The Purpose of Capital
Ross Net Impact Conference: Purpose Driven Profits
October 13-14, 2011
http://pricetags.files.wordpress.com/2008/04/800px-london_millenium_wobbly_bridge1.jpg
Understanding system transformation
Capital Institute is about paradigm shifting.
CHANGE
consciousness
system
As derived from Dr. Monica
Sharma’s work at the UN
problems
Agenda: “Think Different”
1. Competing world views
2. Our UNSUSTAINABLE economic system
3. How we got here
4. Finance: Critical acupuncture point
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
Holistic
Western View
Systems View
- Economy exists apart from nature and
society as monetary phenomenon
- Web of life: one system with multiple
subsystems (holons); hierarchy
of wholes is critical
- Progress: Perpetual material improvement
- Phase transitions, emergence
- “Invisible hand” analogous to natural law
that delivers most efficient outcome
among relative scarcities
- Adheres to laws of thermodynamics
which implies absolute limits
- “Externalities” are fixable market failures
requiring government intervention
- No such thing as “externalities”
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
Wealth Gap vs.
Wellbeing
Worse
USA
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
Portugal
UK
Wellbeing
Greece
Ireland
New Zealand
Symptom: Increasing Wealth Inequality
Austria
Denmark
Belgium
Finland
France
Australia
Canada
Germany
Italy
Spain
Switzerland
Netherlands
Norway
Sweden
Japan
Better
Low
v
v
Wealth Gap
http://www.inhabitat.com/2010/10/14/worlds-largest-and-most-expensive-family-home-completed/
Wilkinson & Pickett,
The Spirit Level (2009)
High
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
Desired
Outcome
EconomicWhat’s
Efficiency
wrong with
this picture?
Finance
Economy
Planet
The most important chart
in the world…
Sustainability in Natural Systems
Optimum
Sustainability
100%
Collapse of
Financial System
0%
Resilience
Efficiency
Source: Lietaer, Ulanowicz, Goerner 2008
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”?
Regenerative
SRI/ESG
Unsustainable Green
Restorative
Sustainable
Resiliency: Driving financial capital upstream
http://3.bp.blogspot.com/_o0s746IzxZQ/TJwMEtnPvsI/AAAAAAAAAWo/lX-2ewPZzo/s1600/upstream.jpg
Regenerative Investing: Grasslands, LLC
A Holistic Management Enterprise in
Partnership 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
The World’s Grasslands are Vast
• 12.5 billion acres — (~40% of total landmass)
• ~1 Billion people, many poor, make their living as pastoralists
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 Solution
Impact Investment: What we feed, GROWS
Wyoming – 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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