Hunter Lovins, President of Natural Capitalism Solutions interviewed by impact investor and entrepreneur Donna Morton.

Most people believe you can invest for value or invest in your values; you cannot have both. Impact investor and entrepreneur Donna Morton interviews Hunter Lovins, president of Natural Capitalism Solutions on how to build public market investment strategies that moves money from harm to healing. This interview looks at why Hunter believes finance is a powerful tool to stem climate change, address extreme poverty and grow the world we want. Hunter also gives us some insights about her new investment firm she co-founded with Donna, Principium Investments. So going beyond CSR, and leaving old school SRI behind, they discuss the new frontiers of impact investing in public markets, integrating ESG and developing divestment and investment strategies for the 21st Century.

 

Donna:  We know your work on sustainability with Fortune 500 companies, your talks and books; what possessed you to want to build a finance company?

Hunter:  Finance is the key to the transition to what Bucky Fuller called a world that works for 100 percent of humanity. Without beginning to move money from harm to healing, we will not achieve the transition of which we all dream.

That said, left to my own devices, it would never have occurred to me to help build a finance company. Through my work at the Unreasonable Institute[1], I met Michael Tracy, who was looking to move his 25 years expertise in managing money from traditional investment to impact investment. He and I both met you, Donna, who was a Fellow at Unreasonable. She is also an Ashoka Fellow[2] and Ugunte Fellow[3]. The three of us began conversations that led to working together. We then pulled in various other team members, and during a marvelous week at the SOCAP Conference[4], confirmed our intention to build a truly transformative finance company. Described as “Occupy meets Wall Street,” it springs from our values that finance should serve the real economy, not only flow money as fast as possible to the 80 people who, Oxfam tells us, have as much wealth as the 3.5 billion poorest people on earth[5].

Donna:  Why finance?

Hunter:  John Fullerton of Capital Institute[6], in his paper “Limits to Investment,”[7] points out that all investment has impact. The planet is being damaged daily by companies making the ordinary investments they believe will enable them to grow and profit. Business as usual is threatening the ability of the planet to sustain life.

If we invest in companies that have committed to behave in more sustainable ways, companies that are conscious of their impacts and are seeking to minimize them, or better, to have positive impacts on health, well being, and the environment, we will do two things to implement a more regenerative economy:

First, we will profit, because there is now a strong business case for behaving more sustainably. Taking early and aggressive action to cut emissions and implement climate protection turns out, as I described in my book The Way Out: Kick-Starting Capitalism to save Our Economic Ass [8], to be very good business. The September 2014 CDP “Climate Action and Profitability” study showed that companies that integrate sustainability into business strategies outperform those who fail to show such leadership. Companies that are managing their carbon emissions and are planning for climate change enjoy 18% higher returns on their investment than companies that aren’t, and 67% higher than companies that refuse to disclose their emissions. These companies are simply better managed, and, all things equal, are more likely to be better investments.

Second, moving money from harm to healing shifts markets. Taking money out of bad things, and putting it into companies that drive better behavior in the world, makes a difference. The Oxford’s Stranded Assets Programme’s Report [9] concluded, “Divestment outflows, even when relatively meagre in the first wave of divestment, can significantly and permanently depress stock price of a target firm if they trigger a change in market norms.

How money is invested—whether by companies, by colleges, or by you—

determines whether we trash the planet or save it.