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San francisco tellus_ci


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San francisco tellus_ci

  1. 1. Redesigning Finance:Pathways to a Resilient Future San Francisco, CA August 9, 2012
  2. 2. 1. Context:Not your grandmother’s SRI/ESG talk2. Long View Implications for Investors:This time IS different3. Public Policy Implications:Not for today
  3. 3. Anyone who believesexponential growth can go onforever in a finite world is eithera madman or an economist. - Kenneth Boulding , Economist, Quaker, Co-Creator of General Systems Theor y
  4. 4. The most powerful force in theuniverse is compound interest. - AlbertEinstein*
  5. 5. May 30, 2011
  6. 6. Exponential growth leads to ecosystem crisis”Safe Operating Space”, J. Rockstrom, National Center for Ecological Analysis and Synthesis
  7. 7. Ecological Overshoot: We use 1.5 planets ”Footprint
  8. 8. We know what sustainability looks likeSustainability Optimum100% Collapse of 0% Financial System Resilience Efficiency Source: Lietaer, Ulanowicz, Goerner 2008
  9. 9. Economic What’sDesiredwith this picture? wrong Outcome Efficiency Finance Economy Planet
  10. 10. 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
  11. 11. Money, Banking, Finance & Investment: Designed for growth
  12. 12. Landing the plane will be a turbulent affair
  13. 13. 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 choiceSource: Potsdam Institute and “Unburnable Carbon”, Carbon Tracker Report
  14. 14. $20 Trillion of denial goes a long way…
  15. 15. 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?
  16. 16. Financial reform: Rearranging deckchairs May 26, 2011
  17. 17. 1. Context:Not your grandmother’s SRI/ESG talk2. Long View Implications for Investors:This time IS different
  18. 18. 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
  19. 19. 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
  20. 20. ESG framework: Integrated reportingUnparalleled Leadership: Jochen Zeitz2010 Earnings: Euro 202mm2010 “E P&L”: (Euro 145 mm)
  21. 21. Investment principles for theAnthropocene • Long run versus trading • Reassert owner responsibility: Active concentrated ownership of resilient cash flow/dividends • Diversify systemic risks across asset classes
  22. 22. 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
  23. 23. “It’s all a question of story. We are in trouble nowbecause we do not have a good story.” - Thomas Berry
  24. 24. Investment is the bridge to the economywe need. And the steering wheel. We are called to be the architects of the future, not its victims. - R. Buckminster Fuller
  25. 25. Thank you