Blog

10. Feb, 2019

Hazel Henderson

Green Economy, Circular Economy, energy, natural resources

It is finally almost ready the Italian version of Badrè's can Finance Save the world with the attractive title: "e se la Finanza salvasse il mondo?" Here following an Abstract of the Book.

Former banker Bertrand Badré aims to re-direct global finance toward   the common good.

Author Bertrand Badré of "Can Finance Save The World?" Berrett-Koehler, (2018) served in top executive jobs at Lazard, Société General and Credit Agricole in Paris before becoming Managing Director of the World Bank and representative at G-7 and G-20 summits and chairing the World Economic Forum's Global Future Council.

French President Macron tells in his Foreword of his many years discussing global financial issues with Badré. They share the view that global finance has gone astray and that the 2008 crises "lifted the veil on this pernicious system. "They believe that there is an urgent need to regain control of the global financial system and steer it toward meeting the investment opportunities in shifting to the low-carbon energy transition, cleaner greener economies and a healthier human environment. All this is set forth in the United Nations (UN) Sustainable Development Goals (IISD.org) to achieve by 2030 and ratified by 195 nations in 2015.

The book's many endorsers of this global agenda range from Christine LaGarde, heading the IMF; Mark Carney of the Bank of England; Angel Gurria, Secretary-General of the OECD; Mohammed el Arian at Allianz, to Prof. Klaus Schwab, Chair of the World Economic Forum; Werner Hoyer, President of the European Investment Bank; Sir Ronald Cohen, Social Impact Investment Steering Group, McKinsey's Dominic Barton and Unilever's Paul Polman, to name a few!

Clearly, institutional investors are also on board after all the commitments made at President Macron's "One Planet Summit" in Paris, December 2017. Many pension fund managers now see green bonds for financing green infrastructure as investments well matched to their time horizons and beneficiaries' needs. Many were also in Paris making commitments to divest from their fossilized assets and shift to the low-carbon green investment sectors now expanding. Thus, New York City's recent announcement that its pension fund will divest from fossil assets was less surprising than its decision to sue oil majors for some of the cost of SuperStorm Sandy, claimed due to their CO2 emissions.

Author Badré calls participating in 2008 in the G-20 meeting and the Financial Stability Board by observing "If we let finance continue on the path that led to the financial crisis ---- serving the elite and feeding the speculators profiting from harnessing the power of finance in narrow self-serving ways --- then we are certain to drive up the level of discord. People will continue to feel increasingly disenfranchised and nationalism and protectionism will accelerate", (page 2). He adds, "Finance is not the master and should not be manipulated by elites. By using finance as a servant, we can re-position its use. We need to set the agenda for financial inclusion and give access to everyone". This stark critique reflects Badré's experience as a private sector banker. He also sees the potential of the fintech revolution, disintermediation and how re-structuring can redirect finance.

This global agenda is now widely-shared and adopted by many retail and institutional investors, asset managers, government agencies, mayors of many cities, as well as civic groups and grassroots globalists. The SDGs are proving to be the new economic development roadmap and metrics beyond conventional GDP-growth goals. France's Macron and Germany's Angela Merkel now share this leadership vision for the European Union (EU) for its future without Britain, as well as former UK Prime Minister Gordon Brown. Brown's focus is also on the huge opportunities in re-designing public and private financial instruments and flows toward investing in the 17 areas covered by the SDGs: reducing poverty; zero hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate action; life below water; life on land; peace, justice and strong intuitions and lastly partnerships for the goals.

 

I approached this book with my usual skepticism for large international agencies and their inevitable bureaucratic and often illusory levels of abstraction. This book surprised me with its granularity, clearly born of real world experience and hands-on competence along with Badré's passionate vision. He sees real possibilities for progress toward materializing these visions through the coalitions around achieving the SDG goals by 2030. I share this optimism since breakdowns always drive breakthroughs. Stress is evolution's tool in all biological species, including humans! We evolve through adaptation to new conditions and environments and their stresses, and so do our institutions. I floated many similar proposals in my "Building A Win-Win-World"(1996) now an e-book, describing the inevitable levels of cooperation in today's world of global problems too big for any single country to solve alone. I also called for a small financial transaction tax first proposed by Nobelist James Tobin in the 1970s and later by Lawrence Summers, to throw some sand in the gears of global finance - since accelerated by high frequency trading (HFT) as I described in"Perspectives on Reforming Electronic Markets and Trading".

