Redesigning Finance:
Pathways to a Resilient Future
San Francisco, CA
August 9, 2012
http://pricetags.files.wordpress.com/2008/04/800px-london_millenium_wobbly_bridge1.jpg

1. Context:
Not your grandmother’s SRI/ESG talk
2. Long View Implications for Investors:
This time IS different
3. Public Policy Implications:
Not for today

Anyone who believes
exponential growth can go on
forever in a finite world is either
a madman or an economist.
- Kenneth Boulding , Economist, Quaker,
Co-Creator of General Systems Theor y

The most powerful force in the
universe is compound interest.
- Albert
Einstein*

May 30, 2011

Exponential growth leads to ecosystem crisis
”Safe Operating Space”, J. Rockstrom, National Center for Ecological Analysis and Synthesis

Ecological Overshoot: We use 1.5 planets
”Footprint Network.org

We know what sustainability looks like
Sustainability Optimum
100%
Collapse of
0% Financial System
Resilience Efficiency
Source: Lietaer, Ulanowicz, Goerner 2008

Economic What’sDesiredwith this picture?
wrong Outcome
Efficiency
Finance
Economy
Planet

Lost in finance: So clever, so ignorant
Our economy has become an anti-
economy, a financial system
without a sound economic basis
and without economic virtues.
- Wendell Berry

Money, Banking, Finance & Investment:
Designed for growth

Landing the plane will be a turbulent affair

Stranded Assets: our $20 T “Big Choice”
• 2 degree warming limit: 565 GtC02
• “Proved Reserves” have 5X this amount
• 74% owned by States, 24% by companies
At current market value, $20 trillion choice
Source: Potsdam Institute and “Unburnable Carbon”, Carbon Tracker Report

$20 Trillion of denial goes a long way…

Ecological overshoot = Financial Overshoot
What’s the off balance sheet ecological debt?
What’s the P/E of a “steady state” economy?
What’s the debt capacity of the steady state?
What’s the unfunded pension liability of a SS?
The sustainable payout of a SS endowment?

Financial reform: Rearranging deckchairs
May 26, 2011

1. Context:
Not your grandmother’s SRI/ESG talk
2. Long View Implications for Investors:
This time IS different

Towards a Regenerative Economy
• Holistic frame: nature as model
• Redefine wealth: natural/social capital
• The humble retreat of finance
• Public interest in capital investment:
All investment has IMPACT

What’s different this time
• Schumpeter’s “creative destruction”
on steroids
• MPT built on flawed assumptions
• Index benchmarking and tracking
strategies exposed
• Diversification often a mirage

ESG framework: Integrated reporting
Unparalleled Leadership: Jochen Zeitz
2010 Earnings: Euro 202mm
2010 “E P&L”: (Euro 145 mm)

Investment principles for the
Anthropocene
• Long run versus trading
• Reassert owner responsibility: Active
concentrated ownership of resilient cash
flow/dividends
• Diversify systemic risks across asset
classes

5 Investment themes for the Anthropocene
1. Low carbon energy infrastructure -
$100 Trillion over 20 years
2. Regenerative enterprise
3. Technology
4. Emerging markets
5. Distress/opportunistic

“It’s all a question of story. We are in trouble now
because we do not have a good story.” - Thomas Berry

Investment is the bridge to the economy
we need. And the steering wheel.
We are called to be the architects
of the future, not its victims.
- R. Buckminster Fuller

Thank you