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

Finance for SustainabilityBard MBA in Sustainability Launch Event

January 24, 2012

1. Our UNSUSTAINABLE economic system 1. Our UNSUSTAINABLE economic system

“Safe Operating Space” -- The world is full

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

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

Netherlands

SwitzerlandBelgium

Germany

Austria France

Canada Italy

Australia

Ireland

Greece

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

2. How we got here 2. 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

PlanetPlanet

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

Collapse of Financial System

3. Finance: Critical acupuncture point 3. Finance: Critical acupuncture point

Sustainable finance: bottoms up Sustainable finance: bottoms up

• Internalize externalities - CSR, ESG

• New tools - Integrated

reporting• New (and old) ideas

- Impact investment

Sustainable finance: top down (systemic) Sustainable finance: top down (systemic)

We are lost in finance…

• What is an “IRR” when we know everything is connected

• What will replace MPT which sees risk as historical SD in a world facing “phase shift” uncertainty?

Stranded Assets: our $20 T “Big Choice” 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: “Unburnable Carbon”, Carbon Tracker Report

Resiliency: Driving financial capital upstream

http://3.bp.blogspot.com

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MEtnPvsI/AAAAAAAAAW

o/lX-2e-wPZzo/s1600/

upstream.jpg

John Fullertonjfullerton@capitalinstitute.org

www.capitalinstitute.org

Thank youThank you