Fast Company recently ran an article on Building the Business Case for Doing Good, a topic that’s obviously right up our alley. So we were very pleased to be among the companies that the author reached out to as she was putting it together. The topic was workplace philanthropy, and Natural Investment Managing Partner (and Resilient Investor co-author) Michael Kramer outlined NI’s 1% giving program, whereby our collaborative team of independent advisors decides where to direct their portion of the annual gifting. Thanks to Fast Company for including us!
A quick and simple think piece on reducing consumption caught our eye this week. 9 Intentional Ways to Challenge Consumerism in Your Life addresses a topic that lies at the heart of resilient investing’s Zone 5 (Tangible Assets/Sustainable Global Economy), yet one that we rarely take the time to really grapple with. Joshua Becker, author of Simplify and Clutterfree with Kids offers up (you guessed it) nine themes to consider, and the comment thread that follows is also rewarding. His core thought is the one in our headline: mindless consumption always becomes excess consumption. If this triggers a twinge for you, then you’d probably benefit from taking a look at what Becker has to say. These two struck us as especially fruitful:
Root Capital is a well-established nonprofit social investment fund that focuses on small farm businesses in the developing world. They lend capital, provide training, and build the local market ecosystems that can help these small and growing businesses thrive. Like many others, Root Capital is rallying around the idea of resilience as a practical and powerful way to respond to the uncertainties of our changing climate. Their new Issue Brief addresses this head-on; it’s called Investing in Resilience: A Shared Value Approach to Agricultural Extension. As they note in the Executive Summary:
The science is clear: climate change is coming. What is less clear is how climate change will impact specific farmers, supply chains, or countries over different time horizons, and how stakeholders should prepare for these impacts. . . . This issue brief focuses on scaling the use of climate-smart practices among smallholder farmers by working through local agricultural enterprises, such as farmer cooperatives or processors. Aggregating hundreds or often thousands of dispersed smallholder farmers, these enterprises represent a significant, but often overlooked, channel for delivering “last mile” agricultural extension – that is, services that provide farmers with the information and skills they need to improve their farming practices.
Here’s a biomimicry-inspired vision for creating a global network of community credit organizations as an evolutionary new underpinning for the global financial system, currently centered on huge banking outfits. It’s by Jamie Brown-Hansen, managing director of Biomimicry Switzerland. Community Credit: The Next Generation of Financial Architecture
We’re psyched that this month’s Financial Advisor magazine includes a feature on our company, Natural Investments, under the title Rebels With a Cause. It provides a solid overview of what we do and why we do it. The author spoke with Michael and Christopher, along with two of our long-time NI colleagues, Susan Taylor and Scott Secrest, about the expansion of the company over the past couple of decades. As Michael explained, “We get approached periodically (by advisors who would like to join the company) and we’re very selective because we want to make sure it’s the right fit with our very small company. The people we bring on really have to walk their talk and not just see this as business. We want people where this is really core to who they are because clients want us to be leaders in social and environmental change. ”
And Susan expressed our core purpose very well here:
We’re in this industry where standard Wall Street thought has, in my opinion, defined capitalism in an extreme way. And we have lots of clients who are longtime activists and social critics who question whether they should even be in the stock market. We live between those two perspectives.
I think extreme capitalism, where profit is the only thing that matters, isn’t the way capitalism was intended. Our planet and social structure can’t survive with that version of capitalism. That’s not sustainable in the long run on a social or mental health model, or any way you look at it. How do we take what works with capitalism and make it better, and make sure human and environmental health have a priority that supersedes profits? Yes, profits matter, but it can’t matter exclusively.
One of the key drivers to the development of the resilient investing system is the recognition that we can no longer count on the steady long-term growth of the stock market to be the driver for growing our assets. Frequent extreme volatility, with the market struggling to keep up with inflation over the course of a decade of downs and ups, as well as uncertainty about whether ecological limits, increased costs of scarce raw materials, or social unrest will undermine the steady-growth machine of the global economy, all led us to step back a bit and look at ways to “wean from Wall Street.”
Still, even in a year of sputtering markets and big global economic disruptions, the S&P 500 is holding steady, so that’s a good thing, right? Well, maybe, maybe not. It turns out that five companies (yup, 1%) are responsible for keeping the ship on an even keel. If we disregarded the big years from “mega-cap” companies Amazon, Alphabet/Google, Microsoft, Facebook, and GE, the market would be down 2.2%—and unless you hold some of the big winners, you may be down as well. Amazon is up over 100% year-to-date and the other four are up 16-40%, while the rest of the “gang of 500” underperformed so much that the index as a whole only eked out a 0.06% gain.
Just another reminder that resilient investors will want to continue to pursue a much broader approach to diversification than simply having your eggs in a range of Wall Street baskets. Our book The Resilient Investor discusses ways of weaning off Wall Street that include community investing, a focus on personal and tangible assets, and a wide range of related strategies.
Alex Steffen recently gave a keynote talk at The Nature Conservancy’s annual trustees meeting that could serve as a statement of purpose for the Dreamers and Drivers among us who continue to believe that we can find our way through the eye of the historical needle. It’s in the form of a talk to a conservation gathering a hundred years from now, looking back:
We’ve lost so much. We came far too close to losing nearly everything. If things went on as they were, we might have.
Instead, we live today on a healing planet. Yes, much has been lost, but much was saved or restored or reinvented, and what was saved and healed and made anew has become a powerful legacy.