Badré's book also addresses threats described in the World Economic Forum's Global Risk Report 2018. Badré also worked on water risks with many global experts. Strangely, all their efforts were focused on the 3% of fresh water and ignoring the other 97% of the planet's water which is salty, and the other half of the plant kingdom composed of plants that thrive on salty water (halophytes) already hybridized to meet most human needs for food, fiber and fuels. All can be grown on the planet's 40% of unused scrub and deserts lands, far into the future! "Green Transition Scoreboard 2014-Plenty of Water".

Thus, even the most advanced human institutions and research need to widen perception to include overlooked resources. These become visible only in broad system overviews, beyond old silos, theory-induced blindness and other cognitive challenges. Badré's thinking and those of President Macron provide a useful context for asset allocators, consultants, pension fund trustees, and managers.

 

 
 
 
2. Feb, 2019

Larry Fink, CEO of BlackRock, the world’s largest investor with $6 trillion under management, evoked heated controversy with his remarks last week that his company would change its hiring and potentially its compensation structure to advance diversity and ensure that five years from now the company is not just “a bunch of white men.” This follows on the heels of his annual letter to CEOs asserting that companies need to embrace a purpose beyond just profit maximization.

Critics, according to Fox Business, were swift to accuse Fink’s commitment to diversity as a form of “corporate socialism,” complaining about “the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.” The Fox article went on to quote Charles Elson, a corporate governance expert at the University of Delaware, saying: “This is fundamentally not the role of a public company, and it’s unfair to investors who may not agree with his politics. A CEO shouldn’t use house money to further a goal that may not create economic returns.”

26. Jan, 2019

'Here is the case for reinventing the corporation so that it serves human well-being' by Baroness Onora o'Neill of Bengarve Emeritus professor Philosophy Cambridge University

20. Jan, 2019

The World Economic Forum opens again next week.The weather is good and the leaders of the World are about to tell us what to do in 2019 to drive Humanity towards better destiny. As I did last year in my article, I searched if the topic of Happiness is high on WEF Agenda. I could not find it specifically but, searching through the Agenda, I found that, according to the Guardian: "The WEF has made mental health a key theme at Davos this year. The forum will address fears that depression, anxiety and other mental health problems are rising, and being neither measured correctly nor properly addressed.

Prince William will challenge business leaders to improve emotional and mental wellbeing in their workplaces. He’s appearing on a “mental health matters” panel alongside the New Zealand prime minister, Jacinda Ardern.

Kensington Palace says the Duke of Cambridge will “use the opportunity to highlight his belief that the world’s major employers have a vital role to play in promoting mentally healthy societies and workplaces”.

Wow, here we are. All the work I am doing in raising attention to "Happiness at work" is paying off. One of the best antidote to anxiety, depression and solitude is to reinforce your mental health.

During 2018 many articles were published on WEF site about Happiness and one contains the answer: "3 secrets to happiness, according to Roman Stoics by John Sellars". 

My surprise was high, as recently I started to study more about Roman stoics thanks to a very nice book: Meditations on Self -discipline and failure by William Ferraiolo. In the article, John Sellars writes that: "Last few years have seen a flurry of interest in the work of three Roman Stoic philosophers who offered answer to how to manage your Happiness. They were Seneca, tutor to the Emperor Nero; Epictetus, a former slave; and Marcus Aurelius, himself emperor. Modern books drawing on their ideas and repackaged as guidance for how to live well today include A Guide to the Good Life by William Irvine, Stoicism and the Art of Happiness by Donald Robertson, The Daily Stoic by Ryan Holiday and Stephen Hanselman, and How to Be a Stoic by Massimo Pigliucci and the one I referred earlier. What all these books share is the conviction that people can benefit by going back and looking at the ideas of these Roman Stoics. There’s even an annual week dedicated to Stoicism.

 Stoicism holds that the key to a good, happy life is the cultivation of an excellent mental state (mental fitness), which the Stoics identified with virtue and being rational. The ideal life is one that is in harmony with Nature (today we would call it Sustainability) , of which we are all part, and an attitude of calm indifference towards external events. It began in Greece, and was founded around 300BC by Zeno, who used teach at the site of the Painted Stoa in Athens, hence the name Stoicism. The works of the early Stoics are for the most part lost, so it is the Roman Stoics who have been most influential over the centuries, and continue to be today".

