A commentator on the impact investing and associated fields - now red-hot topics in wealth management - discusses his approach to sustainability and a healthy relationship with money.
There is a great deal of discussion about using wealth virtuously – not in some shallow, “signaling” way but to genuinely achieve positive impact in the world. This can cover investment, as has been seen in the trends of using financial firepower to improve the environment, cut illiteracy and make companies more transparent. It can be seen in how philanthropy is changing from writing out a large check to getting involved up close in the causes and problems that philanthropists care about. The trend also includes preparing inheritors for wealth so they use it wisely and don’t allow money to define them or make them lazy and unfocused. This is a wide field.
A person in a great place to map out the territory is Benjamin Bingham, who has written extensively for Family Wealth Report (see here). A respected thought leader and figure in the investment field, it is good to welcome Benjamin back to these pages. His article is taken from the first chapter of his new book.
As ever, this publication does not necessarily endorse all views of guest writers and welcomes lively debate. So don’t be shy: email the editor at email@example.com
The following is the first of a series of excerpts from the forthcoming book "Saving Money to Save the Planet" a sequel to my first book, which can be found at www.makingmoneymatterbook.com. The question behind this book, behind questions about investment and the purpose of money, is a much bigger question: what is the future of humanity, and how much of a difference can we make to the answer? The premise is that money follows the path of our intention and intention is a choice. What future will humanity choose? Can we save money from its current guilty status and instead put it in a virtuous role of funding the needs of our time?
Right now, it is assumed that in the next 10 years 800 million current global jobs will be wiped out by Artificial Intelligence (AI). That’s 50 million in the US alone. That means that much of the work humans are doing today is mindless, repetitive and easy to code. The positive side of this is that humans will have to learn to excel in ways that are distinctly human. To develop character, to show their unique combination of individual strengths that no robot can replicate in more than a shallow way: this will become essential for job security.
So, this book is also an attempt at giving credence to the possibility that money will follow this trend to a new world of positive psychology, character building and the need for and recognition of virtues. This will be driven in part by economics, rather than by intellectual elitism. Special talents will be essential to adding value. For example, as most data crunching will be automated, important distinctions will depend on a finer, intuitive sense that cannot be programmed but can be learned. As financial advice becomes increasingly programmed and legal docs are increasingly exposed as pure boiler plate copies, even these high paying jobs will have to develop character strengths and even, dare I say it, wisdom, in order to maintain their relevance.
As Steve Schwartzman, the co-founder of Blackstone (at $470 billion, the largest private equity group in the world) says in his Op-Ed at the time of funding AI studies at MIT: “An ethical approach to AI requires coming up with a long-term understanding of the values we want to see reflected in this technology - and shaping rules that create confidence that AI’s applications will reflect those values. Those values and rules will be found at the intersection of ethics, law and international relations; they won’t come from Silicon Valley alone.”
Parallel with this societal change risk is the climate risk we all face, whether conservative or progressive: we have to become smarter about how we live on the planet if we intend to locate here for the foreseeable future. This is again an existential character-building exercise, because it may involve saying no to things we tend to like, that, for example, require more power. Investor character will play a big role in this story. Imagine the character it will take to stop mining bitcoins with warehouses full of computers crunching numbers, because they are currently using more power than many countries just to make the owners rich!
It will no longer become acceptable to do whatever it takes to make money. Why? Because our future is at stake and there are too many important profitable things to do!
One of the characteristics of money is that it is virtual and almost unfathomable. For the wealthiest and the poorest there is never enough. For the wise, money becomes a tool, an expression of intention. For the fool, it becomes the only goal, a never satisfying end in itself that takes over our psyches. We have spent unfathomable trillions on war already in this Millenium while the Forbes list of Millennial billionaires continues to grow. Such large money numbers are imponderable at first. They need a context of comparable and ponderable scale.
Where did the money come from, where did it go and why? We seem to be losing a sense of the “forest for the trees” or is it that we don’t even see the trees anymore and are sleep-walking through a blurry forest dream with stakes that are too high for us to grasp. Human beings are much more individualized than trees, which makes the generalizations of economists, historians and market pundits touting these big numbers seem abstract and distant. Nevertheless, the way we relate to money is a big part of our individual story. Money is an expression of who we are. Making this idea real is the intent of this book.
Putting the nouveau wealth of thirty-something billionaires aside, how do we relate to the number of soldiers who had boots on the ground in Afghanistan and Iraq that are also in their thirties or forties and will never walk again? What about the trillion dollars it will take to cover the 900,000 claiming new veteran’s disabilities for the years ahead? Caught in the speed of life can people with wealth take the time to ponder such numbers? Do we have time to think about how much we could do to change the way the world works? Or do we have to just stay laser focused on “making” more money?
Clearly this varies greatly. For increasing numbers of qualified and institutional investors there is evidence of a conscience and a desire to give back. What will tech founders do with the billions as they diversify away from the single stock that made them fortunes overnight? Will their investments reflect their values? Will they take the Divest/Invest pledge https://www.divestinvest.org/ along with the Buffett pledge to give away half their wealth over time? Isn’t this a question of character? When will they follow up and step up?
Remember how oil was at $25/ barrel in 2005 and the nation had enjoyed a balanced budget and little debt due to the “peace dividend” of the Clinton years. It was our recent hope that we would be again entering another time of peace and prosperity, but instead now it seems we are positioning ourselves for more expensive militarization.
If young tech billionaires, foundations, pension funds and other private investors would collaborate and invest in improvements for our world, in what might tentatively be called the “Good,” imagine what could be done! If the wealthy ones around the globe who have marched in support of a healthy planet invested their resources in solutions to climate risk rather than owning stock portfolios that support the military industrial status quo, they would be walking their talk!
I respect protestors but have never loved crowds. I missed a chance to march with Martin Luther King, left Woodstock early in spite of the music, and stayed in my darkroom at Yale when 10,000 came to protest against the legal system. I did not march for the climate. But I do vote with the way I invest. Our individual decisions about money are driving the way this world works. What you buy or sell, borrow or lend, give or take, invest or divest is on your conscience…or not, but it still matters. The wounded soldier or homeless refugee ultimately pay the real price of war, but it is our money that funds it, just as we fund the destruction of the environment and the dehumanization of intelligence. Billionaires may have the most leverage, however all individual investors have the power to value what matters to them. Can we imagine money in a virtuous cycle powered by our humanity? The practicality of virtues driving financial decisions will be explored in the chapters ahead.