STRATEGY 2 Sustainable Global Economy Investing: Raising the Bar
As exciting as it may be to expand your notions of investing to include the full range of strategies we describe here, much of the resilient investor's focus is likely to remain in the familiar realm of the existing global economy. That is where most of us have sought to build our financial assets (via salary and investment gains), and it is where we purchase most of our tangible assets: our transportation (whether personal or public, via airplanes or kayaks), our nifty gadgets (from juicers to smartphones), our food, our clothes—the list really does go on and on. Few of us would opt to give this up; we actively enjoy the fruits of this consumer cornucopia, many of which enrich our lives and empower our work and social engagement in profound ways. The role of this investment strategy is to help you work within the existing system as effectively as possible, making wise decisions and sound investments that move you toward your life goals.
Our approach to engaging with the global economy is, as the strategy's name suggests, oriented toward nudging it into higher standards of environmental ethics and social justice—two key elements of sustainability and resiliency. We are asking more from all the players—governments, corporations, and individuals—because our world needs us to do more. By making sustainable choices as we engage with the global economy as citizens, consumers, and investors, our actions within the global economy will be aligned with our activities in the other two strategies.
But do not let our talk of ethics and standards mislead you—the quintessential goal of making money remains central here. Successful engagement with the global economy provides a billowing tailwind that helps us sail into a more abundant future. As we grow our financial assets, we may choose to convert a portion of them into tangible and personal assets, and we can save for major expenses: retirement, house purchase, kids’ college education, vacations, charitable giving, and the like. And while we agree with the critiques of equating GDP growth with societal well-being,
it is also clear that the surplus generated by a thriving economy could be harnessed to reduce poverty and address environmental concerns.
Just as with the other two strategies, there is lots of room for making personal choices that reflect your own particular areas of interest. Some of you may be adamant about reshaping the corporate structures and priorities that underlie today's global economy. Or you might diligently consider the climate, habitat, or social impact of your purchasing decisions. Others will focus on investing in particular green sectors (such as renewable energy, natural foods, and worker-owned businesses), or will prioritize building a career that expresses their values. While a full-on sustainability warrior may do all of this, most of us are likely to pick a few fronts on which to add our two cents to the direction of the global economy.
This strategy is rooted in the muddle-through-up scenario, one in which the world moves toward a more prosperous future. Herein lies one of the trickiest realms for the resilient investor to navigate: our efforts to achieve sustainability (so that we can muddle through up) are taking place within a market-driven economy, one that entices us with “low prices” but does not account for social and environmental costs (and so pulls us toward muddle through down). Every time we buy gas for our car, patronize a chain store, or go out to eat, we are straddling the line between our ideals and what is readily available today. Buy your shoes at a locally owned shoe store: the shoes still came from somewhere, and it was probably not a local cobbler; that smartphone you rely on could be filled with the spoils of remote mining activity and oppressive working conditions. And even when there is a greener choice, it may cost more, so you might not be able to afford it!
Indeed our sustainable global economy strategy coexists uneasily with the status quo global economy; suffice it to say, you will find lots of opportunities for honesty and self-reflection as your well-intentioned actions leave you short of where you would like to be. Often you’ll have to settle for taking incremental steps. The best advice we know of to resolve these sorts of quandaries comes from a line in a Jiminy Cricket song, the one where he teaches Pinocchio how to make tough decisions, which is to “always let your conscience be your guide.”
Perhaps the most significant personal-level engagement we have with the global economy is our career choice. To what degree are you able to make a living while also gaining inner satisfaction from this huge investment of your time and attention? What aspects of your resilient life goals can you bring to bear in your work and with your work colleagues? How do you strike a balance between the demands of earning money and all of your other interests? Asking questions like these taps our desire to play a meaningful role in people's lives and to participate in the creation of a better world.
This same sense of personal connection can come into play while making financial investment decisions, a realm that has traditionally omitted this sort of reflection. Once we recognize that we have some leverage as stock owners, we can use it to effect positive change within the companies we invest in or to urge more-responsible corporate practices within the system as a whole. This has become somewhat easier to do as more corporations issue disclosure reports about their environmental, social, and governance (ESG) practices.
One result of our instant access to information is that we are increasingly aware of the consequences of our actions—and our inactions. This can lead people to decide not to invest in—or to boycott—the products of certain companies or even entire industries.
When garment factories in Bangladesh catch on fire or collapse, we learn which clothing brands ultimately bear responsibility for those deadly, inhumane working conditions. Exploding oil wells and the relentless progression of extreme weather events has led to calls for institutions to divest from fossil fuel companies and to the creation of a new category of sustainable mutual funds that are fossil fuel–free. And when the big banks’ risky and unethical practices caused a systemic financial meltdown, erasing a decade of market gains and putting millions of people out of work or their homes, the notion of “too big to fail” led to the “Move Your Money” campaign that helped people switch to local and regional banks so that their savings would support communities rather than foster reckless speculation.
The global economy has clearly produced remarkable social progress, but today there is a sense that things are stagnating, as if the economy is suffering from chronic fatigue syndrome. From 2003 to 2013, the inflation-adjusted net worth of the median household in the United States fell 36 percent. There is widespread doubt about whether the youth of today will have lives that are as good as their parents’. Concern about income inequality has soared as we watch the rich get richer while the middle class stagnates and the poor suffer the brunt of every downturn. And although the environment usually does not rank as high in polls when compared with these pocketbook issues, science is telling us that we really ought to be alarmed.
Many citizens are eagerly looking for strategies—both political and economic—to address these threatening storm clouds. The sustainable global economy strategy offers just that. It is based on the premise that our economic system can be changed from within, making it less exploitative and better able to meet human needs. Business-as-usual has a lot of momentum, so it's not going to reorient itself overnight; moreover these sorts of changes will not happen without effort. They require an engaged populace, working with persistence and using every possible leverage point to nudge the global economy toward a brighter future. Fortunately, there is plenty that you can do right now.