I’ve long been a subscriber to The Atlantic, and particularly enjoy James Fallows’ contributions to their website (incredible on both China and small cities as “American Futures” trailblazers). But golly, this month’s big feature on Al Gore’s investment firm is pretty heavy on hyperbole, starting with the title: The Planet-Saving, Capitalism-Subverting, Surprisingly Lucrative Investment Secrets of Al Gore. Granted, this is par for the course in headline-writing—this post pleads guilty as well!—and Fallows’ intent with the article is mostly to get “sustainable capitalism” onto the wider public radar, and we’re all for that. Still, most of what is presented here as groundbreaking is, to our quarter-century-in-SRI eyes, old news. To wit:
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,
Tags: ESG, evolutionary strategy, financial assets, sustainable global economy strategy
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.
Tags: close to home strategy, financial assets, tangible assets
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
Tags: close to home strategy, community investing, crowdfunding, financial assets
Restoring wetlands, protecting working forests and farmland, and enhancing wildlife habitats are some of the most exciting avenues for resilient investing. Such efforts provide tangible returns in the form of regional resiliency, and increasingly, they are being packaged into traditional investment vehicles that offer reliable financial returns as well. Earlier this year, senior executives from Goldman Sachs, JPMorgan Chase, Credit Suisse, and others gathered to discuss what they see as a burgeoning market for conservation finance. “The mantra of this event is, ‘scalability, repeatability, investability’” said John Tobin, managing director and global head of sustainability at Credit Suisse. And the numbers being bandied about are certainly exciting for those of us who’ve been touting the trailblazing—but modest—grassroots efforts of various regional organizations that have, until recently, been the primary movers and shakers in this realm. Consider: while conservation efforts by governments and foundations have been funded to the tune of about $50 billion/year,
Tags: farming, financial assets, impact investing, regenerative, sustainable global economy strategy
Here’s a piece of good news that’s flown under the radar: sustainability-oriented companies are rapidly becoming mainstream leaders of the corporate world. Nine companies have crossed the billion-dollars-a-year threshold in annual revenues, and several more are not far behind. E. Freya Williams, whose recently-released book Green Giants looks at the traits and qualities that these companies share, proclaims that sustainability-driven firms are no longer “going up against with the big boys. They are the big boys.” And not surprisingly, they’ve been performing like gangbusters:
Tags: financial assets, shopping, SRI, sustainable global economy strategy
In recent weeks, we’ve seen a number of intriguing tweets and articles from the Unreasonable Group. What’s this all about? Obviously something about making positive change, not taking no for an answer. . . but how, and from what perspective? Perhaps a radical offshoot of Occupy? Nope, not quite. Not even close. It turns out that the Unreasonable Group is an umbrella for several related initiatives that aim to catalyze big money into a network of companies that are “dedicated to a new mode and new way of going about business. One that takes into account the value of all stakeholders involved, that is dedicated to transparency and vulnerability, that is pathologically collaborative, and one obsessed with leveraging profit to solve BFPs (Big F***ing Problems).” And they’re definitely thinking big, with the Virgin Group as their long-term model:
Tags: evolutionary strategy, financial assets, impact investing, sustainable global economy strategy
Media and conference mogul Tim O’Reilly has been shedding some fascinating light on the future of work and our economy, via a series of essays dubbed The WTF Economy on Medium, in preparation for a November conference billed as Next:Economy (What’s The Future of Work?). That parenthetical clues you into the tamer version of the WTF double-entendre he’s playing with—one very much in keeping with resilient investing’s core principle of keeping a close eye on the full range of plausible futures.
So far, the richest piece in the series is the second, Networks and the Nature of the Firm; this is a powerful rejoinder to the growing roar that’s pushing back on rise of the peer-to-peer economy, citing concerns about worker rights, fluctuating incomes, and other pitfalls of the new online marketplaces. O’Reilly doesn’t quite gloss over these issues, but he puts the the old models into a broader context that was new to me. In particular, he stresses the ways that the new economy is but a variation on the old franchising model, but one that replaces lots of middlemen with nimble technological platforms:
Tags: evolutionary strategy, financial assets, workplace
A recent piece in BloombergBusiness caught our eye: Giving Hippies Key to Portfolio is Not Such a Bad Idea After All. Not to say we told you so, but have you heard the one about Hal, Guatemalan shorts, and phone trades back in the day? Indeed, champions of SRI have always had reassuring results to point to, but in recent months, we’re no longer shouting against the roar of business as usual’s river of denial. A series of long-term trends reports have all come to similar conclusions: companies that embrace environmental, social, and governance (ESG) considerations outperform their more traditional peers. The chart at the top of this post is a good sample, showing two different strategies for choosing more ESG-engaged companies; over the past 7-8 years, doing so has outperformed average returns by a cumulative 12-24%. While we appreciated Bloomberg’s decision to publish our 1999 book, Investing With Your Values, we’re even more glad to see them, along with Morgan Stanley and the Harvard Business School, getting on the bus.
