Here’s an introductory article I wrote in 2000. Looks prescient now …
The current global financial system is killing the Earth. Distant capital markets allocate resources without regard to local communities or the local environment. Corporations are required to maximize shareholder return – short-term profits determine decision-making. Our political system seems powerless to change and is equally disconnected from the natural world and the health of the people. The results? Extreme weather, the spread of infectious diseases, a cancer epidemic, social dislocation, staggering soil losses, loss of biodiversity, you know the list. Is this the future that you want to live in? Neither do I.
I’m suggesting a different vision. The opportunity to bring sustainability and profitability together in a way that honors humane values. Business has long been strong at building abundance. With its focus on maximizing profits, it has developed amazing skill at creating “more.” On the other hand, the environmental movement has raised the standard for sustainability, asking that we act in a way that protects and rebuilds the health of the natural world. Both fall short in how they care for people – stress and burnout are rampant in both the business community and the sustainability movement. Holistic financial planning offers a process that combines the best of both worlds in a way that cares for people. It creates sustainable abundance that honors human values. It can create a new world where biodiversity thrives, life is fun, communities are diverse and prosperous, and the climate returns to its normal oscillations, profitably. Through holistic financial planning and socially responsible investment advice you can bring this vision into reality. Here are seven ways that I think holistic financial planning can help move the world toward this new vision.
1. Happiness reigns as people embrace a high quality of life aligned with right livelihood and long-term sustainability
Holistic financial planning begins with the end in mind. At the heart of the process is the holistic goal, a special goal or statement of vision that embraces the quality of life that you want with the right livelihood that you deserve within the context of the imperatives of our living planet. I’ll start by asking the questions “what do you want? What quality of life do you want to have? What values are important to make manifest in your life?” It is essential to have a vision of the kind of life that you want; no ship leaves port without a clear sense of its destination. Experience has shown that if people deny what they want, it is difficult to build sustainable abundance. Things work fine for a time, then burnout takes over and the project fails. Once we have a clear idea of your quality of life the next question is “what do you need to produce to take you there?” “What is lacking right now, or needs to be in place for you to live the quality of life that you want?” I call this “Right Livelihood” because most of us need to engage in a livelihood to further our quality of life, and you want to be in the right one for your life to prosper fully. The final phase of developing a holistic goal is the statement of “Long Term Sustainability.” “How do your resources need to look far into the future to sustain your right livelihood and quality of life?” I ask people to think very long term, perhaps 500 to 1000 years. As a society we are not in the habit of thinking much past the quarterly report, this habit is part of the problem. Your friendships will probably not persist for 500 years, but it helps to think and act as if they could. This entire statement, the holistic goal, then becomes your guiding vision; it is the destination that you are steering the “ship” of your life towards. We’ll use the holistic goal to guide all of the important decisions of our lives: “if I do this or spend this money, will it take me to my holistic goal?” As you progress, and as all of us progress, happiness reigns as we live a high quality of life aligned with right livelihood and long-term sustainability.
2. Holistic solutions become the standard
Holistic financial planning is a simple step-by-step process for helping you create holistic solutions. Holistic solutions are those creative ideas that are simultaneously socially, financially and ecologically sound. Examples of a holistic solution might be a business process that creates profits and greater opportunity for the community by restoring degraded ecosystems, or a profitable investment in a cooperatively owned company that builds renewable energy products. A holistic solution may be a creative way that you find for making money by saving resources and reinvigorating your community. Conventionally when we have a problem we seek the most efficient or cost-effective solution, without considering the broader impacts on us, our community or the ecological web of life. We have a better solution, a holistic solution that addresses a larger context and solves multiple problems without creating new ones. Holistic solutions create surpluses at all three lines in “triple bottom line” accounting. Social and ecological accounts are not just considered but enhanced while creating black ink in the economic column. Holistic solutions are being developed in many businesses and in many communities around the globe as people look for values honoring sustainable abundance.
3. Conserving resources takes center stage as one of the most profitable investment strategies
Saving money by conserving resources is one of your best initial investments. For example, if you spend $1000 on weather stripping and insulation in your home, and it saves you $250 a year in energy costs, you have an investment that returns 25% a year. As energy prices rise, as they will, your investment return increases. You save money, conserve resources, and improve your standard of living. This strategy can create even greater returns if taken further. Sufficient insulation or housing design changes may eliminate the need for a furnace or air conditioner all together. You also pay no taxes on the savings from conservation investments, increasing their effectiveness. Of course you cannot put your entire portfolio into home conservation efforts, insulation and weather stripping don’t cost that much, but you do want to invest in it as soon and as much as you can. Limiting your exposure to expenses that fluctuate greatly contains the effects of inflation on your budget, and creates a more resilient financial plan. This is particularly desirable for those on fixed incomes. This strategy applies to most expenses, and will encourage a more rational and sustainable use of the world’s resources.
4. Investment is redirected into sustainable businesses and away from degenerative pursuits (big oil, gambling, weaponry, etc.)
Every dollar that you spend is a “vote” for the kind of world you want to live in. Do you want to vote for more nuclear power plants or more organic farms? A cornerstone of the socially responsible investment movement, myself and my company (Natural Investments LLC) promote avoiding investments in undesirable companies. You can create a high performance portfolio today that is entirely based on good companies doing good work in the world. It’s not about perfection, it’s about moving in the right direction. One eighth of investment dollars is currently invested in socially responsible funds. That is $2.6 trillion redirected away from degenerative companies, helping to reshape corporate behavior and the allocation of capital resources across the globe. Every day new investment products become available to help you invest in good companies and support the revitalization of under-served communities. We believe, and are seeing, that the grassroots efforts of individual investors and consumers will change the global financial markets. As the people demand social and ecological accounting be considered as a part of corporate and political decision-making, top decision makers will embrace “triple-bottom line” accounting. Financial, social and ecological returns will be balanced in importance. Enhanced capital flows will buoy sustainable businesses, and the old guard will slowly wither away from benign neglect.
5. Local communities regenerate as investments become increasingly localized
It is estimated that for every dollar spent at Wal-Mart, only 20 cents stays in town. Sending our collective capital outside the community concentrates economic power into the hands of a few very large corporations. It turns small towns into colonies of distant companies that we have no democratic control over. Holistic financial planning supports democracy and encourages a “close to home” investment strategy: the best investment opportunities are in the home, then in the local community and then outward from there. From a financial perspective, local control and easy oversight of investment dollars enhances returns. As in the conservation examples above, saving energy cycles money back into your pocket and then into the local economy. An important consideration in the Long Term Sustainability section of the holistic goal is the state of the local community. As you use your holistic goal to help you make decisions ask yourself if the money you are spending helps build the kind of community that you ant to live in. To build a more vibrant local community, the kind of community that we want to live in, we engage in and actively support bartering arrangements, local currencies and local merchants. You can too.
6. Natural capitalists become the new heroes
In their book Natural Capitalism: Creating the Next Industrial Revolution Paul Hawken and Hunter and Amory Lovins chart a path to a new mode of human industry. In their model businesses prosper by investing in people and process, in energy efficiency and natural resource enhancement. Natural capitalists apply this method to develop real wealth by building social and natural capital as well as financial. Holistic financial planning is a simple, step-by-step process to enable and empower natural capitalists. Dwindling natural resources and more and more people require a new way of thinking – a holistic approach to business development and human industry. As the conditions for business change, human creativity and innovation will rise as the single most important factor in survival and success. Holistic financial planning helps you strategically channel new ideas into profitable ventures that simultaneously enhance social and natural capital. In the new millennium those businesses and business leaders who heed the warnings and can apply this formula will find at the head of the class. Shareholders will reward these new leaders, and all will benefit.
7. Earth is finally valued accurately – as priceless
The life processes of the Earth are irreplaceable, and impossibly expensive to duplicate by mechanical means. These life processes are currently given no value in the marketplace. An old growth forest is valued only for the timber and pulp it may provide. Holistic financial planning insists on an honest accounting, and as global political will shifts to an awareness of the reality and severity of climate change, the biosphere will finally be valued accurately – as priceless. Once we begin to value the earth accurately investment will shift from depletion to rebuilding and regeneration. The global financial system and the human decision making that drives it are the critical “leverage point” for creating change. A leverage point, to quote Donella Meadows, is a “place within a complex system where a small shift in one thing can produce big changes in everything.” By expanding the conventional, economic bottom line into a “triple bottom line,” by valuing the Earth accurately, we can intervene into the complex system of human culture on our planet and slowly move it toward sustainability. We believe these changes will take place as individuals embrace a better process of decision making and begin to see the world more whole. This intimate process will help all of us reconnect, rebuild, revision and regenerate. Why don’t you join us in this exciting revolution?