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

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Business Beyond Tomorrow Montreal Sustainability Weekend Sustainability and Finance: Are We Radical Enough? March 11, 2011. Agenda Our UNSUSTAINABLE economic system How we got here Finance: Critical acupuncture point Sustainable Finance: Are we Radical Enough?. - PowerPoint PPT Presentation

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Page 1: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Business Beyond Tomorrow Montreal Sustainability Weekend

Sustainability and Finance:Are We Radical Enough?

March 11, 2011

Page 2: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Agenda

1. Our UNSUSTAINABLE economic system

1. How we got here

1. Finance: Critical acupuncture point

2. Sustainable Finance: Are we Radical Enough?

Page 3: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

1. exponential growth is UNSUSTAINABLE 1. exponential growth is UNSUSTAINABLE

Page 4: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 5: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

FACTIf everyone were to live like Americans we would need 5 Earths

http://passmethemalkplease.files.wordpress.com/2008/04/gursky.jpg

Page 6: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Symptoms of an unsustainable system…

Page 7: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Symptom: Population Crisis

http://cdn5.mattters.com/photos/photos/1370157/crowded_train_stations_in_china_10.jpg&imgrefurl

World 6,826,859,514

http://2.bp.blogspot.com

/_JSpbgoKp8LA/SjF4960b8qI/AAAAAAAAFVg/B4CaO

wK2yTk/S1600-R/w

orldpop_2009_lowerfertility.gif

Page 8: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

•Weather-related disasters affecting 1 million up 4X over 4 decades

•Economic losses up 10X

(The Millennium Ecosystem Assessment)

Symptom: Climate Change Risk

http://www.katrina.noaa.gov/helicopter/images/katrina-new-orleans-flooding3-2005.jpg

Hurricane Katrina, 2005

Page 9: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Energy Crisis

http://cdn.content.compendiumblog.com/uploads/user/206a9a2b-627f-446d-b836-03b603106274/08ef70d7-7014-48c5-b9a5-7d322cf1fccc/Image/caa79888d3200de8c9ed8dbfb0bfd8c4.jpg

“Nothing has changed….oil and natural gas are essential to our way of life.”

- Jack Gerard, American Petroleum Institute

“Nothing has changed….oil and natural gas are essential to our way of life.”

- Jack Gerard, American Petroleum Institute

Page 10: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

http://www.naturalbuy.com/wp-content/uploads/2008/08/water-crisis.jpg

Symptom: Water Crisis•Lake Meade, primary water source for Las Vegas, projected dry in 10 years (Las Vegas Sun)

Page 11: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Symptom: Desertification

http://www.globalenvision.org/files/343342966_d32322dd2a_b.jpg

Page 12: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

NetherlandsSwitzerlandBelgium

GermanyAustria France

Canada ItalyAustralia

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

Page 13: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Symptom: Financial Crisis

Page 14: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

2.

How we got here: The efficiency of capitalism

Page 15: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Economic Efficiency

Economy

Finance

What’s wrong with this picture?Desired Outcome

PlanetPlanet

Page 16: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

What does “Sustainability” mean?

What does “Sustainability” mean?

Page 17: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

UN Brundtland Commission - 1987 UN Brundtland Commission - 1987

“Sustainable development is development that meets the needs of the present withoutcompromising the ability of future generations to meet their own needs.”

Page 18: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

The Natural Step 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

Page 19: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Harvard Business Review* 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

Page 20: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

A system is sustainable when it does not

generate the symptoms of unsustainability.

The most important chart in the world…

Page 21: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Sustainability Optimum

Efficiency

100%

0%

Resilience

Source: Lietaer, Ulanowicz, Goerner 2008

Natural Systems Definition: Balance of Efficiency and Resiliency

Collapse of Financial System

Collapse of Financial System

Page 22: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

“What did you do, once you knew?”

Page 23: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

3.

Finance: critical acupuncture point

Page 24: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Finance is the fuel source,

what we feed GROWS

Page 25: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Driving financial capital upstream

http://3.bp.blogspot.com

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o/lX-2e-wPZzo/s1600/

upstream.jpg

Page 26: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Driving Capital Upstream

•Individuals/Institutions (Impact investment)

•Corporations – TBL, B-Corps,

•Government policies (carrots and sticks)

•Public Finance?

Page 27: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

4.

Sustainable Finance: Are we Radical Enough?

Page 28: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 29: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Expressions of Sustainable Finance

• Responsible Investing• Community Development Finance • Environmental, Social, Governance

(ESG)• Impact Investment • Environmental Finance• Sustainable/Ethical Banking

Page 30: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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.

Page 31: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Even More Radical…

Unsustainable finance is unethical.

Page 32: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Sustainability Optimum

Efficiency

100%

0%

Resilience

Source: Lietaer, Ulanowicz, Goerner 2008

Radical Sustainable Finance – Step 1•Sustainable Financial System

•Sustainable Monetary System

Page 33: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Complementary Currencies: proven models WIR Bank

• 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

Page 34: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 35: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 36: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 37: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Resiliency can be replicated

• “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

Cleveland, OH

Page 38: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Grasslands, LLC: Holistic Management

Restore ecological function, revitalize rural communities. Profitably.

Page 39: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

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

Page 40: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Imagine: Harnessing Capital

A world in which finance serves a just, resilient and sustainable economic system…

Page 41: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance:

Sustainability and Finance:Are We Radical Enough?

Page 42: Business Beyond Tomorrow  Montreal Sustainability Weekend Sustainability and Finance: