I started my career in energy and environmental policy and was admittedly a skeptic of global warming. As part of that work, I met with some of the top scientists and policy experts on the issue, both skeptics and believers. I sat in public and private meetings with Senators debating the merits of the science and the warnings. What first put cracks in my skepticism was reading Reagan’s former Secretary of State George Schultz’s interview in the Scientific American. In the article, Schultz stated that one of his primary geopolitical worries for the United States was global warming: “You know, a new ocean is being created for the first time since the Ice Age [in the Arctic with the meltdown of sea ice]. How could that happen? It's getting warmer.” I respected Schultz as a strategic and wise long-term thinker. At 92 years old, he was concerned then that policy makers were not doing enough to steward our planet for the next generation of children being born. Then, right after this interview, I had a conversation with an Admiral in the Coast Guard responsible for the Arctic describing his new task of monitoring the safety of the first-ever arctic swimming competition in that very ocean opening up due to global warming. It was hard to ignore the Admiral’s firsthand accounts.  This set me on an intellectual journey to understand our role in warming the planet.

Years later, in 2016, I met John Fullerton through my work as a foundation advisor and ever since this meeting, his thinking has challenged my way of seeing economics and our relationship with nature. John is the founder and president of The Capital Institute, and the author of Regenerative Capitalism: How Universal Principles And Patterns Will Shape Our New Economy. As a former Managing Director at JP Morgan, John was responsible for various aspects of the company’s global capital markets and derivatives businesses, and then ran the investment arm of LabMorgan.  John was one of the pioneers in the field of impact investing. 

Confronted with the risks of global warming and the financial system’s role in degrading our biosphere, John eventually left the epicenter of the financial system to work on the system from “the outside in.”  He launched The Capital Institute as a think tank, partnered with the Yale University Center for Business and the Environment and worked “to explore and effect economic transition to a more just, regenerative, and thus sustainable way of living on this earth through the transformation of finance.” Over the last few years, John has been a keynote speaker at some of the most important philanthropic and impact investing conferences on the future of the economy.

At the same time as meeting John, I was also reading Laudato Si by His Holiness Pope Francis and working on collective efforts to put Laudato Si into practice. While Pope Francis was calling citizens of the world to understand the ethical and philosophical reasons to care for our common home planet earth, John was doing the complimentary work in thinking through the practical systemic changes that would need to be put in place to reverse the degradation of our natural environment.

Here are some of the key paradigm shifts that John helped me see:

We are embedded in natural, living systems: For most of us, we live most of our days in artificial, man-made environments and spend the remainder of our time inside the virtual reality of the digital world. In this context, it is easy to forget our dependencies on the natural world. At the core of John’s work is a relational worldview: “Humanity is an integral part of an interconnected web of life in which there is no real separation between “us” and “it.” The scale of the human economy matters in relation to the biosphere in which it is embedded. What is more, we are all connected to one another and to all locales of our global civilization. Damage to any part of that web ripples back to harm every other part as well.”

Human flourishing is interconnected with planetary flourishing: Plato said “To seek the whole is love,” asking his ancient Greek followers to seek to understand their place in the whole order and pattern of reality what he called the Logos. In this same vein, John advocates for a new holistic way of seeing wealth and prosperity: “True wealth is not merely money in the bank. It must be defined and managed in terms of the well-being of the whole, achieved through the harmonization of multiple kinds of wealth or capital, including social, cultural, living, and experiential. It must also be defined by a broadly shared prosperity across all of these varied forms of capital. The whole is only as strong as the weakest link.” His work is distinct from the traditional approaches to “sustainability” which merely focuses “on social and environmental health using traditional reductionist logic to ‘solve problems,’ [whereas John’s regenerative economics] aims directly at building healthy human networks as the objective, drawing on universal principles and patterns, with “sustainability” becoming an outcome, a natural byproduct of systemic health. It is like holistic healthcare in contrast to reductionist disease care.”

