Valuing Natural Capital
The investment strategy behind Portfolio 21 is an understanding that adaptation to changing global environmental investment risks is inevitable.
The critical flaw in today's economic models—and therefore Wall Street's investment process—is the embedded assumption that natural capital and therefore economic growth are unlimited.
During the 60 years since World War II, we've voraciously availed ourselves of the earth's abundant natural capital, acting as if we had an endless supply of essential natural 'products' such as fossil fuels, clean air and water.
In 1960, our world economy and its three billion people consumed half of the earth's bio-capacity, that is, half of what the earth was able to renew, recycle or produce like clean air and water, timber and cropland. By 1985 our economic footprint was equivalent to one earth's production of goods and services.
Today, there are more than six billion people and we now use the planet's resources faster than they can regenerate. We are exceeding the earth's ability to renew itself by 20%, or in investment terms, we are spending principal. This is dramatically reducing our planet's ability to meet our future needs for such essentials as clean air and water.
The investment strategy behind Portfolio 21 is an understanding that adaptation to changing global environmental investment risks is inevitable. The earlier this thinking is integrated into business practices, the more natural capital we'll be able to retain for future generations, and the greater the economic stability we will be able to achieve.
We believe companies that prove this understanding by innovating with environmental sustainability strategies have a real competitive advantage today and are poised for further leadership and innovation in the future.
The Fund's environmental policy could cause it to make or avoid investments that could result in the portfolio under-performing similar funds that do not have an environmental policy. There are no assurances that the fund will achieve its objective and/or strategy.