Finance for Sustainability Bard MBA in Sustainability Launch Event January 24, 2012
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 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 v Denmark Norway Finland Sweden Netherlands Switzerland Belgium Germany Austria France Canada Italy Australia Ireland Greece New Zealand UK Portugal Japan USA Better Low Wealth Gap Wellbeing Worse High Wilkinson & Pickett, The Spirit Level (2009) Wealth Gap vs. Wellbeing
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 Planet
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
3. Finance: Critical acupuncture point
Sustainable finance: bottoms up Internalize externalities - CSR, ESG New tools - Integrated reporting New (and old) ideas - Impact investment
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” 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 wPZzo/s1600/upstream.jpg
John Fullerton Thank you