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The Purpose of CapitalRoss Net Impact Conference: Purpose Driven

ProfitsOctober 13-14, 2011

Understanding system transformation

Capital Institute is about paradigm shifting.

consciousness

system

problems

CHANGE

As derived from Dr. Monica Sharma’s work at the UN

4. Finance: Critical acupuncture point

3. How we got here

1. Competing world views

2. Our UNSUSTAINABLE economic system

Agenda: “Think Different”

5. Regenerative Investment: Grasslands, LLC

1. Competing world views

After 500 years of progress based on the Cartesian logic of the Enlightenment…this is our Copernican moment

Reductionist

Western View

HolisticSystems

View- Economy exists apart from nature and - Web of life: one system with multiplesociety as monetary phenomenon subsystems (holons); hierarchy

of wholes is critical

- Progress: Perpetual material improvement - Phase transitions, emergence

- “Invisible hand” analogous to natural law - Adheres to laws of thermodynamicsthat delivers most efficient outcome which implies absolute limits

among relative scarcities

- “Externalities” are fixable market failures - No such thing as “externalities”requiring government intervention Society needs to define a “SOS”

- Supremacy of the individual - Interdependence – all is connected

- Machine as model – mechanistic/linear - Nature as model – complexity/emergence

2. Our UNSUSTAINABLE economic system

OVERSHOOT

The global economy now uses up 1.5 times the earth’s capacity to regenerate the natural capital upon which the system and life depends.

- The Global Footprint Network

“Safe Operating Space” -- The world is full

“Safe Operating Space” - National Center for Ecological Analysis and Synthesis

UNCERTAINTY SPIKE

Symptoms of an unsustainable system overwhelm our senses with crisis upon

crisis

2b. rising inequality is UNSUSTAINABLE

Symptom: Increasing Wealth Inequality

http://www.inhabitat.com/2010/10/14/worlds-largest-and-most-expensive-family-home-completed/

Wealth Disparity:•2% of population Controls > ½ the World’s Wealth•50% of population controls < 1% of World’s Wealth•Income gaps between rich and poor > 2X in last 50 years Spain

Denmark

Norway

Finland

Sweden

NetherlandsSwitzerland

Belgium

Germany

Austria France

Canada Italy

Australia

IrelandGreece

New Zealand

UK

Portugal

Japan

USA

Better

Low Wealth Gap

Wel

lbei

ng

Worse

High

Wilkinson & Pickett, The Spirit Level (2009)

Wealth Gap vs. Wellbeing

Capitalism and democracy demand trust

Inequality lead to the Financial Crisis

Paul Krugman: “Inequality and Crisis: Coincidence or Causation?”

3. How we got here

Our economy has become an anti-economy, a financial system without a sound economic basis and without economic virtues.

- Wendell Berry

Economic Efficiency

Economy

Finance

What’s wrong with this picture?Desired Outcome

Planet

The most important chart

in the world…

Sustainability Optimum

Efficiency

100%

0%

Resilience

Source: Lietaer, Ulanowicz, Goerner 2008

Sustainability in Natural Systems

Collapse of Financial System

4. Finance: Critical acupuncture point

What are the “First Principles” of sustainable economics?

• Bruntland Report, 1987: “Sustainable Development”

• Dematerialization through efficiency

- Jevon’s Paradox• Weak vs Strong

sustainability

“First Principles” of sustainable finance: What’s your impact?

• Relative scarcity vs absolute scarcity

• Real vs virtual wealth: the exponential function

• Finance practice: what is “value”?

Unsustainable

SRI/ESGGreen

Sustainable

RestorativeRegenerative

Resiliency: Driving financial capital upstream

http://3.bp.blogspot.com/_o0s746IzxZQ

/TJwM

EtnPvsI/AAAAAAAAAWo/lX-2e-w

PZzo/s1600/upstream

.jpg

Regenerative Investing: Grasslands, LLC

A Holistic Management Enterprise inPartnership with Savory Institute

• Alan Savory won the Buckminser Fuller Award in 2010

• Ranch management contracts, owned and third party• 55,000 acres under management in S. Dakota and

Montana• Expansion in Great Plains, New Zealand, Patagonia

• 12.5 billion acres — (~40% of total landmass)• ~1 Billion people, many poor, make their living

as pastoralists

The World’s Grasslands are The World’s Grasslands are VastVast

Peak Soil?

•Soil is second largest carbon sink after the oceans

•According to James Hansen, the atmosphere contains 800Gt of carbon, plants 600Gt, and soils contain 1500Gt

•We’re losing about 24 B tons of soil per year

Nature Provides the SolutionNature Provides the Solution

Impact Investment: What we feed, GROWS

Wyoming – both photos taken same dayWyoming – both photos taken same day

• Left-side upstream, managed holistically (260% inc in livestock over 10 years)• Right-side is downstream land managed ‘conventionally’

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