Papers & Events: Highlights from Workshop–“Redesigning Finance: Pathways to a Resilient Future”

On August 9th 2012, institutional thought leaders were invited to a workshop gathering in San Francisco convened by Corporation 20/20, Tellus Institute, and Capital Institute to discuss “Redesigning Finance: Pathways to a Resilient Future.” Presenters included Joshua Humphreys, Fellow of Tellus Institute, Marjorie Kelly, author of the recent book Owning Our Future: The Emerging Ownership Revolution, Allen White, Vice President and Senior Fellow of Tellus Institute, and John Fullerton, Founder and President of Capital Institute. Attended by leaders of 20 investment firms, institutions, law offices, and foundations, the one-day workshop started with Allen White’s setting the stage with a discussion of the current dominant framework in which society “lurches from one crisis to another.” He called for a rethinking of the purpose of finance to include support for the creation of more just and resilient economies. Capital Institute Founder and President John Fullerton focused on the $20 trillion of unburnable carbon challenge (if we are to avoid exceeding the threshold of 2 degrees Celsius warming), leaving us with a “Big Choice” of business-as-usual or the survival of our planet. He went on to call for a “regenerative economy” that has its architectural roots in nature as well as a better narrative to promote sustainability. Marjorie Kelly struck a similar tone to Fullerton’s, focusing on the emergence of “generative” enterprises that are designed as living systems. She went on to elaborate that “behavior comes from structure,” and that in economic enterprises, the core structure comes from ownership. This issue of ownership will play a major role in identifying ownership of public goods, particularly as it relates to issues of sustainability. Finally, Joshua Humphreys closed out the workshop by examining the financial system beyond modern portfolio theory, offering a new idea of “Total Portfolio Activation” that helps investors identify opportunities by asset class that can benefit society and the environment. For example, cash and cash equivalents can be placed into productive use by providing deposits to credit unions that help finance low-income families. Additionally, Humphreys points out that fixed-income assets such as the World Bank Green Bonds and community development loan funds such as Boston Community Capital can help support countries and communities hit hard by ecological and economic crises, echoing the notion of finance as the servant of the economy, not its master. Subsequent discussions of the presentations revealed that much work is ahead, including working of a new narrative to challenge old paradigms, addressing inequality, the notion of endless economic growth as well as more diversity in expertise of systems design. For full details, check out the highlights from the workshop here.