These days with the extreme weather events, new virus variants, and economic uncertainties regularly making headlines I find my thoughts turning to how to build climate resilient wealth. On the one hand that means emphasizing the sustainable and non-financial stores of value I highlighted in this post. It also means investing my retirement savings in the solutions to our challenges and NOT the causes. I cannot achieve that outcome investing in the stock market, which prioritizes shareholders and profits above all else, even the SRI & ESG options (for the sake of transparency I’ll remind readers that about 30% of my retirement account still resides in ESG/SRI funds). The change I want to see in the world can only be brought about through regenerative finance.
- What is the Regenerative Economy?
- Regenerative Finance Leaders
- Regenerative Agriculture – the Gateway to Regenerative Investing
- Regenerative Investments in People (Not Just Planet)
- Is Investing in the Regenerative Economy Only for the Wealthy?
- How to Start Dabbling in Regenerative Finance When You're NOT Wealthy
This prompts the question…..
What is the Regenerative Economy?
Our conventional economy is extractive, linear, and very short sighted. Resources such as water, soil, and entire eco-systems, as well as people (more on that later), are regularly depleted, exhausted, and exploited without concern. Given we live on a finite planet, our current economic model, which will only lead to further destruction and suffering, is not sustainable.
It’s gotten to the point where we need to go beyond sustainability and maintaining the status quo to a regenerative approach. When we look at this in the context of economics that means restoring and regenerating our natural and human capital. Some of you may have heard of the circular economy, which is based on the principles of designing out waste and pollution. This is a step in the right direction, but doesn’t go far enough because it would merely sustain where we are currently.
In a regenerative economy the assets are restored, renewed, improved, and enriched, not just recycled. It’s modeled on nature’s ability to maintain healthy eco-systems that are constantly getting richer (in biodiversity, flora & fauna, etc.) with all of the elements interacting in very synergistic ways with a continual ebb and flow of giving and receiving. The philosophy and concepts behind the regenerative economy draw a good bit from the ways indigenous populations think about wealth and stewarding valuable resources – they have so much to teach us.
Back in 2018, during a presentation to Brazilian business leaders, regenerative economy consultant B. Lorraine Smith outlined a simple framework of 3 key elements of the regenerative economy.
1) The “economy and all of the businesses that make up the economy, capture more carbon than they emit.”
2) “It restores biodiversity, and it restores ecosystems through the businesses that are part of this economy.”
3) “It generates quality of life through means that are just and inclusive for all.”
Regenerative Finance Leaders
One well-known voice in the regenerative economy space is John Fullerton. After resigning from a position at JP Morgan he spent a number of years exploring other ways of thinking about wealth and economics. That culminated in the publication in 2015 of his booklet Regenerative Capitalism: How Universal Patterns and Principles Will Shape the New Economy. His team at the Capital Institute developed this slightly more complex and specific, but still easily digestible visual that outlines the guiding principles of the regenerative economy.
There’s also Kate Raworth, who bills herself as a renegade economist -that’s my kind of economist!!!. She has gained quite a bit of traction with her book Doughnut Economics. Her central premise prioritizes thriving over growth and meeting human needs without overshooting Earth’s ecological ceiling. This framework was adopted last year by the cities of Amsterdam and Brussels.
Regenerative Agriculture – the Gateway to Regenerative Investing
Outside of the medical field the word regenerative is most commonly used in connection with agriculture. So to the extent that people have even heard the word regenerative used it’s often in connection with agriculture (or medicine). Given how depleted the soils are on so many conventional farms around the world, it’s not surprising that this is the case.
There’s no standard definition for regenerative agriculture, but the primary emphasis is placed on restoring and rebuilding healthy soil. This soil health is achieved not by using chemical fertilizers, but by using the natural resources on site (cover crops, rotational grazing, etc) with the goal of creating a more resilient and productive farm.
Not surprisingly, when searching online for information on regenerative investing one encounters many references to regenerative agriculture. Unfortunately, for the time being most of those opportunities remain the terrain of wealthy and institutional investors (more on that in a bit).
One thing retail, non-accredited, and non-wealthy investors like myself can do is to let our interest in investing in regenerative agriculture be known to those in our area who are farming and caretaking land. One of the first investments I made after opening my self-directed retirement account was to purchase an ownership share of a local permaculture farm. That remains my largest investment to date. A year after that I (and many other locals) made a low-interest loan to a friend, who stepped up to save our area’s longest operating organic farm. He succeeded and has since paid back all the loans in full.
Those interested in delving much deeper into this topic may want to listen to Koen van Seijen’s Investing in Regenerative Agriculture and Food podcast.
Regenerative Investments in People (Not Just Planet)
In addition to soils and ecosystems that are out of balance, our planet is populated with people who are mentally, emotionally, and physically depleted as a result of our extractive economic system. Regenerative investing opportunities are not limited to farming, forests, and food. We can also make investments that support a life-affirming economy, new economy, or solidarity economy.
The group of people that came together back in 2016 to form Regenerative Finance outlined the following list of values, which represent the world they’re “working together to usher in.”
- Builds Community Wealth
- Shifts Economic Control
- Democratizes the Workplace
- Drives Social Equity
- Advances Regenerative Ecological Economics
- Re-localizes Primary Production and Consumption
- Strengthens the Public Sector
- Builds Movements and Power
- Retains Culture and Tradition
- Restores Indigenous Sovereignty and Promotes Decolonization
- Restores Right Relationship within Ourselves and with Our Communities
Is Investing in the Regenerative Economy Only for the Wealthy?
Most middle class, not wealthy, and non-accredited investors like myself build wealth by investing in the stock market through our brokerage or employer based retirement accounts. One of the reasons this is the case is because of the Securties Act of 1933. This legislation, which wanted to protect non-accredited investors from getting swindled, put costlly requirements in place that made it very difficult for private companies to make their investment opportunities available to us.
Since regenerative finance only exists OFF Wall Street and largely involves investing directly in private companies, it has primarily been limited to non-accredited and institutional investors. Making it unintentionally somewhat elitist, which is sadly ironic.
That’s slowly beginning to change thanks to crowdfunding platforms, other innovative local investing mechanisms being experimented with in a number of communities, and people’s growing desire to pursue values aligned investing. Increasing interest in self-directed retirement accounts is also facilitating this shift.
How to Start Dabbling in Regenerative Finance When You’re NOT Wealthy
I’ve spent a lot of time over the past seven years learning how to be a DIY non-accredited regenerative investor outside of the stock market. Along the way I’ve encountered other bold, frustrated, pioneering people like myself, who were also ready to break free of Wall Street and start applying their most powerful lever – their $$$ – to bring about the change they want to see in the world. So it certainly can be done.
So maybe now you want to invest in the regenerative economy, but don’t know where to start. I’ve compiled what I’ve learned about socially conscious investments outside the stock market into a pay what you want Beginner’s Guide to Regenerative Investing.
This guide is delivered in a 1 hour video presentation and covers the following:
- overview of the current regenerative investing paradigm
- regenerative investing options for non-accredited investors
- helpful resources
This Guide does NOT cover –
- how to invest
- how to perform due diligence
Learn more and access the guide today so you can start shifting your investment portfolio allocations towards a more regenerative future.
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