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: Potsdam Institute and “Unburnable Carbon”, Carbon Tracker Report
Ecological overshoot = Financial Overshoot What’s the off balance sheet ecological debt? What’s the P/E of a “steady state” economy? What’s the debt capacity of the steady state? What’s the unfunded pension liability of a SS?
Financial reform: Rearranging deckchairs May 26, 2011
1. Context: Not your grandmother’s SRI/ESG talk 1. Context: Not your grandmother’s SRI/ESG talk 2. Long View Implications: This time IS different 2. Long View Implications: This time IS different
The situation is hopeless, but I could be wrong. - Ted Turner, quoting his former Foundation head.
Towards a Regenerative Economy Holistic frame: nature as model Redefine wealth: natural/social capital The humble retreat of finance Public interest in capital investment – an opportunity for leadership
A unique moment in history for Fiduciaries Years of focus on fiduciary duty of prudence has generated myopic investment herding behaviors, undermined intergenerational pension equity… - “Reclaming Fiduciary Duty”, James Hawley, Keith Johnson, Ed Waitzer
What’s different this time Cycles within seismic shift -- downside shock bias Caution: Steady state = revaluation Long run not sum of short runs Uncertainty different than risk There is “no sideline”
What’s different this time Schumpeter’s “creative destruction” on steroids MPT built on flawed assumptions Index benchmarking and tracking strategies exposed Asset class diversification a mirage