THE NATURE OF INVESTING by Katherine Collins, Bibliomotion, Inc., Brookline, MA, 2014
THE WORLD WE MADE by Jonathon Porritt, Phaidon Press, Forum for the Future, UK, 2013
Katherine Collins, author of The Nature of Investing, is also a successful veteran asset manager of a multi-billion dollar mutual fund for Fidelity, and head of their US Equity Research. After 20 years, Katherine Collins decided to widen her investment lens, first by earning an MTS degree at Harvard Divinity School, and then taking a professional course in biomimicry and becoming an investor in the field's premier global company, Biomimicry 3.8. For full disclosure, Collins also serves on Ethical Markets Advisory Board, and I am also an investor in Biomimicry 3.8 which is a privately held, Certified B Corporation, as is Ethical Markets Media (USA and Brazil).
Collins takes the reader through all the intricacies of professional asset management and how it evolved into today's complexities, driven by mathematical models, benchmarks, algorithms, securitization and the proliferation of derivatives which led to the collapse of the housing bubble and the crises of 2008 and beyond. Unlike many of her Wall Street cohorts, Collins became increasingly uneasy about the growing abstractions, empty formulas and focus on short-term returns dictated by the conventional financial models. Collins decided to refurnish her mind, explore the world of values, ethics, assumptions, and finally, to re-explore the real world, not just of Main Street, but the basis of human survival and success on this planet: how life forms evolved successfully over the past 3.8 billion years.
This deeper worldview is the basis for biomimicry, i.e., understanding how nature designs and innovates, codified in Life's Principles, the core curriculum taught in the global education and corporate innovation programs offered by Biomimicry 3.8, whose clients include multinationals Interface (NASDAQ:TILE), Procter and Gamble (NYSE:PG), Holcim (OTCPK:HCMLF), and Brazil-based Natura. Increasingly, companies see the biomimicry model as the path to innovation: re-designing their products and processes for minimizing energy and materials waste, using lessons from many species to improve their products and operations for long-term profitability, while capturing huge savings through radically enhanced efficiency.
While many companies are innovating through mimicking nature's designs, utilizing green chemistry and lighter elements in the Periodic Table, financial firms, pension fund managers and other institutional investors are still using the obsolete formulas derived from economic theories which led to the financial collapse of 2008. Worse, many are doubling down on the old models of risk assessment which failed so spectacularly, and finding more dubious shortcuts to hype performance, high-frequency trading, selling unsuspecting local governments interest rate swaps, manipulating LIBOR, protecting tax havens, lobbying against reforms and the below-1% transaction taxes introduced in many countries.
Collins, using her newly acquired knowledge, shows how to measure companies and portfolios using the yardsticks of biomimicry and Life's Principles to identify good management, and long-term resilience and sustainable prosperity. This approach is now available for licensing as a turnkey, scientific knowledge system, including some of Collins' input, as the Principles of Ethical Biomimicry Finance®, with a growing list of exemplary companies that successfully use such principles. Collins is now a sought-after presenter after her TED talk, and is reaching asset managers beleaguered by demands to purge their portfolios of polluting companies, fossil fuel producers and shift to the cleaner, knowledge-richer companies like those we track in our Green Transition Scoreboard®. This transition is now global and unstoppable, as solar, wind and energy efficiency are scaling rapidly and becoming cost-competitive with 19th and 20th-century fossilized sectors. Collins' new firm, Honeybee Capital, is pioneering these resilient investment strategies through biomimicry. Time for asset managers to learn this new paradigm!
Jonathon Porritt is Britain's foremost futurist, founder of the influential Forum for the Future, and his The World We Made is a look back from 2050 as if asset managers and companies have learned from Katherine Collins' The Nature of Investing and the consulting practices offered by Janine Benyus, author of Biomimicry and founder of Biomimicry 3.8. The World We Made is deeply engrossing, with hundreds of illustrations and visuals of the designs, technologies and scientific principles that undergird the global transition from the early fossil-fueled Industrial Era to the green economies now embraced by 191 countries at Rio +20 in 2012, the OECD and many pioneer asset management firms, including Domini, Calvert, Parnassus and many others, using all the new metrics from GRI, SASB, IIRC, which I cover in "Mapping the Global Transition to the Solar Age."
Porritt has been a pioneer educator, campaigner and leader in reform of London's capital markets for decades. He outlines in this book his prescriptions for "Taming Our Capital Markets" (p. 220), critiquing the obsolete model of austerity based on theory-induced blindness of economic advisors, central bankers and politicians. Porritt advocates a financial transaction tax (FTT), now gaining hold in the EU, envisions a global FTT to curb tax havens and sees an International Court for the Environment, analogous to today's International Criminal Court (ICC). Porritt's vision is of the successful evolution of human societies as they shift their resourcing from digging in the earth to using the free photons from the Sun and redesigning all our products, processes, buildings, cities and agriculture to conform with our growing knowledge of how our planet actually functions. This book belongs alongside Collins' The Nature of Investing as an inspiring and vivid picture of what our world will be like if we apply the lessons and the technologies already at hand: successful, prosperous, more equitable societies for our children and our human future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.