Investment Philosophy
For the past century, a single force has dominated our economic landscape - growth.
Unlimited growth has been the expectation for as long as there's been a stock market and it forms the foundation of all traditional investment strategies. But this global growth in wealth, population, technology, and consumption has also vastly expanded our demands on the planet's resources and services.
"The economy is a wholly owned subsidiary of the environment, not the other way around." --U.S. Senator Gaylord Nelson
Human demand continues to exceed the earth's supply of renewable resources, which in turn creates stress on these systems and their ability to serve the economy through the 21st century. We believe this limit on future growth represents the greatest risk and uncertainty in the economy, and that the next several decades will be truly transformational on a scale similar to the Industrial Revolution.
Key Principles
- The global economy is exceeding the earth's carrying capacity at an unsustainable rate and is approaching a natural limit to growth.
- Selective growth investing is an imperative as a limited number of companies will successfully benefit from the rapidly changing environment.
- Integrated risk analysis is required to quantitatively and qualitatively assess financial, environmental, social, and governance factors impacting industries and specific companies.
The Portfolio 21 investment thesis is predicated upon these key principles. We believe traditional investment analysis underestimates the long-term opportunities and risks associated with ecological limits to economic growth, leading to persistently mispriced assets. Further, patient investors employing an ecological framework can achieve investment returns that exceed market averages and our peers.
