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.
Tags: climate, financial assets, global, impact investing, sustainable global economy strategy
This is a one-two punch I couldn’t resist: one of my top-5 journalists recommending a powerful new essay by my favorite “recent discovery” in earth-connected literature. Even better, Andrew Revkin and Robert Macfarlane are both riffing on one of the juicier umbrella topics for thinking about our rapidly-changing world: the Anthropocene, or the idea that the human mark on the planet is likely to take its place as the latest geological epoch.
Both Revkin and Macfarlane set out to point our attention to the best of the recent writing on this key topic. Revkin, in large part, welcomes Macfarlane’s recent piece as a chance to take a break from his regular dips into the recent literature, but he adds a few of his own recent faves at the end of his column. By contrast, Macfarlane’s extended essay in The Guardian presents a rich and complex introduction to the topic. You couldn’t find a better starting point (just as you couldn’t find a better deep-dive for learning about the field than those regular dips collected on Revkin’s site). Here’s a first taste, then click through for more excerpts:
There are good reasons to be sceptical of the epitaphic impulse to declare “the end of nature”. There are also good reasons to be sceptical of the Anthropocene’s absolutism, the political presumptions it encodes, and the specific histories of power and violence that it masks. But the Anthropocene is a massively forceful concept, and as such it bears detailed thinking through. Though it has its origin in the Earth sciences and advanced computational technologies, its consequences have rippled across global culture during the last 15 years. Conservationists, environmentalists, policymakers, artists, activists, writers, historians, political and cultural theorists, as well as scientists and social scientists in many specialisms, are all responding to its implications.
Tags: climate, evolutionary strategy, future, global, learning, personal assets
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.
Tags: community investing, financial assets, global, justice
Not long ago, we featured a post that quickly summarized several global initiatives that are bringing cities together to develop effective local climate change programs. Now, in the run-up to the Paris climate talks in November, these urban government efforts are accelerating. In August, President Obama announced that 15 US cities had recently joined the Compact of Mayors, nearly doubling American participation, to 34 cities, and he challenged mayors across the country to bring that number up to 100 before Paris. Meanwhile, 12 US mayors announced the Local Climate Leaders Circle; they will be delegates at the Paris COP21 talks, representing climate action at the municipal level, and Rio de Janeiro became the first city to meet the Compact of Mayors climate goals.
Former New York Mayor Michael Bloomberg recently penned a stirring article in Foreign Affairs that fleshed out why urban leaders have the incentive to take action where national governments are moving slowly:
Tags: climate, close to home strategy, global
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
For all our encouragement that resilient investors should consider the full range of possible futures, and our respect for the array of thought leaders that inspire our archetypal Dreamers, Dealers, Doomers, Dualists, and Drivers, it really all comes down to one simple question: are we f**ked? Pity the climate scientists, who most fully understand the forces we’ve unleashed, and who spend their days (and sleepless nights) grappling with the implications. A recent feature in Esquire takes us into their world, and their homes, offering a sobering glimpse of what life is like for those among us who know the most. Says one researcher who answered that aforementioned simple question by publicly affirming that, yes, we are: “I think most scientists must be burying overt recognition of the awful truths of climate change in a protective layer of denial.” A climate activist terms it “pre-traumatic stress.” This article, When the End of Civilization is Your Day Job, is well worth the ten minute read; it’s really quite moving, and rather unsettling, since even the scientists who resist despair don’t seem to have much to offer in the way of specific encouragement.
So it was a welcome solace to see one of Andrew Revkin’s in-depth reports a few days later, on a climate science meeting attended by 2000 top researchers and policy-makers that he found “refreshing in several ways”:
Tags: climate, global, learning
While big-picture trends continue to paint a worrying picture of our future, those of us with a more optimistic worldview find solace and inspiration in the countless smaller—but socially and environmentally transformative—initiatives taking place around the world. Yes, the race between environmental calamity and evolutionary transformations is neck-and-neck, but the Dreamers, Drivers, and Doers among us see a real potential for rapid, exponential advances in the tech realm, alongside a wave of on-the-ground entrepreneurial visionaries driving rapid progress in health, education, and clean energy in communities around the world. We received a fresh dose of inspiration from a compendium of “22 of the Most Fascinating Social Good Startups Changing the World.” The common thread here is empowering individuals to create small companies that create new jobs and incomes while tackling local issues including poor sanitation, recycling, access to electricity, and supporting small farms. Click through for a look at five of our favorites.
Tags: dreamer, evolutionary strategy, global, impact investing
For sixty years, the King Bhumibol Adulyadej of Thailand has been expounding on a development philosophy he terms The Sufficiency Economy. It’s based on putting moderation and balance at the center of development strategy, emphasizing the Buddhist concept of ‘the middle path’ as a leading principle for appropriate conduct of people, businesses and government at all levels. As illustrated at the top of this post, it bears a striking resemblance to the three-tiered expansion of “self-interest” that fires what we call the invisible heart of resilience, which unleashes the real power and promise of resilient investing.
Tags: collaboration, dreamer, financial assets, global, sustainable global economy strategy
“The postwar geopolitical system is breaking down, and what comes next could be volatile—not least for the corporations that have built, cheered, and profited from the globalized economy.”
