Green Investing

The new economic model accounts for the natural capital provided by ecological systems and their contribution to maintaining life on earth.

Green investing - When the first Pilgrims made it to the shores of the new world the first impression voiced by the sailors was delight over the unlimited amount of straight virgin timber for use as masts in the sailing vessels of the time. Great Britain had all but exhausted its forest reserves for mast timber and America promised a seemingly unlimited supply ready for the taking. The economy in the land of plenty rewarded those who were best able to extract the vast wealth of natural resources. The consequences for poor stewardship were relatively minor as there was always more to draw from if you fouled your own nest or had used up the existing supply. The values held by these early pioneers eventually evolved their way through the political economy, creating an economic model of ever expanding consumption based on seemingly unlimited natural resources.

Now fast forward to the year 2013. We have air pollution, water quality concerns, choked expressways and trouble managing all the trash. Humans being a highly adaptive lot are addressing these consequences by evolving new value systems. These in turn are creating the foundation of new economic models that more efficiently manage human and natural resources. Central to the creation of a new economic paradigm are investment and pricing attitudes that support this new vision - Green Investing. We have such signals now. Consumers are choosing organically grown food and investors are pursuing a values-based, Socially Responsible Investment (SRI) strategy. In both cases I believe the core of inspiration around such actions is that consumers and investors are coming to recognize that investing in the marketplace is a creative act, an empowering vote for the world you want to live in. In this article I want to explore this new model of business and commerce and some of the underlying principles that are driving its evolution.

Business and Commerce: A New Model for a New Economy

A review of business and commerce since the outset of the industrial revolution reveals a number of sobering facts. According to Lester Brown's Annual State of the World Survey, every ecological system on earth is in decline. Further, a review of the distribution of the planet's annual natural resource harvest finds that 82% goes to serve the consumption of just 20% of the world's population. While there can be no doubt that the developed world's standard of living has soared during this period, what is also clear is that these gains have come at an unbearable cost to the environment and contributed to an extreme global economic imbalance. Investors in companies that ignore these facts do so at their own peril.

The emerging new model for business and commerce has come to be known as investing for the three P's: People (social equity), Profit (rate of return) and Planet (environment). The traditional model exploited the environment considering it a wholly owned subsidiary of business, extracting natural resources with little regard for sustainability, efficiency or social equity. Success under the old model is narrowly defined in terms of rate of return on monetary capital. The new economic model places high priority on Profit and also gives consideration to the natural capital provided by planetary ecological systems and their contribution to maintaining well-being on earth - Green Investing.

It is based on the reality that it is in fact business that is a wholly owned subsidiary of the environment. The companies that embrace this directive of the new economy see the inevitability of adapting to this hierarchy. They are building manufacturing models along with business and human resource practices that seek to harmonize with and restore natural systems.