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

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http://pricetags.files.wordpress.com/2008/04/800px-london_millenium_wobbly_bridge1.jpg

Redesigning Finance:

Pathways to a Resilient FutureSan Francisco, CA

August 9, 2012

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

Sustainability Optimum

Efficiency

100%

0%

Resilience

Source: Lietaer, Ulanowicz, Goerner 2008

We know what sustainability looks like

Collapse of Financial System

Economic Efficiency

Economy

FinanceWhat’s wrong with this picture?Desired Outcome

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