Earth has biological boundaries and we are living beyond them: Living within liberal democratic societies that value freedom as one our ultimate goods, it is difficult for us to conceptualize limits on our economic freedoms. John has helped me see beyond the false assumption of unlimited growth to see that our economic growth needs to be the kind of growth that regenerates our biosphere: “Economic activity is already breaching four of nine critical ‘planetary boundaries’– atmospheric carbon, nitrogen and phosphorous flows from agriculture dumped into our river systems, land use changes, and the rate of biodiversity loss. Fresh water stress in specific locations is on the rise. In the process, we are compromising the Earth’s interconnected life support systems.”

Markets are part of, not the solution: John along with other market practitioners like Joe Ritchie taught me to question market fundamentalism: “Instead of believing a laissez-faire market system can somehow magically solve long-term systemic challenges if only we can improve market efficiency and transparency, regenerative actors understand that markets, while central, are but one of a number of institutions involved in systemic health. Others key institutions include governments, community institutions, educational institutions, commons trusts, non-profits, foundations, etc. Markets address certain problems well but not others.”

A Q&A with John Fullerton, Founder of The Capital Institute

To learn more about what various types of institutions can do together to reform the economy, I asked John a few questions. Some of his ideas resonate immediately, others I am still exploring. Regardless, I appreciate how he makes me think more critically on these questions. I hope it encourages you to see our economic and ecological systems in a new way and spurs us all on to practical actions rather than change our man-made systems to support human and planetary flourishing:

• How would you describe human flourishing in the context of a regenerative economy?

“A regenerative economy would provide the essential social and ecological foundations upon which individual flourishing is possible.  By aligning our economic system design with what we understand about how all healthy living systems work in the real world, humanity, and each of us individually will be set free to realize our potential, unburdened by the present life threatening and dignity draining struggles of daily life.  As a result, our struggles will not cease, but they will become productive and life-enhancing struggles: the struggle of self-actualization and collective self-actualization.”

• Where do you see the most promise in harnessing new technological innovations in bringing about a regenerative economy?

“The most obvious area is in energy.  Not only do we need to rapidly transition off the burning of fossil fuels, we must move toward a totally renewable (in fact, not just in name) non-extractive source of energy for our human needs and desires.  This includes the rare Earth minerals currently required for our so-called “renewable energy” systems.  So our energy technology must continue to evolve radically from here, both in term of energy source (some are now talking about plasma) but critically as well, our ability to rapidly and massively deploy it without requiring an unacceptable carbon footprint to do so.

Less obvious perhaps, but equally critical is our ability to manage the landscapes and seascapes of our one planet.  Human decision-making now controls virtually the entire surface of the planet, and much of it is grounded in reductionist, short-term financial optimization with no regard to a sustainable future.  Shifting how we think and manage is therefore critical.  We must develop a relationship with our environment in which our economic activity is the engine that drives ecological regeneration, not to ecological disaster, as is now the case.  In particular, we must restore the health of our critical carbon sinks, and understand how we can mimic nature in building soil without limit by simply unlocking the most powerful technology ever “invented” – photosynthesis.   And getting our heads around this will demand highly granular and distributed information, but also the contextualized information that too often remains invisible – warm data.  Certainly, AI and blockchain technology can play perhaps an essential role in this challenge if we manage to guide our use of these technologies with genuine wisdom.  We must start with the wisdom of the only civilizations that have managed to sustain themselves over the long term, namely, indigenous wisdom.”  

• Given the model of regenerative economics, where do you see the most systemic risks for investors in the current economy?

