financial support for adaptation) and in principle (“common but differentiated responsibilities”). The annual COP meetings, charged with implementing the Convention’s goal of stabilising the climate, have failed, and will continue to fail, because these richer countries have lost the political will to negotiate the delivery of their obligations. Instead they devote their energies to emasculating the Convention.

The story of coffee may underpin one of the early chapters in the history of dysfunctional global governance in the 21st century.

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Drought in Brazil may hit your coffee mug, from CNN

From Mexico to Brazil, climate change threatens coffee growers in Latin America, from Unside Down World

How climate change will brew a bad-tasting, expensive cup of coffee, from The Guardian

Science Cracks Coffee’s Genetic Code. Up Next: Frankencoffee, from Bloomberg Businessweek

Ethiopia: Coffee sector performs below potential – Briefing Note from Ecobank

Climate Justice Briefing

Greenpeace audit should focus on governance


My instinctive sympathy is with the fall guy in last week’s story that Greenpeace International has fired a member of its Amsterdam finance team for losing 3.8 million euros on “an ill judged contract aimed at managing foreign currency exchange costs.”

I also work in finance for an international NGO, fortunately a much smaller and less complex organisation than Greenpeace. We receive most of our income in euros and dollars, our corporate accounts are in sterling and our expenditure occurs in a mix of the world’s poorest countries. This is a classic profile for exchange rate losses.

There are common sense ways for small non-profits to manage the risks. By far the most important is to make sure that relevant financial skills are represented on your board and at the highest level of influence within the executive.

I’ve no inside track on Greenpeace International but this basic principle of financial governance appears conspicuous by its absence, at least on the evidence of an hour or two of surfing obvious reference material. The “complete independent audit” promised by Greenpeace to sooth angry supporters might usefully make a start with the senior management organisation chart? Notice anything missing?

greenpeace organisation chart

The Head of International Finance is off the chart to the right, reporting to the Organisational Director, three tiers distant from the Executive Director. That will surely change.

Occupancy of all the positions in the lower half of the organisation chart has been in flux over the last year or two, doubtless a further aggravation for the finance team. There are signs that a UK troubleshooter on NGO finance has been installed in Amsterdam for most of 2014.

At Board level, the Treasurer of Greenpeace International is Ed Harrington, whose financial credentials draw on senior management experience for San Francisco local government and utility bodies, not exactly the sharp end of multi-currency risks.

Somewhat better qualified is Steve Francis, an accountant from the European life assurance sector. However, it’s not clear from Greenpeace publications which of these two board members has direct responsibility for finance (and therefore for that hole in the organisation chart – and for currency risk management policy). Both will presumably make a decently hasty exit.

Full details of the hedging contracts will of course emerge from the audit, if not before. The extent of the loss appears surprising in relation to the amount of cash potentially available. Greenpeace International accounts suggest that the total face value of the contracts is unlikely to have exceeded 15-25 million euros. Losing 3.8 million sounds more like betting the farm than hedging risk.

All this is guesswork but, if I was a Greenpeace donor, I’d like to know which bank or currency trader was hawking such a toxic bundle of futures and whether that institution observed proper process for executing the customer agreement – and for disclosure of risks on the specific contracts.

The Independent in the UK reports that the Greenpeace finance employee obtained the necessary second signature on the trading contracts from a junior rather than senior colleague, this by implication being the sackable offence.

My imagination readily paints a picture of the context ……that there were foreign exchange losses of 600,000 euros in 2012 (for the normal reasons), creating pressure on the finance team to “do something”, a recognised slippery path to bad advice. The team member had become hardwired to coping with a vacuum of financial competence in the corporate hierarchy and instead turns to a colleague to make it happen. There but for the grace of God……

Greenpeace International has obtained the headlines it wanted – invoking speculation, bad bets and gambling by a rogue individual. The public story will probably end there. For the sake of the world’s most incisive environmental campaign group, I hope there’s a radical repositioning of finance within the governance structure.

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Greenpeace International statement on foreign currency exchange losses

Greenpeace loses £3m of public donations after currency gaffes from The Independent

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The sublime, the climate and Eleanor Catton


After a bad experience with Wolf Hall, I resolved never to buy door-stopper novels, not even those strewn with accolades, without first trying out their authors in shorter form. Tuesday’s Man Booker prize for The Luminaries left me unmoved as soon as I saw Eleanor Catton struggling to hold up her 800-page tome for the cameras.

By Friday I was having second thoughts, my breakfast routine suspended by the riveting 1500 words that Ms Catton had delivered to The Guardian, describing her childhood in Christchurch. If such a treat of descriptive memoir could be dashed off in the 48 hours of post-award euphoria (surely it was dusted off the shelf!), what riches might there be in a polished novel?

The Guardian article explores the inadequacy of language to describe sublime human experience, taking the visual example of unspoiled landscape. As a native of New Zealand’s South Island, Eleanor Catton has had more opportunity than most to take up this artistic challenge.

Catton’s purpose here was confined to professional reflection on the boundaries of her craft. Inevitably, my own reaction jumped to the consequences. If our universal tool of communication is unable to capture the essence of humanity’s relationship with the natural world, is it any surprise that we’re trashing the place? If Eleanor Catton can’t articulate the ecstasy of natural beauty, how can we expect earth scientists to convey the significance of its loss?

Efforts to answer such questions are in full flow in the aftermath of the latest IPCC report on climate science. The UK Chief Scientist, Sir Mark Wolpert, lamented the “sense of ennui” amongst mainstream public reaction, warning a Royal Society meeting that “science isn’t finished until it’s communicated”.

My former colleagues, Anuradha Vittachi and Peter Armstrong, continue to engage with this topic through the lens of empathy, that most elusive human quality. For me, the empathy deficit arguably accounts for all catastrophic group behavior in our species, past and present. Can we learn more by teasing out its contribution to the failed response to climate change?

I’m not sure – but here’s the climate section of Anuradha’s interview with Sarah Woods, the playwright who performed her solo production of The Empathy Roadshow at the South Bank Centre last week. “It all boils down to space and time” she says about the ostrich tendencies of people and politicians.

It’s curious that Eleanor Catton’s article invoked this same concept of “time and space” in her striving to make linguistic sense of natural beauty. This is difficult terrain, grappling to hook up the fruits of our clever rational minds with the dark matter within, with too little time for the task.

We could do no worse than commission Eleanor Catton to tackle the embryonic genre of climate fiction.

Sarah Woods in conversation with Anuradha Vittachi at her London Empathy Roadshow. Click on YouTube for the full interview. From Hedgerley Wood.

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Eleanor Catton: The land of the long white cloud from The Guardian

‘Science is not finished until it’s communicated’ – UK chief scientist – from RTCC

Climate Justice Tread Softly briefings

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