The Resilient Investor lays out a dynamic framework that anyone can use to enhance personal, community, and societal resilience. But the book is only a starting place; this blog will keep you current with our latest thinking, and plugged into the exciting, evolving global conversation around facing our uncertain future.
We’ll be digging deeper into several core areas—living resiliently, new opportunities across the Resilient Investing Map, and a range of viewpoints on future scenarios—and we’ll also be engaging with others, sharing the best of what we come across online and adding our two cents to their thoughts. We’re hoping to spur some conversation around these topics, so feel free to chime in, either in comments or by sending us an email. Thanks for joining us!
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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):
Co-author Christopher Peck was recently interviewed by Pat Lynch of WomensRadio, in advance of his upcoming talk at the San Francisco Green Festival. In a nice concise thirteen minutes, he introduces the core principles of resilient investing and offers a quick overview of his career as a holistic financial planner. Listen below, or on the WomensRadio site.
Michael Kramer also offers a great, brief overview in a recent interview at the Sustainability Unconference in his home state of Hawaii; click through to hear his summary of the system, and take a look at this short article that illustrates the system as well. Stay tuned to the end to witness the historic first utterance of what’s sure to become a major socio-philosophical movement (or Muppet character?) when Scott Mooney of Triple Pundit dubs Michael an “apolocaloptimist!”
I have long advocated for deep energy retrofits; as we developed the resilient investing system, this became an obvious Zone 4 activity (tangible assets, close to home). “Remodel your house so that it uses dramatically less energy,” I’d proclaim, “It’ll be more comfortable, and you can save money and the planet at the same time!” Experts like McKinsey assured me that insulation and heating systems pay off very quickly. After two years of actually tackling it at our house, the practicalities are—surprise!—a bit more complicated.
When you take a closer look at an older house you don’t see just outdated insulation; you also see drafty windows (and possibly mold), and a
Did you know that Calvert Foundation’s new Vested portal has lowered the entry point for its social investment opportunities to $20? Social impact investing is one of the best ways to get real bang for your buck, but until recently there were few options for people with modest savings to participate. Most impact investments are risky enough that they’re only available to accredited investors, though local and regional loan funds and Calvert’s Community Investment Notes made it safer by bundling many social-impact projects into a mutual-fund-like packages. Still, depending on the outfit, minimum investments were generally $1000 or more.
Vested opens these doors much wider, and offers beginning investors a wealth of choices: you pick the amount of your investment, and the term, as well as the type of social impact you’d like to have. Investments for 3 years or longer pay interest rates comparable to or higher than most savings accounts. Most exciting, you can choose from an array of targeted purposes, and with the low entry point, it’s easy to spread your money around a bit into several areas of interest. Familiar themes like women’s empowerment, microfinance, and small businesses are augmented by other intriguing areas of focus, including aging and education in the U.S. or fair trade overseas. For those who want their money to make a real difference in the world, this kind of direct investment in on-the-ground initiatives has far more impact than buying shares of even a do-gooder company. Your social returns are significant, while your money makes roughly what it would just sitting in your bank.
We’ve long urged readers to expand their view of investing to include focus on growing local economies and their own personal and tangible assets; we often use the phrase “weaning off Wall Street” to evoke these broader horizons. Still, we and most of our clients remain substantially invested in the stock market, even as we seek ever more ways to diversify into all nine zones of the resilient investing map. In the spirit of looking beyond such readily visible horizons, though, let’s hear from a couple of financial pros who have taken a more radical leap, revamping their entire approach to financial assets in ways that led them to walk away from Wall Street and never look back.
RSF Social Finance has gone all the way, divesting of all publicly traded stocks and bonds, rejecting the institutional standard for setting interest rates, and—interestingly, the hardest of all to complete—severing their ties to too-big-to-fail banks. President and CEO Don Shaffer explains:
(As) Einstein famously said, “We cannot solve our problems by using the same kind of thinking we used when we created them.” Wall Street is tethered to only one kind of growth, the most relentlessly efficient kind. . . . Are there other ways to structure investment portfolios that are valid for the 21st century?
Shaffer challenges the idea that we need to accept our embeddedness in the system as it is:
What this means in practical terms is that Gore and his Generation colleagues have done the theoretically impossible: Over the past decade, they have made more money, in the Darwinian competition of international finance, by applying an environmentally conscious model of “sustainable” investing than have most fund managers who were guided by a straight-ahead pursuit of profit at any environmental or social price.
Convincing quotes from three experts all seem to agree this flies in the face of conventional wisdom. Where have they been? When we wrote Investing With Your Values in 1999 (published by Bloomberg, not exactly a fringe outfit), there was already a solid track record of clear parity and frequently out-performance by SRI funds; our own Jack Brill had completed a 5-year New York Times mock-management quarterly feature, running a strong second with the only SRI portfolio. Indeed, the co-authors of our new book were in the audience at the annual SRI Conference in 2005 when David Blood, who had recently launched Generations Investment Management with Gore, told the gathered crowd, “You were right. You’ve been right for 25 years. Incorporating social, environmental, and corporate governance considerations into the stock selection process adds value.” We were happy to welcome Blood to the club in 2005, and we’re surely excited that Generation’s first ten years of results can be added to the steady stream of mainstream reports confirming and expanding on the message that socially and environmentally responsible firms outperform their values-neutral peers.
