Business Beyond Tomorrow Montreal Sustainability Weekend Sustainability and Finance:

1. Business Beyond Tomorrow Montreal Sustainability Weekend Sustainability and Finance: Are We Radical Enough? March 11, 2011

2. Agenda • Our UNSUSTAINABLE economic system • How we got here • Finance: Critical acupuncture point • Sustainable Finance: Are we Radical Enough?

3. 1. exponential growth is UNSUSTAINABLE 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-Founder of General Systems Theory

4. 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

5. FACT If everyone were to live like Americans we would need 5 Earths http://passmethemalkplease.files.wordpress.com/2008/04/gursky.jpg

6. Symptoms of an unsustainable system…

7. http://2.bp.blogspot.com/_JSpbgoKp8LA/SjF4960b8qI/AAAAAAAAFVg/B4CaOwK2yTk/S1600-R/worldpop_2009_lowerfertility.gifhttp://2.bp.blogspot.com/_JSpbgoKp8LA/SjF4960b8qI/AAAAAAAAFVg/B4CaOwK2yTk/S1600-R/worldpop_2009_lowerfertility.gif • Symptom: Population Crisis World 6,826,859,514 http://cdn5.mattters.com/photos/photos/1370157/crowded_train_stations_in_china_10.jpg&imgrefurl

8. Hurricane Katrina, 2005 • Symptom: Climate Change Risk • Weather-related disasters affecting 1 million up 4X over 4 decades • Economic losses up 10X • (The Millennium Ecosystem Assessment) http://www.katrina.noaa.gov/helicopter/images/katrina-new-orleans-flooding3-2005.jpg

9. Energy Crisis “Nothing has changed….oil and natural gas are essential to our way of life.” - Jack Gerard, American Petroleum Institute http://cdn.content.compendiumblog.com/uploads/user/206a9a2b-627f-446d-b836-03b603106274/08ef70d7-7014-48c5-b9a5-7d322cf1fccc/Image/caa79888d3200de8c9ed8dbfb0bfd8c4.jpg

10. Symptom: Water Crisis • Lake Meade, primary water source for Las Vegas, projected dry in 10 years (Las Vegas Sun) http://www.naturalbuy.com/wp-content/uploads/2008/08/water-crisis.jpg

11. Symptom: Desertification • The Silent Global Crisis: • Soil loss: 24 B tons per year* (1992) • C02 emissions: 28 B tons (2009) • In past 40 years, 30% of farmland has become unproductive http://www.globalenvision.org/files/343342966_d32322dd2a_b.jpg

12. USA Worse Wealth Gap vs. Wellbeing • 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 Wellbeing • Symptom: Increasing Wealth Inequality Portugal UK Wilkinson & Pickett, The Spirit Level (2009) Greece Ireland New Zealand Better France Austria Australia Low Canada High Wealth Gap Denmark Germany Italy Spain Belgium Switzerland Finland Netherlands Norway Sweden http://www.inhabitat.com/2010/10/14/worlds-largest-and-most-expensive-family-home-completed/ Japan vv

13. Symptom: Financial Crisis http://macleans.files.wordpress.com/2009/04/houses2.jpg?w=660

14. 2. How we got here: The efficiency of capitalism

15. Desired Outcome What’s wrong with this picture? Economic Efficiency Finance Planet Economy

16. What does “Sustainability” mean?

17. UN Brundtland Commission - 1987 “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

18. The Natural Step “A state in which society does not systematically undermine natural or social systems within the biosphere.” - 4 Systems Conditions must be met

19. Harvard Business Review* “An activity is sustainable when all costs are internalized.” “Holding on to an economics-based definition of sustainability helps reconcile broader social interests with the measurement of shareholder value.” * “We Need a Definition of Sustainability”, Chris Meyer - 2008

20. A system is sustainable when it does not generate the symptoms of unsustainability. The most important chart in the world…

21. Natural Systems Definition: Balance of Efficiency and Resiliency Optimum Sustainability 100% Collapse of Financial System 0% Resilience Efficiency Source: Lietaer, Ulanowicz, Goerner 2008

22. “What did you do, once you knew?”

23. 3. Finance: critical acupuncture point

24. Finance is the fuel source, what we feed GROWS

25. Driving financial capital upstream http://3.bp.blogspot.com/_o0s746IzxZQ/TJwMEtnPvsI/AAAAAAAAAWo/lX-2e-wPZzo/s1600/upstream.jpg

26. Driving Capital Upstream • Individuals/Institutions (Impact investment) • Corporations – TBL, B-Corps, • Government policies (carrots and sticks) • Public Finance?

27. 4. Sustainable Finance: Are we Radical Enough?

28. What is Sustainable Finance? • Currently no Wiki entry for “sustainable finance” • Baseline - Top score in 2006 Sustainable Finance Report* was ABN Amro and HSBC: D+ *WWF and Banktrack

29. Expressions of Sustainable Finance • Responsible Investing • Community Development Finance • Environmental, Social, Governance (ESG) • Impact Investment • Environmental Finance • Sustainable/Ethical Banking

30. Sustainable Finance: A Definition (radical) Finance is sustainable only when in aggregate it fuels the transition to, and serves the needs of, an economy that creates more equitable well-being while respecting the finite geophysical boundaries of the planet.

31. Even More Radical… Unsustainable finance is unethical.

32. Radical Sustainable Finance – Step 1 • Sustainable Financial System • Sustainable Monetary System Optimum Sustainability 100% 0% Resilience Efficiency Source: Lietaer, Ulanowicz, Goerner 2008

33. Complementary Currencies: proven models WIRBank • Founded in 1934, Switzerland • Response to stock market crash in 1929 • The word for “we” in German > economic circle is also a community • Has grown from 16 to 62,000 members • Swiss Franc 1.6 Billion annual turnover

34. Radical Sustainable Finance – Step 2 • Differentiate and constrain capital flows to shift economy • Invest “upstream” in social and ecological Resiliency • Requires new goals, tools, metrics, markets • Private Direct (“Impact investment”) • Corporate Real Investment • Government Real Investment

35. Canadian Tar Sands: “The most destructive project on earth”

36. Models of resiliency exist • Basque Country, Spain • Founded in 1956 • Philosophy: Co-operation | Participation | Social Responsibility | Innovation. • Divided into four areas: Finance, Industry, Distribution and Knowledge • 85,000 people, 256 companies, 15 Billion Euro turnover

37. Resiliency can be replicated Cleveland, OH • “Import replacement” activity (Jane Jacobs) • Employee-owned, for-profit companies: greenhouse produce, laundry service, solar energy • Based locally, hire locally: permanent green jobs • Workers earn a living wage, build equity as owners • Circulate money within community - 5:1 multiplier

38. Grasslands, LLC: Holistic Management Restore ecological function, revitalize rural communities. Profitably.

39. Radical Sustainable Finance – Step 2 An assessment of Wall Street • Commercial Lending • Securities Underwriting • Trading • Mergers and Acquisitions • Retail Banking Services • Investment Management • Hedge Funds • Venture Capital/Private Equity

40. Imagine:Harnessing Capital A world in which finance serves a just, resilient and sustainable economic system…

41. Sustainability and Finance: Are We Radical Enough?

42. www.capitalinstitute.org