Peter Jäderberg, managing director and founding partner of the Jäderberg & Cie. group, tells us in an interview what connects him to the Swedish environmental activist Greta Thunberg. He also explains why, in his opinion, there are too few genuine impact investing projects and why Jäderberg & Cie. has created a prime example of impact-oriented investing with its investment project "JC Sandalwood Invest 18".
Peter Jäderberg (PJ): I think it is appropriate to speak of a tipping point. The issue of sustainability in our society has been simmering long enough, but nothing has really changed fundamentally. The majority of people's willingness to take action has been thwarted by the emergence of the Swedish zeitgeist. I do, however, see President Trump as the main cause of Greta's willingness to strike and his indispensable willingness to fight, and I think that his way of cancelling the Paris Climate Treaty was sufficiently appealing to my compatriot.
PJ: At the moment there is a narrow focus on the threat of climate change and CO2 emissions. Further acute ecological and social imbalances are still being neglected in the broad debate. But generally speaking, a strong increase in demand for sustainable investments can be observed. However, this is offset by an inflationary increase in the supply of self-proclaimed sustainability products on the stock market. Our small entrepreneurial investments must therefore fight for attention against the enormous marketing and sales machinery of the capital market. In fact, however, we are seeing a rapid increase in interest in our assets on the part of professional investors, as there are very few genuine impact investing projects to date. For almost ten years now, private investors have been consistently investing with JC Sandalwood, probably because the sustainability of our business model is convincing.
PJ: In general, it would be very helpful in any legislation if lobbyists did not give in. Sometimes it seems like the absurd theatre of a Kafka novel, how deliberately laws are created on a factual basis. In principle, the EU initiative to enshrine sustainability in law is to be welcomed. Whether it is the EU taxonomy, the obligation to disclose the sustainability content of financial products or the change in the asset allocation rules for institutional investors - all of this is in danger of being jeopardised by the immense greenwashing. On the one hand, the knowledgeable preparers of the laws are aware of this, on the other hand, the lobbyists and the marketing departments of the capital market are not asleep and have been busy for years. Moreover, every piece of legislation is accompanied by a worsening of the situation, which often enough causes the assessment or is misused as an argument that the state should stay out of it. In concrete terms, it would be helpful if the Ministry of Economic Affairs were to inform consumer protectors and investors about greenwashing and stigmatise it. A pious wish.
PJ: When you make a sports bet, does it score goals? Let's hope not. What if you double the bet or somebody else does? Does that change the outcome of the football match? A perhaps confusing example. If you buy an ETF that synthetically replicates an index of the share prices of sustainable companies, does that give you or the ETF influence on those companies? Absurd assumption. If you buy a share of a company that produces an HIV drug directly on the stock exchange or through a fund, where does the purchase price go? To the seller of the share, but not to the company, let alone to your project. Will this result in more HIV patients being treated? Unfortunately not at all. I got this last example from the clever team at the CSP Institute of the University of Zurich, who have academically proven that investing via the stock exchange does not make the world more sustainable, at least not directly. Although there are indirect possibilities, for example by influencing the management of the stock exchange company or possibly in the case of capital increases, these are empirically exceptions. Nevertheless, there are masses of funds and investment strategies on the capital market that adorn themselves with the labels ESG, sustainability or even impact, but can never, ever, achieve their suggested goal. In the case of H.C. Andersen, the little boy said, astounded, that the emperor is not wearing anything at all. A more colourful word for label fraud is greenwashing.
PJ: A basic requirement for our entry ten years ago was that our project should reforest mixed forests that support groundwater, fauna and flora, i.e. not monoculture. This will not only preserve the endangered species of sandalwood tree for the Earth, but also for the billions of mainly Asian users. This pleases the World Conservation Union IUCN, which is on the red list and has publicly praised our sandalwood project. Also our comrades-in-arms, such as the ethical investor Church of England or the world's leading forestry investors at Harvard University, have liked it so much that they have also invested as neighbours and independently. In addition, the very valuable essential oil from our sandalwood trees is processed, which is used in food, natural cosmetics and medicine, among other things. Very strict purity rules apply. The list of sustainability aspects of this investment is long. With greenwashing, the question is not whether the investment goal is sustainable, but whether the investment brings about sustainability or merely adorns itself with it. Polemically, one could argue that the investment of our sandalwood investors does not usually result in further tree planting. The trees are already standing. But through new investors we finance, for example, years of cultivation and also the creation of new, sustainable sandalwood products, such as hopefully novel medicines, as well as periodically new tree plantations. Since the investor is involved in our sandalwood plantations as an entrepreneur, he is the direct operator and thus also a direct impact investor. Admittedly, this is a simplified description, but the opposite of greenwashing.
PJ: First and foremost is risk management. This is what makes or breaks a natural investment. Our Australian partner is doing this proactively and in an exemplary manner, equipped with a generous budget, because the sandalwood tree is very precious and is worth saving on risk prevention. Despite the convincingly increased survival rates of the trees and the learning curve of our management teams over the last twenty years, this is no guarantee for the future. A risk also remains with this investment, despite insurance. Another risk aspect for every investor is the correlation in his asset portfolio. In this respect, sandalwood shines because it shows an unusually high degree of independence from stock markets and the economy, and in this respect it is not comparable to typical forestry investments. It is a perfect admixture. The yield is well above the capital market average. We expect harvest yields of more than one billion euros and a double-digit return on our plantations from 2028 onwards. Due to the worldwide and diverse demand for high-quality sandalwood, sales of this natural product at good prices are highly probable. But of course there is no absolute certainty. But here in relation to the risk a very good return. If we miss the harvest yield target by 60 percent, the investor will still get back his invested capital.
Peter Jäderberg was born in Västerås, Sweden. Since 1970 he has lived and worked in Hamburg. He studied law, business administration and economics. Subsequently, he was managing founding partner of APS Advanced Portfolio Selection GmbH for several years, which specialised in international, institutional securities trading and the development and marketing of quantitative analysis tools.
Since 2010, Peter Jäderberg has been the managing founding partner of the Jäderberg & Cie. group, which now includes 40 companies in Germany and Australia. Jäderberg & Cie. operates plantations (cultivation of sandalwood) and pursues the refinement and marketing of the raw material. Today the group of companies owns 5 plantations (700 hectares, 350,000 sandalwood trees, in two Australian states), making it one of the five largest sandalwood companies in the world.
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