UPDATE: Fallows generously excerpted this post as part of his ongoing followup thread on the Gore article that features reader feedback. We’re flattered and pleased to be part of that dialogue.
One of Generation’s favorite metaphors also struck us close to home: the idea that looking beyond the narrow question of financial performance to consider a broader “spectrum” of information provides a stronger foundation for making investment decisions. Each of our last two books has explicitly aimed to expand our view of investing,
At a conference this summer, Building Climate Resilience for Equitable Communities, Shaun Donovan, Director of the Office of Management and the Budget, announced a slew of new White House climate resilience initiatives that are targeted to helping communities at risk and reduce the inequity that has become a major source of social instability. He asked:
“Why are some children less likely to go to college, find good-paying jobs, and stay out of the criminal justice system? Why do those who have the least stand to lose the most when the storm comes through?”
Donovan went on to outline several programs that address these questions, through the lens of federal efforts to increase resilience in the face of climate challenges, including
Highly efficient, tight homes that stay cool in summer and warm in winter with little or no outside energy have been a “thing” in recent years. However, the relatively large up-front investment left this breakthrough as yet another green lifestyle option for the well-heeled. That’s rapidly changing, though, with the opening of large apartment complexes utilizing the German passivhaus approach to design. Portland, Oregon’s smattering of high-end private “passive houses” have now been joined by the The Orchards, an affordable housing complex of 57 apartments:
“Every day I find a new reason to love it,” gushes Georgye Hamlin, whose one-bedroom apartment is as noiseless as a recording studio. “It’s cool, it’s quiet, and I don’t even hear the train. During the heat wave, my girlfriend came over to sleep because it was so cool. Yay for German engineering!”
Cornell University has broken ground on the world’s biggest passive building, a 350-unit apartment house in New York City, where Mayor Bill DeBlasio is laying out an urban vision built around this kind of building:
A key to social resilience in the coming decades will be providing fair and reliable access to water. And now is the time for resilient investors to consider how they feel about private companies taking the lead in making it so. A recent NYT article introduces some of the key players in one of the leading edges of this hot-button topic, parched California:
“Water has been taken for granted, but reliable access is no longer guaranteed,” said Disque D. Deane Jr., a Wall Street veteran who runs Water Asset Management. “It will be seen as an asset class that will be allocated in portfolios like health care stocks or energy or real estate.”
The article does not touch on the most contentious issue, privatization of municipal water systems. Instead, its focus is on desalination plants and delivering underground reserves in the Mojave to coastal cities. Social and environmental considerations are likely to be deployed by both advocates and critics of projects like these; it’s bound to be another issue that splits the establishment green community (as have GMOs, nukes, and larger ideas like ecomodernism); so if you want to make an informed choice that reflects your own best thinking and deepest feeling, we recommend that you aim to become at least somewhat informed about the debate here.
Two recent MBA graduates in Seattle are pioneering an exciting new approach to funding local businesses. They call it Community Sourced Capital, and they’ve already funneled about $1.5 million to dozens of small companies around the country. Their innovation is that the investments are zero-interest loans; lenders expect to get their money back, but the “returns” are explicitly in the form of social benefits, ie, enhancing their local economy by helping to grow small businesses. These are mostly modest projects (funding targets range from $5000-50,000), and 98% of the loans they’ve made so far are being repaid on time. In the words of CSC Co-Founder Rachel Maxwell: “Money does not have to be about creating more money—it is a tool we can use to create the world we want.” You can learn more in an interview with the two co-founders published on
A new research paper has added resilience to the qualities that are enhanced in those who practice mindfulness—that is, maintaining a non-judgemental awareness of the present moment. The concept has roots in Buddhism and meditation, though simpler forms of “mindfulness training,” stripped of most of Buddhism’s conceptual framework, have spread widely in recent years, aiming to harness the benefits of in-the-moment awareness in the workplace and in daily life.
In the study, recently summarized in Pacific Standard, participants’ personal resilience was measured via ten self-descriptive statements, including “able to adapt to change,” “can stay focused under pressure,” and are “not easily discouraged by failure.” The researchers concluded:
Mindful people can better cope with difficult thoughts and emotions without becoming overwhelmed or shutting down.
Consider this yet another nudge in the direction we encouraged in the “Qualities of the Resilient Investor” section of our book: maintaining some sort of centering practice is, for many, a key foundation for cultivating personal resilience. From Chapter 6, Be Ready for Anything:
Over the course of a life, some combination of counseling, spiritual practice, participation in men’s or women’s groups, membership in a church community, professional development programs that include an emotional/reflective element, and extended immersions in the natural world with like-minded friends will serve to deepen your self-awareness and help clarify all the choices that present themselves to you.