Sunday, January 6, 2013

Negative vs. Positive Investing



As the 350.org effort to push divestment from fossil fuel companies from university portfolios accelerates this year there will be plenty of folks weighing in on the wisdom of such an effort. I simply want to add a little context to this discussion on investing. Any discussion of divestment conjures up the effort in the 1980s to divest from companies profiting from apartheid in South Africa. In a basic sense it is a form of what I might label 'negative' investing. By that I mean we rule out things we will invest in.

The South African divestment actions followed on the footsteps of earlier 'negative' investment approaches regarding nuclear and other weapons manufacturers, tobacco, etc. We saw mutual funds (e.g. Pax World Fund) developed that used 'screens' to remove companies that some believed were creating 'objectionable' products. Many of these funds were initiated by faith based organizations or peace groups. In fact the role of negative screening still dominates SRI (Socially Responsible Investing) in most mutual funds while trying to create a "positive" financial return on investment (ROI).

I see this as the infant stage of investing for the common good. Perhaps a necessary stage, but not sufficient for creating the needed transitions to a world where there is really peace and justice for all. As we move into adolescence we see the increased role of 'community investing', in 'green energy bonds', in 'social entrepreneurship', and other mechanisms emerging among those trying to grow a better world. See for example Michael Shuman's Local Dollars, Local Sense for some approaches. Most of the institutional investment dollars are socked away in the Global players, what are called 'Large Cap' firms, yet where much of the innovation occurs is the small and mid cap firms. More recently we see, primarily involving some large foundations, the emergence of what is often referred to as 'mission-based' investing (e,g, Heron Foundation, Hampshire College). Where the investment portfolio matches the mission of the organization. One might refer to it as an anti-hypocrisy investment policy.

Yet still the orientation is fixed on the 'for-profit' sector as the dynamo of economic progress, or as is spun now by pundits - the job creators. The very successful entrepreneur, Paul Hawken, spun a well-considered critique in 2008 in his wonderful Blessed Unrest where he shows how much the engine for change comes from civil society. In 2010 Michael Edwards, former World Bank and development official, penned a 'powerful critique' of the private sector and its philanthropic efforts in Small Change: Why Business Won't Save the World . As Charles Eisenstein shows us in his Sacred Economics, the foundations upon which the profit world is built is crumbling and thus a new approach is necessary for us to share this singular planet peacefully and for many more generations. Our thinking is so constrained by the entrenched education, economic, and political systems that it is hard to reconsider alternatives to them.

What do we want to grow - more fossil fuels or renewable energy? More globally processed and distributed foods or more local varieties? More concentration of wealth or more equity? The investment choices we make should start with these kinds of questions, not with how much money will I get back? Once we can shift our economic system to start there we will forever be told 'we can't afford it. 


As Eisenstein suggests, "Weigh the competing voices of your idealism and your cynicism, and ask yourself, "Can I bear to settle for anything else?" Can you bear to accept a world of great and growing ugliness? Can you stand to believe it is inevitable? You cannot. Such a belief will slowly but surely kill your soul. The mind likes cynicism, its comfort and safety, and hesitates to believe anything extraordinary, but the heart urges otherwise; it urges us to beauty, and only by heeding its call can we dare create a new Story of the People."


Given what we are facing, or more accurately what our children and grandchildren will face we better try a little harder.

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