From sustainability to resilience

Around the country, contested zoning reclassification hearings are a common occurrence. In Kona, Hawaii, where I live, owners of a large coastal open space property that was zoned for conservation recently sought to rezone within the urban boundary and develop it as a luxury resort and marina. The developers made an outstanding effort to make the development “green,” which was encouraging. While most of the testimony covered the usual “jobs vs. environment” and overburdened infrastructure arguments, I suggested that no new coastal development should be approved in Hawaii due to the real threat of rising sea levels.

My argument wasn’t merely about protecting human life; it was also about making a potentially catastrophic investment decision. The response to my testimony was silence; it was not an argument the Land Use Commission, nor the audience, had likely ever heard. But I was not trying to be Chicken Little; I was asking people to think about an emerging future and plan responsibly, not only from a survival perspective but from a financial one as well. It would make little sense if the human response to climate change was not only a biological catastrophe, but also bankrupted us. But as history shows, the failure to invest one’s resources wisely can disrupt and even extinguish civilizations. Some say we’re well on our way.

With Hurricane Sandy illustrating the peril faced by low-lying communities, and with several Pacific Island nations facing relocation of their entire populace, it’s clear that climate change is proceeding rapidly and that the consequences are both real and severe. How do we allocate our human, tangible, and financial assets and resources in a manner that might minimize further disruptions? History will judge us on our ability to make choices that foster resiliency in the face of the ongoing changes, and everyone knows that preventative measures are far more effective than crisis intervention.

MK_resilience planningIn permaculture (sustainable design), which I’ve been teaching for over 20 years, one of the principles is to design for catastrophe. Planning for the worst-case scenario isn’t a luxury of thought or a sign of negative thinking—it’s a survival necessity, and given the financial consequences, requires thoughtful and intelligent planning. This is familiar logic in other aspects of life: having a basic savings account, business reserves, and a government rainy day fund reflects this sensibility. But designing for unexpected—or sporadic but predictable—events affects every aspect of life. Folks in Hilo know this well; two tsunamis destroyed its bayfront neighborhoods decades ago, and they remain intentionally undeveloped open space for a reason. But the acknowledgment that nature cannot be ignored still hasn’t seeped into mainstream consciousness. After recent and more extreme fire, flood, and hurricane catastrophes, most people just rebuild in the same place again, writing off the disaster as a solitary event rather than part of a pattern.

The same can be said for investment. Financial professionals are well-prepared to speak about the cycles of markets as a way to encourage investors to stay the course and not panic in periods of economic downturn. This attitude is based not only on failure to see destructive systemic patterns, but also on looking backwards, for it presupposes that the future will look very much like the present.

But what if that’s not true? What if ecological limits revealing themselves as climate change, overpopulation, bee colony collapse, and resulting food and water scarcity illustrate that this time it’s different? Whether one believes we’re headed for trouble or that our collective ingenuity and sustainability ethic will help us to break through to a more evolved way of living—who truly knows?—the fact is that the volatility and unpredictability of this era in human history, combined with a level of global interconnectedness never before experienced, is an entirely new reality for us all. How we choose to steward our human and natural resources is the essential issue of our time. All of it is a form of investment, and our capacity to be resilient in the face of these challenges will determine our rate of return and success by whatever measure one prefers.

The truth is that most of Hawaii’s population centers and economic engine, like many major American cities, are highly vulnerable to sea level changes. And yet we proceed with business as usual, not only failing to invest in ways to protect these settlements, but failing to invest sufficiently in the economic solutions that might enable future generations to survive and thrive.

Investors by definition are driven by need for financial return, and yet people continue to invest in industries and activities that put humanity at risk, such as fossil fuels, toxic chemicals, exploitive methods of production in the apparel and other industries, and coastal development that carry such inherent risk that a financial professional cannot legitimately call them prudent investments, as securities law requires.

A more comprehensive investment approach is needed to change this, one that takes the ethic of care of people and planet to heart in every decision made. Human business ingenuity and all the personal shopping, banking, investing, and lifestyle choices in our daily lives should prioritize a fossil fuel free way of life as quickly as possible. This means buying local and living as plastic-free as possible, and it means using as many organic and biodegradable resources as possible. It also means investing our surplus cash—including our retirement accounts—in companies and infrastructure projects that create a more regenerative way of life, here and elsewhere. These choices are readily available. We just need to make the commitment.

This article first appeared in the Fall 2013 issue of Natural Investment News

Michael Kramer

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