Financial market volatility and depleting natural resources together present a challenging outlook for investors. How can individuals and communities be more resilient amid growing political and fiscal turmoil throughout the world? How can we impact change?
Chris Martenson, futurist and author of The Crash Course, believes that we’re asking young people to step into a story that does not fundamentally make sense: work hard, go to college come out with debt, then enter an uncertain workforce that no longer honors long-term commitments. “Oh, by the way,” he said, “there’s this huge debt load you’re going to have to pay back. And here’s your crumbling infrastructure. Sorry, we didn’t invest it well.”
How do we change that story? According to Tom Van Dyck, senior vice president, RBC Wealth Management, people under the age of 35 have a lot of power. They can take control of their destiny by voting, and not just in the ballot box. “They vote with their dollars every day by what they buy. And they vote with how they invest.”
Martenson agreed. “Change comes from the bottom up.” He went on to say, “If we leave it up to our political leaders, we’ll have to get into crisis first. Greece is my model for this.” Will what’s happening in Europe now come to our shores? “Absolutely. It’s a mathematical certainty.” We’re on an unsustainable course, fiscally and economically. “Let’s shape a future by design rather than by disaster.”
Regarding energy, Martenson believes there’s much we can do, with solar for example. However, he said that we’re not in an energy crisis—there are a lot of ways to make electricity—we’re in a liquid fuels crisis. “It’s going to take a long time before any combination of alternative energy can make a significant dent on how we use our liquid fuels.” In response, Van Dyck said that we should start converting the economy immediately to something much more sustainable. He spoke of cradle-to-cradle design, where all costs and externalities are priced into the product. That’s what sustainable investing pushes for. “It’s not a free market when pollution is a subsidy.”
According to Martenson, “Once we understand that the natural capital is being depleted, it’s like the principal balance of bank account being drawn down.” If we squander that, we will have declining living standards. We have to use hydrocarbons wisely, with an eye toward the future.
Looking toward the future, Van Dyck believes innovation is the answer to becoming more sustainable. And one path toward innovation is a carbon tax, one that would increase gradually over time so business could plan for it. “It’s not politically viable,” he said, “but that doesn’t mean you shouldn’t do it.”
Following on that, Martenson pointed to the energy shock of the 1970s. In Europe they put a high tax on their petrol to shape behaviors, and now they use about half the energy per capita while sustaining a high quality of life. “There’s absolutely no question that people respond best to economic incentives.”
What is an individual investor to do? The first thing, according to Martenson, is to invest in yourself. Get out of debt. He also sees high ROI in energy efficiency in your home and local infrastructure.
Van Dyck spoke of investing in companies with higher quality management teams that use sustainable practices.
“The facts are very compelling,” said Martenson, but we are not having a discussion about facts, we’re really having a discussion about beliefs at the heart of it.” We have to model it without any expectation that people will follow.
– Lucy Sanna
April 24, 2012
Photos by Rikki Ward
The Commonwealth Club of California