Michael Kramer, co-author of The Resilient Investor, has been deeply engaged with all manner of green initiatives in his home state of Hawaii. Not surprisingly, he’s been on the forefront of a shift there that sees resilience as a powerful organizing principle for these efforts. A recent article he penned for Ke Ola magazine, Resilience is the New Sustainability, takes a deep dive into the reasons for this shift and lays out an array of recent programs that are moving the state in this direction. He is enthused about the Big Island’s increasing self-sufficiency in food and the fact that it’s pushing past 50% renewables in its energy mix. Living on an island in the middle of the world’s largest ocean certainly increases the incentives to accelerate these changes, and we can all learn a lot from the dynamic public and private collaborations that are making Hawaii a leader in local resilience.
Two new reports highlight the expanding adoption of Environmental, Social, and Governance (ESG) criteria among money managers, as well as the benefits to the bottom line that accrue to ESG-savvy investors.
The biennial Report on US Sustainable, Responsible and Impact Investing Trends from US SIF, the trade organization for the SRI industry, shows a continuation of the rapid adoption of ESG criteria among mainstream money managers that was noted in the previous Trends Report. In the last two years, the value of portfolios that include consideration of ESG factors has mushroomed by 69%, to over 8 trillion dollars, under the management of 777 money managers and institutional investors, and over 1000 community investing financial institutions. While the number of more active money managers who filed shareholder resolutions
Two new programs aim to get subject-matter experts linked up with local and regional governments to take on their most pressing resiliency challenges. Andy Revkin offers up his typically link-infused overview of these efforts, centered on Thriving Earth Exchange, which is networking to bring in experts to help cities with specific issues such as flood risks to food distribution systems, adapting to extreme heat, responding to drought, and many others. Meanwhile, the Obama White House rolled out a similar program dubbed The Resilience Dialogues, an “online consultative service will help communities find, use, and understand information, tools, and programs to support their climate-resilience needs.”
Both of these programs are actively soliciting requests from cities for expert guidance, and subject-matter experts willing to share their insights. If you’re active in your local community’s transition, resiliency, or climate response programs, check them out! Start with Revkin’s introduction, then dig in.
In May, the SEC finalized its long-anticipated new rule that opens the door for more investors to take part in the most exciting—and risky—realm in the investing universe: innovative startups. Previously, only “accredited” investors ($200K/yr income or $1 million in assets) were allowed to take these risks, and thus to reap the outsized rewards that can accrue to early investors in companies that are not yet available in the public stock markets.
Indiegogo announced this week that it will begin allowing small companies to offer equity investments on its platform, rather than just the rewards-based pre-sales that have been the core of crowdfunding up til now. Many small companies have used crowdfunding platforms to get rolling and prove that there’s a ready market for their new products, only to turn to the super-rich when the time came to scale up for mass marketing their innovations. Oculus, for example, raised millions from early adopters, but it was equity funders who reaped the windfall when the company was sold to Facebook for $2 billion.
In these early months, the potential is just beginning to be realized. According to WeFunder, the largest equity crowdfunding portal so far, about 55 companies have successfully raised a combined total of $12 million from small investors. WeFunder is currently hosting several dozen offerings, which range from
Acclaimed permaculture teacher Ross Mars has just released a new book that will be a valuable resource for the burgeoning crop of small farmers working on modest landholdings, as well as for people moving toward increased self-reliance on their property while maintaining their jobs away from home. As Mars notes, “Today in North America, the fastest growing forms of agriculture are small peri-urban farms of less than 20 acres growing vegetables for market.”
The Permaculture Transition Manual: A Comprehensive Guide to Resilient Living is a hefty (450 page) resource that features in-depth guidance on all elements of permaculture design and personal homestead resilience—land, labor, wildlife, energy, and your own mindset—as well as case studies of four diverse projects. We fully support Ross’s underlying respect for the value of permaculture’s insights:
Permaculture connected many streams of the world’s traditional knowledge with modern forms of science and urged ordinary people everywhere to continue that lineage of empirical investigation. The books were a prospectus for a worldwide distributed experiment in ecological subsistence agriculture for the post-industrial world.
That experiment is now over 30 years old, and I will argue that its fruits are abundant and that results have validated the original thesis well enough that we should expect it to meet the needs of a new generation of garden farmers whether they be former pastoralists settled into towns in Botswana or industrial workers made redundant by energy descent in Boston.
Not long ago, I stumbled across The Daily Yonder, an excellent website that focuses on rural economic and social issues (try their Weekly Yonder email to get a taste). This week, they featured an inspiring interview with Maury Forman, Senior Manager for Rural Strategies and Entrepreneurship for the Washington State Department of Commerce, who urges small towns and cities to cultivate an entrepreneurial culture that can entice young and middle-aged kids who left town to return to start small businesses. In contrast to the concern about “brain drain” in small towns, he says, “Let kids get out and explore. People keep saying we want to keep our kids after high school. I think we should let them go out and explore new ideas, new things, and then come back educated and experienced, so that they can start a business, and create new jobs, and live in healthier communities.”
