Numbers Don’t Lie

Howard Warren Buffett, the grandson of Warren Buffett, is an entrepreneur of our generation.
Unlike his grandfather who built Berkshire Hathaway to a $707-billion conglomerate on the back of pure capitalist pursuits, Howard’s company is one that invests solely on projects that yield both financial gains and positive social impacts. The young Buffet insists that the two can and must go hand in hand.
His company is called “i(x) Investments” and is driven my a simple mantra. The company believes that “capitalism is the most powerful force on the planet…. if a company builds and invests in businesses that have an explicit social purpose, it can create a sustained change in the world on a scale we’ve never imagined.”
i(x) Investments provides capital to companies with proven technologies but without the means nor wherewithal to scale-up to a global level. They help companies gain access to markets normally inaccessible to them by tapping into their vast network of top-level decision makers, management expertise, and of course, by infusing large amounts capital. So far, their investment portfolio include businesses involved in renewable energies, LEED certified real estate projects, ecologically friendly agro-industries, and companies that promote gender equality, among others.
Research shows that companies that yield positive impacts are more sustainable than those whose sole purpose is profit.
Howard is in partnership with another heavyweight in the global investment scene, Trevor Neilson. Trevor was the CEO of the G2 Investment Group, an affiliate of the $350-billion Guggenheim Fund. Prior to that, Trevor served as the director of public affairs for the Bill & Melinda Gates Foundation and the office of former President Bill Clinton.
Trevor is married to Evelin Weber who is half Filipina. Evelin is a philanthropist who heads The Philippines Foundation. The power couple were recently in Manila and I had a chance to enjoy an afternoon of chat with them.
i(x) Investments is a permanently capitalized holding company that provides individuals and institutions with the opportunity to invest in meaningful pursuits.
Socially relevant investments is the trend among individuals with billions of dollars in net worth, says Nielson.
For the likes of Bill Gates, Amancio Ortega, Bernard Arnault, and even Robert De Niro, they invest not only to gain financial returns but more so, to make an impact in the state of the world. Their lot is enormous. In 2013, as much as $6.57 trillion was invested in socially responsible endeavors.
As a matter of policy, however, i(x) Investments does not declare dividends. Instead, it reinvests its earning to compound its growth and social impact. Investors exit the fund by selling their shares at a handsomely appreciated value.
The beauty of i(x) Investments is that it has built systems to precisely measure the social impact of their projects. In one glance, investors can readily see (and appreciate) how many lives have improved and how much the degradation of the environment has been retarded as a result of their investments. For those who invest in i(x), returns line both the pocket and the soul.
The Neilsons are committed to help in the development of the Philippines. What is appalling to Trevor is the sheer amount of trash generated by our cities and how much these pollute our sewerage systems, air and waters.
Case in point, the city of Manila alone produces a staggering 8,600 tons of waste a day, nearly the same amount of trash generated by the whole of Singapore. The entire Metro Manila produces 35,000 tons of garbage daily, three times the amount produced by New York City. Metro Manila’s trash goes directly to our landfills, if not dumped in Manila Bay and Laguna de Bay.
Even more worrying is the fact that Metro Manila produces the world’s largest amount of non-biodegradable plastic. Plastic waste find their way in the digestive systems of marine life and nostrils of turtles, invariably poisoning them.
Trevor has his eye on solving this problem.
Fortunately, one of the companies in i(x) Investments’ portfolio has the technology capable of turning trash into fuel suitable for aviation applications. Thermochem Recovery International, an American company, is the owner of the technology but is only interested in operating in the US. i(x) Investments has licensed the technology for worldwide rollout. It is now in the final stages of building its trash-to-fuel refineries in Mexico, Colombia and Argentina.
Trevor’s intention is to build the fourth refinery in Metro Manila, in partnership with a Philippine based company. Funding, in whole or in part, can be provided by i(x) Investments.
With the amount of trash generated in Metro Manila, the intended refinery will be capable of producing as much as 212.7 million gallons of aviation fuel per year. At the present rate of approximately $2.26 per gallon, this represents a resource worth $480.7 million which is otherwise “rubbish”.
This year, Philippine Airlines will consume 462 million gallons of aviation fuel for its operations. I suspect Cebu Pacific will consume the same amount, if not more, given the size of its fleet. Between the country’s two principal carriers, the entire output of the intended refinery will be spoken for.
In fact, three more refineries of the same capacity are warranted just to meet demand.
The Philippines is an importer of 99.8% crude oil that produces jet fuel. One can imagine the savings on import costs on a national level.
Aviation fuel produced from trash is cheaper than those produced from crude oil. The savings translates to better profits margins for airlines. This, in turn, will allow them to lower ticket prices to the benefit of the riding public.
More significantly, this type of aviation fuel emits 70% less carbon than oil-based fuel. This bodes well for most international airlines which are co-signatories to the Paris Agreement on Climate Change and committed to lower their carbon emissions. Using biofuel is a win-win situation, emission-wise and profit-wise.
In terms of land-based pollution, having the refinery to absorb Metro Manila’s trash will ease the inundation of our landfills. This will decrease the carbon emission from burning waste and lessen stray trash from polluting our lakes, rivers, and seas.
i(x) Investment’s proposed refinery in the Philippines is both timely and desperately needed.
Fortunately, they are already in talks with a local conglomerate that has a footprint in land-side aviation and power generation. Let’s hope the talks come to fruition. The nation will greatly benefit from this. Watch out for updates on this space as I monitor the progress of negotiations.
Andrew J. Masigan is an economist
(The title of this piece has been changed. It has also been corrected to reflect the correct spelling of the name of Mr. Howard Warren Buffett. Our apologies to our readers and Mr. Buffett.)