Those gifts became the seedbeds from which sprouted our new world. That we have so much left from which to coax a long and bountiful tomorrow is no accident. Those seeds of hope were saved and planted and tended to by people who made the decision that they would live as if the future mattered. As if nature mattered. As if we mattered.
These were visionary people. Responsible people. Courageous people. All around the world, our best ancestors took up the challenge of leaving a different, bolder legacy, one not of error and loss, but of leadership, stewardship, innovation.
Take five minutes to soak in Steffen’s vision of how we became the ancestors who, “when they understood the planetary crisis they faced, their answer was not cynicism or surrender, but to seek out others and together meet that crisis with action.” It’ll perk you up for another day of doing what we can today to assure that our descendants have a future worth living in. (That final link is another compelling essay, in which Steffen makes the moral case for not giving in to despair.)
We all recognize the plusses and minuses wrought by the industrial revolution. But how many of us are tuned into the potentially even more transformative potentials of the current Industrial Evolution? The venerable eco-media site Grist is putting a new, more human spin on some of the same territory covered by the folks at Singularity (the techno-zeal of which can sometimes be more than a little discomfiting, even as it inspires). Grist’s Industrial Evolution series starts with this statement of purpose:
What if we were on the brink of a sustainable tech revolution, and we didn’t even know it? Not the kind of revolution that would put solar panels and low-flow shower heads in every home in America, but one that would fundamentally change how our technologies interact with the natural world?
Thanks to recent advances in biotechnology, we can now engineer biological systems like machines. And thanks to advances in sensor technology, wireless networking, and materials engineering, we can build machines that act biological. Together, these trends could usher in a more sustainable future — one where our built world seamlessly integrates with the environment, rather than disrupts and destroys it.
But that will only happen if we develop these new technologies in a conscientious and responsible way. In this series, we speak with a group of individuals who are doing just that. They’re scientists, artists, and thinkers, and they see a high-tech, sustainable future on the horizon.
There are ten articles in the series so far, with more continuing to be rolled out. Check it out!
Following up on this post from a couple weeks ago, here are two more striking indications that fossil fuel investing is becoming a losing game. An analysis by Canadian research company Corporate Knights has found that 14 of the world’s largest institutional investors would have done much better over the past 3 years if they had divested from their major fossil fuel holdings and expanded investment in environmentally-oriented companies they already own. The fourteen have a collective total of just over a trillion dollar in holdings, a figure that would have been 22 billion dollars (2%) higher had they divested. The Bill and Melinda Gates Foundation was especially hard-hit; it totals about $40 billion, and left $1.9 billion (4.6%) on the table by sticking with its fossil fuel holdings. The divestment criteria used is similar to the earlier comparison using the S&P 500 as a benchmark, targeting the Carbon Underground 200 (companies that have the largest as-yet-untapped reserves of coal, oil, and gas), plus utilities that generate more than 30% of their power using coal.
Meanwhile, MSCI, one of the world’s leading providers of financial indexes, made a simple tweak in its All Country World Index (ACWI), simply dropping 124 companies that have large reserves of oil, gas, or coal on their books. The resultant fossil fuel free global index outperformed the ACWI by 60% in its first year (gaining 6.5%, versus 4.1%). Tom Kuh, head of ESG indexes for MSCI, stressed that “Carbon is increasingly becoming a factor that investors are looking at in understanding risk in their portfolios.” Responding to this concern, MSCI will be providing carbon footprints for all of its indexes beginning next year.
There seems to be no shortage of “practical visionaries” with big ideas about how we’re reshaping our global and local economies to be more just, ecological, and responsible. A joint initiative of EcoTrust and e3 (economists for equity and the environment) called Future Economy is producing reports that seek to answer the key question about such initiatives: are they mostly hype and hope, or are they something really new that’s emerging and can make a large-scale difference?
The first minute or so of this video gets at the purpose here:
Hovering around the edges of the ongoing global conversation about climate change is the (specter)(promise) of geoengineering. Many of us are (cautiously hopeful)(deeply unsettled) by the whole idea. How about you?
This is one of those topics that every (informed)(caring) human will want to stay in touch with over the coming decade or so. It’s hard to imagine a 2025 scenario short of total breakdown in which the need to compensate for our decades of feet-dragging hasn’t pushed geoengineering into the center of public discourse.
In the spirit of staying informed, this recent interview with Oliver Morton of The Economist is one of the best quick overviews that I’ve seen in the past year or so. For starters, he reminds us that climate is not the first global system that we’ve purposefully engineered:
The fossil fuel divestment movement has faced some fairly stiff headwinds from institutional money managers who insist that universities, foundations, or individual investors will suffer financially if they choose to forgo investment in energy companies that have, historically, been among the best-performing stocks to hold. But a recent analysis by Fossil Free Indexes paints a very different picture: if you take the S&P 500, and remove companies that are among the Carbon Underground 200 (companies that have the largest as-yet-untapped reserves of coal, oil, and gas), replacing some of them to maintain a balanced portfolio, your investment returns can be higher than they’d have been if you stayed on the business-as-usual path. Applying this criteria to the past ten years, you’d have earned about an extra 1% per year. This includes several years early on when the fossil fuel free approach slightly underperformed; it appears that in recent years, you’d have done much better than that (e.g., more than 2% a year over the past 3 years):