Money Week - UK (2021-10-08)

moneyweek.com 8October 2021 MONEYWEEK

MONEYWEEK

8 October 2021 |Issue 1072 Britain’sbest-sellingfinancialmagazine

Scandaloftheweek

OzyMedia,anonline

mediafirmfoundedby

CarlosWatson(pictured)

andSamirRaoisincrisis

after Raoapparently

impersonatedaYouTube

executive as partof an

attempttor aise $40m

from GoldmanSachs,

says TheNew York

Times. Raoreportedly

pretendedtobe

YouTube’sAlexPiper on

aconfere ncecallinF ebruary, in ordertor eassure

Goldmanthat Ozy’svideoswereperformingwell.

Ozyhas ra ised more than $80m from investors,

including philanthropistLaurene Powell Jobs and

mediagroup Axel Springer, sinceitwas setupin

2013.However ,the NYTclaimsthatthe firm has

exagger ateditsaudience andmay onlyhavea

fraction of itspurported 50 millionmonthly us ers.

Anumber ofinvestors, ad vertisers,journalists

andboard members havesince cuttieswithOzy.

Watson hasattributed the YouTubeincidenttoa

mental-healt hcrisisonthe partof hisco-founder.

On Friday,heannounced thefirmwouldclose, but

said onMonday that he will trytokeepitrunning.

Coverillustratio

n:

HowardMcWi lliam.

Photos:

Alamy;Christ ie’s;GettyImages

Fromtheeditor-in-chief...

Energyprices areon

theupeverywhere.

Here,wholesale

natural gas prices

have just hitrecord

highs–up100%

in amonth.Inthe US,petrol

prices areatt heirhighest for seven

years. InChinathe government

hasbegun to ration electricity.

InIn dia, coal supplies aresolow

(a fewdays’ worth) that power

cuts arealmostdefinitely on the

way. It rather looks, says Gavekal

research group, as if theworld

is “inthe grip of afull-blown

energycrisis ”. Thereisl otsto

thinkabout as aresult. Youmight

want to have agood look at just

howdiversifiedyourportfolio is:energy

crise shaveahistoryofo pening thedoorto

inflationaryspirals. That’s aparticularrisk

when co mbined with rising wages(seepage

12)and rising taxation (see page22).Are

youready (see page 6for howmuchmarkets

hate stagflation)?

Butthere is some thingelseyou should

do: checkthe environment, socialand

governan ce (ES G) criteria your fu nd

manager uses when it chooses –and rejects

–possibleinvestments.Theycould be part

of theprobl em.These last fewyears,ith as

beenall therageinthe investme nt industry

to signal concer nfor societybyannouncing

that youwill notinvesting rubbystuff.Only

last month,Harvard Universi tysaid it would

divest its$42bn endowmentfromfilthy

fossil fuels. It joinsanother 1,337institutions

globally, managing over $14trn,who have

made thesamecommitm ent.

That sounds nice.But as we arefinding

out, theconsequences arenot.The

immediatecausesofthe energycrise sin

differentcount ries vary,but drill down,says

Gavekal, andtheyare all dueto“ market

distortionscausedbydeliberate policies”–

policies that in largepartreflect th edesireto

go green. This is theoretica llylaudable(see

page 26 for good stuff on hydrogen). Butwe

can’tgof ully greenanywherenearasf astas

activi stsand governmentsthinkweshould.

Global energyusetends to rise at ab out

2% ayear. Andregardl essofh ow fast we

buildrenewables,wewillneedfossil fuels

as back -upfor decadestocome, notleast

because building rene wableenergycapacity

takes alot of energyin itself.AsEdward

Chancellor notesonBreakin gviews.com, it

takes four to five y ears to recoup theenergy

that goes into making turbinesand other

rene wables.Thatmeans the$16trn of green

investme ntsplanned globally

will mean concurrently soaring

demand for oil. Want clean

energy?You need dirtyenergy.

Ashame then that investme nt

in fossil fuel pr oduction and

exploration is falling sh arply(see

page 23)and that oilmajorsare

loat htoinvestinbig ne wprojects,

forthe si mple re ason that no one

will back them.Overthe lastfive

years,the worl dhas discovered

about 12 billion barrelsofo il a

year andconsumedthree timesas

much (more on thisinn extweek’s

magazine), whileglobal oiland

gasupstreamcapital spending

hasfallen from nearly $800bn in

2013 to below$350bnthisyear.

Theresultwill be unpleasant –int erms of

growth,int erms of livi ng standardsand

in termsoft he actual goal,our abilityto

efficientlyattemptourenergytransition.

So look at your fu nd manager’s policies.

They maybedivesting from fossil fuels. They

mayfeelgood about all theESG boxesthey

cantick. Theirpolicy, they will tell you, is

ESG-complian t. They’llber ight.But if that

ESGpolicyisnot practica l–if helpscreate

inflation,fallinglivingstandardsand general

misery–and if it turns thepublicagainst the

idea of thegreen transition... is it also ethical?

It’s aquestionworth asking.

“Isitreallyethicaltopursueaninvestment

policythatdamageslivingstandards?”

Goodweekfor:

HairmodelAashnaRoyhaswonnearlyRs20m(£2 0 0, 000 )compensat

botchedtrimatoneofDelhi’stopsalonsin 201 8,saysTheSun.A

consumertribunalawardedherthesubstantialsumafterhearingtha

Roysufferedaseverementalbreakdownandlossofworkwhenstaf

atthesalonattheMauryaSheratonHotelcutherhairtooshortand

damageditwithexcessammonia in atreat ment.

Universi typrof essorand former PfizerexecutiveAndrewHopkins

hasamassed a$539m paperfortuneafterhis drug-discovery

companyExscientiafloatedonNasdaqlastweekina$2.9bninitial

publ ic of fering (IPO), says TheGuardian.The firm,which was

foundedin2012att he UniversityofDundee, uses artificial

intelligence to speedupthe processofdesigning drug sand has

formed partnerships with pharma giants such as GlaxoSmithKline.

Badweekfor:

BillionaireOlegTinkov(pictured)has pleadedguiltytoUStax fraud

andwillpay more than $500minbacktaxes ,interestand fines, says

Bloomberg. Tinkov hidmorethan $1bn in assets andincomewhen

he renouncedhis US citizenship afterthe IPOofTinko ffCredit

Systems,Russia’s largest onlinebank, in 2013 –ayearwhenhedecla

netincomeof$206,000 andnet worthof$300,000.

Employees of GoldmanSachshavelosttheir pandemic mealperks,sa

the FinancialTimes. Theinvestmentbankwas givingfree breakfasts,

lunchesand ice-creamsto staffinL ondon, but thesewerewithdrawn

last month“to encouragesupportof thelocalrestaurants and

businesses”, nowthatover50% of staffhavereturnedtothe office.

MerrynSomersetWebb

[email protected]

Wantcleanenergy?Youneeddirtyenergy

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