Then the author suggests the recipe with 3 secrets (below I copied part of John Sellars article integrated with abstracts from the Marc Aurelius Meditations as published by William Ferraiolo and my comments)

Control how you think

The first is that some things are within our control and some are not, and that much of our unhappiness is caused by thinking that we can control things that, in fact, we can’t. "You can control nothing other than your own attitudes, values, and efforts directed at mental discipline" Marcus Arelius reports in Book 1 of his Meditations. "Master yourself (..) this is your only purpose".

What can we control? Epictetus argues that we actually control very little. We don’t control what happens to us, we can’t control what the people around us say or do, and we can’t even fully control our own bodies, which get damaged and sick and ultimately die without regard for our preferences. The only thing that we really control is how we think about things, the judgements we make about things.

This leads us to the second foundational principle from Epictetus: it’s not things that upset us, but how we think about things. Stuff happens. We then make judgements about what happens. If we judge that something really bad has happened, then we might get upset, sad, or angry, depending on what it is. If we judge that something bad is likely to happen then we might get scared or fearful. All these emotions are the product of the judgements we make. Things in themselves are value neutral, for what might seem terrible to us might be a matter of indifference to someone else, or even welcomed by others. It’s the judgements we make that introduce value into the picture, and it’s those value judgements that generate our emotional responses.

The good Stoic news is that these value judgements are the one thing over which we have complete control. Things happen, none of which are inherently good or bad, and it’s within our power to decide how we value them. The paradox of Stoicism, as Epictetus formulates it, is that we have almost no control over anything, yet at the same time we have potentially complete control over our happiness.

Train your mind

At first glance, this might seem to understate the very real challenges that people face in their daily lives. How can just thinking differently help someone who is struggling to put food on their table, for instance? The Stoics didn’t shy away from this. They fully acknowledged that life can be hard sometimes.

Seneca knew this all too well: he suffered exile, multiple bereavements, and was ultimately forced to commit suicide by Nero. He also knew that it was all too easy to say “I’m not going to let these external things disturb me” but quite another to follow through and not be disturbed oneself.

So the Stoics developed a whole series of practical exercises designed to help train people to incorporate Stoic ideas into their daily lives. Seneca recommended taking stock at the end of each day, noting when you become irritated by something trivial, or act angrily in response to someone who perhaps didn’t deserve it, and so on. By noting his mistakes, he hoped to do better the next day.

Marcus Aurelius had another strategy, reminding himself each morning that he was probably going to encounter a lot of angry, stressed, impatient, ungrateful people during the coming day. By reflecting on this in advance, the hope was that he would be less likely to respond in kind. But he also reflected on the fact that none of these people would be like this intentionally. They were the victims of their own mistaken judgements. He suggested to cultivate Gratitude: "never fail to appreciate the unearned opportunities that you have been granted. These are gifts not provided to all and appreciate what you have, not compare: "What others have been granted is none of your concerns".

Here we get another paradox: no one chooses to be unhappy, stressed, angry, miserable, and yet these are in fact all the product of our judgements, the one thing within our control.

Accept what happens

Another Stoic strategy is to remind ourselves of our relative unimportance." No one is master of his own fate. No one is master of any domain beyond his own will and sphere of direct influence. Do not attemp to change the weather. The world does not revolve around us. Adapt to its changes and do not complaint of heat,rain or snow. This is not your business".

The sun is shining in Davos, echoes of the Romans Stoics may help world leaders to set improvement policies on mental health based on the search of individual happiness with a recipe with more than 2,300 years. 

 

19. Jan, 2019

Each year I write a letter to the companies that BlackRock invests in on behalf of our clients, emphasizing the importance of a long-term approach. In this year’s letter, I explore the connection between purpose and profits. 

Purpose is not a mere tagline or marketing campaign; it is a company’s fundamental reason for being – what it does every day to create value for its stakeholders. Purpose is not the sole pursuit of profits but the animating force for achieving them.

Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked. Profits are essential if a company is to effectively serve all of its stakeholders over time – not only shareholders, but also employees, customers, and communities. Similarly, when a company truly understands and expresses its purpose, it functions with the focus and strategic discipline that drive long-term profitability. Purpose unifies management, employees, and communities. It drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders. Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financial returns for the shareholders of your company.

Read my full letter here.