Tags: ESG, financial assets, SRI, sustainable global economy strategy
Here comes some more indication that Paul Gilding’s optimism about market forces steering a rapid transition away from carbon-intensive energy may indeed pan out. As Exhibit A, check out this op-ed from Hank Paulson, Secretary of Treasury for George W. Bush during the economic meltdown of 2008:
For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked. This is a crisis we can’t afford to ignore.
And that’s just his opening salvo. Yowsa! Exhibit B is even more startling; it’s a dry-as-sand financial assessment of the risks of Paulson’s “climate bubble” as it affects the world’s biggest institutional investors. Despite its “just the fact, ma’am” tone, the message is one that we can definitely get behind:
Tags: climate, financial assets, renewable energy, sustainable global economy strategy
The investment world is on the cusp of many disruptive changes, just like the world as a whole. New online tech, artificial intelligence, and sharing platforms will all shake up the status quo—and the livelihoods of investment advisors like us—far more than the emergence of online brokerages did a generation ago. There’s no telling which innovations will deliver on their promise, but this article on a new outfit called Motif caught our eye this week. The idea is that you can put together a group of stocks that target a market segment you’re interested in being invested in:
Walia gave the example of the mobile Internet: How do you invest in that trend? Jim Cramer proposed a mobile Internet index in 2009, but no one seems to have done anything with the idea. Or, say, Facebook. So far, buying actual shares of Facebook doesn’t seem to be paying off as a way to play social networking. Walia’s alternative: Buy the companies with the most likes on Facebook. (Hey, it’s outperformed the S&P.)…Notice how much money you and your friends spend at Starbucks? Buy into a motif called Caffeine Fix. See iPads everywhere? There’s a motif for that: Tablet Takeover.
Motif users will be able to create their own motifs and share them with friends—either small groups of trusted fellow investors or one’s entire Facebook friends list.
The interface is simple (see image above), and of course you can track your results to see if your bright new “fund” is a winner. Former top executives at eTrade and Bank of America are on board and they are emphasizing keeping trading costs very low, making it an appealing platform for bringing your own values, passions, and interests to bear in your investment approach. But remember, the past pleasure of your particular passions is not a guarantee of future results!
Tags: financial assets, investing, sustainable global economy strategy
The stubborn inertia of our political and energy systems in the face of stark climate change realities has been the great frustration of the past decade (or three), and is at the root of the discouragement and despair that’s growing in many of us. Our society seems intent on waiting too long to act. But Paul Gilding has become a leading voice for an alternate view, one that sees the past decade as prelude to a tipping point we can embrace rather than dread. His book, The Great Disruption, laid out his view that when push came to shove with climate change, the market and the big-monied economic elites would spur a WWII-scale refocus of the economy toward carbon-neutral energy. For the past couple of years, he’s updated the book’s themes with fresh analysis every few months, based on the latest global developments. He’s now convinced that 2015 is the year that the “Dam of Denial” breaks, and his latest missive offers further encouragement that the long-sought disruptions are at hand:
For over a hundred years, energy markets have been defined by physical resources, supplied in large volumes by large, slow moving companies developing long life assets in the context of slow moving shifts in markets. The new emerging energy system of renewables and storage is a “technology” business, more akin to information and communications technology, where prices keep falling, quality keeps rising, change is rapid and market disruption is normal and constant.
If you haven’t tuned into Gilding before, this is a great place to start. The new piece includes links to several of his key articles over the past two years, and will likely leave you feeling a tad—or a lot—more optimistic about our prospects. Read on here for a few more nuggets from this most recent article:
Tags: climate, evolutionary strategy, financial assets, future, global, investing, renewable energy, sustainable global economy strategy
Iroquois Valley Farms, one of the first ventures that raised investment monies to purchase and restore farmland, has successfully completed its initial phases and begun offering redemptions to its early investors. Going forward, investors will be able to redeem their investments any time after a 7-year hold period. The original 100 investors had bought in without knowing when, or if, they would get their money back, seeing this as a long-term investment in Iroquois’ mission of preserving and providing access to farmland. Having reached this point, Iroquois is gearing up to scale their project by raising $20 million in new investment (accredited investors only).
Since 2007, Iroquois has purchased 25 farms in Michigan, Maine, New York, Kentucky, Illinois and Indiana; 70% are being farmed by young farmers, most of them from second or third generation farming families. As with the investors, the farmers leasing land from Iroquois have the right to move forward, by purchasing the farms after seven years of working them. Likewise, they are welcome to continue leasing for as long as they’d like.
We love this model of farmland regeneration and ownership; kudos to Iroquois Valley Farms and its initial investors for showing that it can work for young farmers, for the land, and for investors. Visit their site to learn more; here are a couple of stories about farmers they’ve worked with:
Tags: farming, financial assets, impact investing, tangible assets