October 14, 2020
by my Guest writer Gregory Wendt and Nick Sramek
The next step in the development of financial institutions in the United States is absolutely crucial, to stave off the dual threats that have the power to forever change communities in virtually every corner of the world – inequality and environmental degradation. Addressing these challenges is literally “the trillion-dollar” challenge. These funds can help create the appropriate structure to develop robust communities and resilient ecosystems. The pension funds have the power to transform our world and build wealth in a new and profound way.
Luckily, others have paved the way in constructing the bridge between the deep pools of capital that have the power to transform, and the pressing climate crisis we face that need capital market solutions.
Mats Andersson, former CEO of Fjärde AP-fonden (AP4), the forth largest Swedish pension fund, is one of first who have led the way. Mats is a visionary in two ways: first, he understood the magnitude of the problems at hand, particularly regarding climate change; and second, he comprehended that institutional capital that acts as ballast for our capital markets also has the power to transform. Moving these ships into the open ocean can not only create waves, but a tidal wave of change that is now sweeping through Western Europe and Scandinavia. Mats led the decarbonisation efforts in the AP4 portfolio and motivated countless companies to take action. He also engaged the United Nations to bring their considerable might to addressing climate change – with the tools of finance and investment.
More pension funds and large institutional investors around the world will begin to take similar steps to utilize the might of trillions to address socioeconomic and environmental problems in their countries. Luckily, this isn’t a far-flung dream to activate further pools of capital towards systemic challenges in our world. In recent years, a growing number of thought leaders have been articulating the changes needed for impact investing to truly accomplish its goal of transforming the economy.
Each of the below perspectives are speaking toward a more comprehensive and inclusive set of activities to build on the success of the past, and weave a more coherent fabric for investors to support advanced economic development for the well-being of communities across the world.
- From Impact Investing to Integrated Finance: The Clean Money Revolution – Joel Solomon
- From Sustainability to Regenerative Economics: A Finer Future– Hunter Lovins, John Fullerton et al
- From Economism to Earth Systems Science: Mapping the Transition to the Solar Age – Hazel Henderson
- From Reductionist Thinking to Systems Thinking: Biomimicry for Finance 2012 Statement for Transforming Finance based on Ethics and Life’s Principles Hazel Henderson, Jeanine Benyus and others at Ethical Biomimicry Finance
- From Financial Capitalism to Mutual Impact and Deep Economy: The Purpose of Capital – Jed Emerson
- From Ego-System to Ecosystem Economies: Leading from the Emerging Future – Otto Sharmer
- From Extractive Businesses to Regenerative Business: Regenerative Business – Carol Sanford
- From Conventional Capitalism to Common Good Capitalism:Common Good Capitalism – Terry Mollner
- From Billions To Trillions: How a transformative approach to collaboration and finance supports citizens, governments, corporations, and civil society to share the burdens and the benefits of solving wicked problems
- From Private Banks to Public Banking: Public Banking Institute
- From the New Deal to the New Grand Strategy and the New Green Deal: New Grand Strategy – Patrick Doherty, Puck Mykelby and Joel Makower
It’s encouraging that new pathways are being developed all over the world that aim to revisit and expand on our assumptions about capital markets evolution. It is essential to increase the efficacy of impact investing to build in systems thinking to long-term sustainable plans that can ensure that we create resilience for the next 100 years, repurposing the effective but incongruous models of today for the needs of future generations. This is the way to create fertile soil for an intergenerational transfer of stewardship to improve our environment, communities and economy, and establish the preconditions for a regenerative capital markets framework to fully take root.
Gregory Wendt, Nick Sramek and Mats Andersson are my guests on the new episode of Transformers. Listen here.Kaj Embren