This teaser on a recent Atlantic article titled Globalization Bites Back only hints at the surprising perspectives it fleshed out, backed up by quotes from a wide array of mainstream economic analysts. The piece reinforces one of the primary drivers behind the resilient investing approach: today’s world is rife with “systemic risks,” factors that could shuffle the economic deck in ways that traditional asset diversification cannot prepare us for. A few key take-aways:
Ian Bremmer, the founder of the Eurasia Group, which advises companies on geopolitical issues, puts the situation in stark terms, noting that we’re in “a period of geopolitical creative destruction—the glue that is holding the world together no longer sticks. . . The last time this happened was the end of World War II. The level of geopolitical risk as a consequence of this transition—which is just starting—is absolutely going to be a big deal.”
“The last three years have definitely been a wake-up call for business on geopolitics,” agrees Dominic Barton, the managing director of McKinsey. “I’ve not seen anything like it. Since the Second World War, I don’t think you’ve seen such volatility.” Most businesses haven’t pulled back meaningfully from globalized operation, Barton said. “But they are thinking, Gosh, what’s next?”
“Was ExxonMobil worried about a skirmish in Georgia? I doubt it,” says Michael A. McFaul, the former U.S. ambassador to Russia. “But now companies like that one care a lot about the details of the conflict in eastern Ukraine. The conflict in Donetsk is being closely watched day by day by multinational corporations and is influencing their decisions.”
Bremmer notes that convincing companies of the value of his firm’s services was, until recently, a challenge. “There used to be a level of skepticism among top executives: ‘This is interesting, this is fun to talk about, but does it matter for my business?’ ” But they don’t say that anymore. “We no longer have to make a business case as to why what we do is relevant.”
Barton looks at the stagnation of the middle class in Europe and the US, alongside increasing focus on inequality and posits, “I think, in a 300-year time frame, this 20 or 30 years will be looked on as a pretty amazing period (referring to the past five years and the coming decades). “People are asking, ‘How does the capitalist system work? Is it right? Is democracy right?’ There are a lot of people asking fundamental questions.”
Indeed, even as we continue to be investing in the global economy, all this points to the need to stay on our toes, ready to respond nimbly to changing conditions, and considering how to be prepared for potentially profound shifts in the years to come.
Tags: global, risk
One of the key traits of a Resilient Investor is putting focused attention into being prepared. This time-honored theme is one that I explored on March 11th on the C-Realm podcast in an episode called “Ready for Anything.” In turbulent times it’s impossible to know exactly what situations we might have to face, let alone how to be ready for them. But there is great value in considering a wide range of plausible scenarios, and preparing for those that seem more likely. Last week, that lesson was brought home by the resilient people of Vanuatu, as their preparation for extreme weather paid off with priceless returns.
Eyewitness reports of Cyclone Pam were truly scary: it was one of the strongest tropical storms ever to hit land, with gusts over 200 mph. But remarkably, there were only eleven deaths from the storm. This really made me curious! Was it was just luck? Or, had this island nation pulled off a remarkable feat? Turns out it’s the latter, and from the stories trickling out it’s clear that we could learn much about resilience from their example.
The first thing to note is that Vanuatu has been actively preparing for stronger storms. For several years, the World Bank and international aid agencies have been working with the government of Vanuatu on a program aimed at “increasing resilience to climate change and natural hazards.”
Tags: climate, close to home strategy, global, resilience
A growing number of funds, brokers, and clearinghouses are directing investor capital into socially- and environmentally-oriented projects around the world. At this time, most of the investments are shares of funds, open just to accredited investors. However, some of these projects have opportunities for other investors, including limited crowdfunding, and Direct Public Offerings open to all. This is a very partial list of these sorts of opportunities.
About impact offerings
This chart from Cutting Edge Capital is a good introduction to four different types of offerings (DPO, donation-based crowdfunding, current accredited-only 506c offerings, and soon-to-be-available non-accredited crowdfunded investing opportunities under new SEC rules).
Clearinghouse of mostly-established consumer product companies looking for additional investment. At present, accredited investors only, but once SEC rulemaking is complete, plans to open crowdfunding opportunities for smaller investors.
CuttingEdgeX is a clearinghouse that lists a variety of Direct Public Offerings, in which investors purchase shares of a fund that pays annual dividends, with the principle being redeemed after a specified period. Open to non-accredited investors.
By pooling investors’ capital, Greenbacker acquires a diversified portfolio of income-producing renewable energy power plants, energy efficiency projects, and other sustainable development investments. Their net-worth and income thresholds are significantly lower than typical accredited investor limits (about 25% of the norm).
Mission Markets is a broker/dealer for impact investments of many kinds (funds, project finance, structured debt products and later stage private and public companies). Accredited and institutional investors only.
Oakland-based Mosaic uses crowdfunding campaigns and larger investments by accredited investors to fund clean energy projects. A new platform on Mosaic’s site focuses on growing renewable energy by giving people an opportunity to finance solar arrays on other people’s homes. NOTE: unless you live in California, Colorado, Oregon, Nevada, or New York, you may only invest on the Mosaic platform if you are an accredited investor.
Tags: accredited investors, global, impact investing, solar
Paul Gilding is an Australian writer, corporate consultant, and long-time activist. His book “The Great Disruption” lays out a classic Dualist vision: he sees that avoidance of the climate issue is likely to send our economy veering into the edge of the ditch, but he’s convinced that as push really comes to shove, economic and political forces will refocus and direct their efforts to avert disaster.
Paul Gilding website
Includes an ongoing series of articles tracking current events in the context of the Great Disruption.
Book: The Great Disruption
Video: The Great Disruption, How Humankind Can Thrive in the 21st Century
An 18-minute condensed version of his talk on the book’s themes
Video and Audio: Gilding’s picks of the best of his talks
Tags: dreamer, dualist, evolutionary strategy, future, global