Diving in the Maldives – ESG & The Power of Incentives

Diving in the Maldives – ESG & The Power of Incentives

I am coming to the end of my holidays, where I spent a week scuba diving on a boat around the Maldives and then a few days relaxing on a resort Island.

Our Boat

The reefs are  beautiful.

Everything you see in the ocean is supposed to be there.

Marine life is healthy and stunning.

Our Resort Island

The reefs here are not as good and sadly there is a lot more in the ocean that does not belong – higher population and more waste (sadly often from the guests).

The resort has recently employed a Marine Biologist to clean and repair the reefs.

Now, I am no environmentalist – you won’t find me with the Extinction Rebels preventing people from getting into work. But I did get thinking about the power of incentives and the value of awareness – something us investors acutely recognise.

Thanks Vivek – this is an investment blog!

Specifically, I am sure we have noticed that well known / hotter stocks tend to be valued more highly than their counterparts. And investors tend to study management incentives – incentives are another important theme in environmentalism.

With respect to incentives: I certainly want to look at the terms and targets around share option schemes. It’s probably the main thing I am looking for in the annual report (see my article on DotDigital where I raise a concern around this).

I have also been listening to “Charlie Munger: The Complete Investor”, which is a collection of his speeches and letters. One of the facts that stood out, is that despite the autonomy $BRK gives to the managers of their investees, one of the items that they retain control of is compensation.

I have dived in a few different parts of the world, some good and some not so good. In the good, I can see the incentives and awareness at work.

The Maldives is known for the quality of diving – the government, the locals and the resorts are putting in substantial effort (perhaps more than they can afford) to conserve and repair the environment. The locals are not well off when you consider the cost of living, but with government support, they are doing their best to ensure sustainability.

I believe these behaviors are driven by the financial incentives in place. Tourism and Scuba tourism are big drivers of the economy – a powerful incentive to make sure that visitors have positive experiences and keep coming back.

Of course, the locals are very aware of what the ocean brings to them and perhaps that is why they value it so highly.

When I first started diving, it was in the Great Barrier Reef (before GoPros – in my case, cheaper Chinese copies of GoPros existed!)

Absolutely stunning and well looked after – incentives & awareness strike again to ensure the place is highly valued and looked after.

Barbados vs St Lucia

Barbados has stunning beaches, but the ocean is dirty – more plastic cutlery than fish. People visit Barbados for the beaches, not for the diving.

St Lucia, on the other hand – this is a great diving spot in the Caribbean. Dive leaders (and divers if they are comfortable) are asked to pick up anything they see that does not belong down there. Policies are in place to prevent over fishing and clean up programs are in place – very different to Barbados where trash is left to its own devices.

The difference in two islands fairly close to one another geographically and culturally is stark. St Lucia is poorer than Barbados, but the effort greater.

In Closing…

I am no expert on ESG Investing and there are multiple factors at play as far as my experience is concerned, not least the location and nature of the ocean itself, but it got me thinking.

If climate change and plastic and other pollution are some of the biggest challenges facing humanity, it would be more effective to ensure the right incentives are in place and awareness is increased.

Awareness has certainly increased during my lifetime, but maybe disrupting individuals in their day to day lives or criticising entire countries and governments for their lack of action are not the right incentives.

At worse, these risk alienating the very people that need to be motivated.

I hope with the articles and videos, I have made a small contribution to increasing awareness. If I have bored you, perhaps the videos below will make up for it.

Spoiler alert – there was a professional crew at the Manta site (their videography skills I imagine are somewhat better than mine, or at least they have better equipment!).

PS – suggest watching the videos without sound, unless you really want to hear my breathing or screaming through my regulator like a little girl!!

PPS – If you do want to do a liveaboard in the Maldives, I strongly recommend CarpeDiem – thanks to the crew and guests on board for a fantastic week.

Video Footage

Drones are cool

Manta – Sorry Blue Planet

Nurse Shark – super cool and really safe – still scary when they come at you!

 

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Andrew Latto
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Very interesting article. Essentially about incentives I guess. I am a greenie and hope we can become better. I think Costa Rica is also very green. There probably is an extra cost in terms of higher energy prices etc. Someone like Elon Musk is making greener technology a reality. Global population growth is a challenge that will have a long-term impact.

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