I actually think it’s easier to do economic development in rural areas than it is in big cities. …. When you have small successes in rural, they’re big successes; the thrill is so much bigger there than it is if Seattle hires 10 employees. It’s going to make the newspaper in a rural community. I find rural communities to be easier to work with, more fun to work with, they take life a little less seriously.
Forman has also collaborated with a colleague to put together one of the best concise primers on raising capital that we’ve seen, and they’re giving it away free online. Startup Wisdom: 27 Strategies for Raising Business Capital offers succinct 2 or 3 page overviews of everything from crowdfunding to local investing clubs to grants (while also making nods to the lottery and even lemonade stands!). It won’t get you all the way to being funded, but it’s a perfect first read to help you narrow down the avenues you want to investigate further. They put this booklet together after finding that many potential rural entrepreneurs were struggling with Step 1, since “banks were not loaning to people in order to get businesses started. They didn’t like the idea. It was a risk. The whole bank idea of making bank loans just wasn’t in the banks’ interest, especially in micro-loans. That’s really what many small communities are looking for, probably under $50,000.”
Forman is offering just the kind of practical, localized guidance that can invigorate the regional vitality that is essential to the flourishing resilient economies and social networks that we envision in The Resilient Investor. Here’s to both local communities and early- to mid-career rural expatriates taking this advice to heart!
In the face of continued grim climate news and disturbing societal trends, it is increasingly clear that governments cannot marshall the resources—or perhaps even the will—necessary to the tasks before us. Increasingly, though, forward-looking investors are stepping in to help lead the way forward. Two recent reports offer some encouraging signs that global finance does indeed include many actors who are committed to the changes that we need.
Domestically, a progress report on an impact investing initiative from the White House Office of Social Innovation and Civic Participation shows actual investments to be outpacing and outperforming the initial commitments and expectations. When this private-investment initiative was announced in June 2014, they had $1.5 billion in new commitments to impact investments from private funds, foundation programs and endowments, investment banks, small family foundations, and nonprofit organizations. By the time the dust settled on the first round of planning, that total had grown to $2.5 billion to be invested over the five years from 2014-2019. The recent report followed up and found that in just the first eighteen months, through December 2015, almost half of this total had already been invested, suggesting that in the long run the goal may well be exceeded. This is especially likely when we turn to the returns coming in on the early investments, which universally have exceeded expectations. It turns out—no surprise to the SRI community—that investing in projects with strong social and environmental impact is very good business! So far, about two-thirds has been invested for social impact and one-third for environmental impact, especially climate solutions. 81% has been invested here in the U.S.
Internationally, the news is also encouraging. A recent UN report outlines the challenges before us: to meet both the UN’s 2030 Sustainable Development goals and the targets in the Paris climate agreement, $90 trillion of investment is needed over the next 15 years. This amounts to about 8% of global GDP over this timeframe, a daunting but not unrealistic goal. But to get there, it will mean marshaling the same power of private financing. As former Secretary of the Treasury Hank Paulson points out in an op-ed entitled How to Raise Trillions for Green Investments:
“The good news is that there is a global abundance of private capital. To unlock these riches, governments must create conditions that encourage private investment in clean technologies and sustainable development. With smart, well-designed and coordinated policies, financing models and instruments like bonds and incentive programs, countries have the potential to solve some of the planet’s most pressing environmental challenges while still maintaining economic growth.”
Paulson is especially enthused about the explosive growth of green bonds, which nearly quadrupled from 2013 to 2015, up to $42 billion. Of this, 40% is being deployed in China, where the government there has set ambitious green energy and building targets. The Building Energy Efficiency and Green Development Fund is a public-private partnership that will bring leading-edge technologies from U.S. companies to China to increase the energy-efficiency of new buildings there. (One more reason to NOT start a trade war with China!)
All this investment is still just the first few drops in the $90 trillion bucket, but the rapid ramping up of these and other green investment commitments suggests that the financial powers that be are finally waking up to the scope of our challenge and are ready to put their massive wealth to work making the changes that are needed. Time will tell whether it will be enough, but we’re encouraged that it’s happening on a scale we haven’t seen before.
A friend of ours from Calvert recently spotted a copy of The Resilient Investor that has a pretty sweet view of downtown San Francisco. The occasion was the 10th anniversary party of the New Resource Bank, an evolutionary financial institution that puts account-holders’ funds to work in an array of green and sustainable businesses, non-profits, and development projects. While we tend to point readers to local banks in their own regions, New Resource is an excellent option to consider if your local options aren’t satisfying. The cherry on top is that they were the first publicly-traded B-Corporation; that’s a real commitment to doing things a better way!
A new series of free online interviews with twelve leaders of the socially responsive investing movement is now rolling out, with one new interview available each Tuesday. The “Women Invested” series is hosted by our Natural Investments colleagues Malaika Maphalala and Carrie Van Winkle.
The diverse line-up of guests ranges from managers of capital management firms Green Century Capital and Trillium Asset Management to community investing champions from Calvert Foundation and Nia Community, the co-owners of Namasté Solar, the farm manager at Iroquois Valley Farms, and many others.
Check out the Women Invested site for full bios of all the featured guests as well for both audio and video versions of the interviews. You can also click through here for a preview of the bios.
We’ve been hearing about the rapid expansion of solar power, and most of us have probably noticed more rooftop panels and small community solar projects in fields. But it turns out that solar’s spread is not simply due to climate concerns or enticing economics: there’s a strong “contagion” factor, as new solar owners encourage their friends and neighbors to get on board. Check out this animation, from northern Colorado:
According to SolarCity, the largest solar installer and leasing outfit in the US:
Did you know that despite the lack of any federal laws protecting LGBT people from discrimination, three-quarters of Fortune 500 companies have policies in place to do just that? The “S” part of corporate ESG (Environmental, Social, and Governance) standards and SRI (Socially Responsible Investing) has been coming alive in increasingly dynamic ways in recent years.
This year, as three southern states passed laws that actively codified anti-LGBT discrimination, some of the loudest—and most effective—voices raised against these initiatives came from large companies. As summarized by The New Yorker:
Last month, executives at more than eighty companies—including Apple, Pfizer, Microsoft, and Marriott—signed a public letter to the governor of North Carolina urging him to repeal the state’s new law. Lionsgate Studio is moving production of a new sitcom out of the state, Deutsche Bank cancelled plans to create new jobs there, and PayPal has cancelled plans for a global operations center. In Mississippi, G.E., Pepsi, Dow, and others attacked the law there as “bad for our employees and bad for business.” Disney said that it would stop making movies in Georgia, which has become a major venue for film production, if the governor signed the bill. Something similar happened last year in Indiana, after the state passed a religious-freedom law allowing businesses to discriminate against L.G.B.T. customers and employees. At least a dozen business conventions relocated.
The article goes on to look at the ways this leadership by corporate interests upends both progressive and conservative orthodoxy. Progressives often decry the influence of business on government decision-making, but this time it’s a welcome addition to grassroots voices against regressive new state laws. Meanwhile, as the New Yorker’s James Surowiecki notes, “to many conservative business leaders, today’s social-conservative agenda looks anachronistic and is harmful to the bottom line; it makes it hard to hire and keep talented employees who won’t tolerate discrimination.”
Though we’ve long been champions of the idea that business can play a key role in reshaping society in positive ways, this vocal leadership on perhaps the leading social justice issue of the day is a welcome surprise.
A fascinating and somewhat scary article from Jeff Masters at Weather Underground paints a very plausible picture of how climate change could trigger a confluence of weather-related impacts around the globe that, together, lead to an unprecedented shock to the global food system. He fleshes out a report put together by Lloyd’s of London, which posited several events around the world, including an El Niño-driven drought from India through Southeast Asia to Australia (triggering a 6-20% reduction in key grain harvests), along with floods in the Mississippi basin creating a 7-27% hit on US grain, and torrential rains and landslides causing a 10% drop in Pakistan and the Himalayan lowlands. The addition of a couple of plant-diseases in South America and western Asia add some more 10% reductions to regional harvests, with the cumulative result being a world-wide food crisis.
We’ve had hints of this in the past, as when US floods in 1993 (pictured above) caused US corn production to fall 33%, or the 60% spikes in global food priced during two Russian droughts (pictured below); the more recent one occurred in the same year as damaging floods in Canada and Pakistan, both of which also contributed.
What’s different in the Lloyd’s of London analysis is the idea that climate change could trigger several large impacts at once. Instead of 60% increases in food prices seen in the “bad” years within recent memory, they suggest we could see global food prices leap to 4 or 5 times the norm, which are likely to trigger all manner of social upheaval and tragedy of the sort that tends to trigger us to plunge our heads into the nearest hole in the sand. . . .
It will probably say something about your own comfort with risk to hear that Lloyd’s sees this worst-case scenario as having about a 20% chance of happening during the next forty years. Even if we dodge those odds, the chart above is a reminder that one or a few modest disruptions can have a huge impact on the global food system. It seems prudent for resilient investors to have at least an awareness of these risks, and, if possible, a plan in place for how to respond if food prices spike.