“Investors have two massive risks that they seem unaware of.  First of course are stranded assets.  In 2011, I estimated this risk at $20 Trillion, arguing that we have a choice to take a write off of that magnitude, with all the financial and economic implications, or we fry the planet and destroy life as we know it (and destroy the economy in the process).  Al Gore just put it at $23 Trillion in his speech at the COP in Madrid. [Citigroup estimates this number at $100 trillion]. The ramifications of this are literally unimaginable. But we simply need to deal with this reality.  What I’m calling “systemic philanthropy”, combined with MMT (Modern Monetary Theory) holds the key to managing this transition without total social collapse.”

The second risk no one is thinking about is the valuation of all financial assets in a world under increasing ecological limit constraints.  This “head wind” to conventional economic growth will not be felt uniformly.  But in aggregate, future growth rates will either be under increasing pressure from real world and policy constraints (or we will destroy the planet).  So the value of stock markets and all financial assets that are leveraged to growth will need to adjust downward to this new context.  Based on this new context (and current rich valuations especially in the US) one could easily construct an argument that the broad indexes are overvalued by half or more.  The point is, in the future I think we can expect, resilient and responsible to our future cash flows (like from renewable infrastructure projects) will be valued (appreciated by investors) more, and the growth of extractive businesses (whether from natural resources or from people) will come under pressure to be valued less.”

• If you were a new CEO of a major bank, what would your top three priorities be to bring regenerative economics into the mainstream of finance?

The GABV (Global Alliance for Banking on Values) does a pretty good job already, even though they frame it as “values based banking.” But I think they are moving toward the regenerative framework soon (I gave the keynote at their 10th anniversary event and challenged them to it which was well received).  This report shows GABV banks outperform financially as well.

The three priorities for incoming bank CEO’s would be:

1.    Begin with re-imagining what regenerative leadership looks like.  Use a holistic context and first principles to do that, and to set the strategy. 

2.   Finance the real economy rather than financial speculators.

3.   Finance what needs to grow (renewables, small business in general, ‘b corp’ type businesses, etc and cut off any financing of the “bad” (fossil fuels, etc)

4.   Focus on one or a few select bioregions where there is historical and cultural fit [for regenerative economics]. 

(ok that was 4!) 

• What role do you see mayors and local leaders playing in building regenerative economics at a local level?

Bioregions are the natural and logical organizing unit of analysis for regenerative economies.  They also have the granular information necessary to make critical and contextualized decisions that affect local people and local ecosystems, the nexus of regenerative economies.   So power must shift to bioregions.  Mayors and local leaders shift from being “under” more powerful leaders to leading such national leaders by example and demanding of national leaders what they cannot accomplish on their own. 

For more information on how cities and states are building regenerative bioregions check out John’s work here.

• What role can philanthropies play in building a regenerative economy?

Philanthropy (broadly defined to include all surplus capital in my ideal state) must find a new name.   Philo – anthro - “love of man” is a very human-centric idea well suited to prior centuries and eras, but not well suited to the Anthropocene and the Integral Age when we can no longer separate “man” form “nature.”  Love of our fellow human beings means love of Earth. 

We should redefine [philanthropy] to include all surplus capital because if we awake to the reality that the enormous pile of surplus capital we have created from modern capitalism has come at the expense of a decline in natural capital (and the associated ecosystem function upon which all life depends), and at the expense of social capital (despite claims that more people have been lifted out of poverty (defined as $1 day).  We live at a time when the vast majority of humanity is struggling at best, and often miserable, living in fear for the next paycheck, the next illness, and now even having to contemplate the possibility of extinction due to climate change.  Certainly the prospect of human thriving is a far off dream, beyond the reach of most imaginations today, even in the “advanced” economies of the west.

So we need to understand that the purpose of this surplus capital, whether sitting in a foundation or not, must be to serve the transformation to a truly regenerative economy, and in the process, as necessary, transform itself into natural and social capital whose value is what is now scarce.  How much and who becomes the moral question of the moment.  But when roughly half of the estimated $360 Trillion of global wealth is concentrated in the top 1% of humanity, certainly there is ample surplus wealth – easily in excess of $100 Trillion - to tackle the defining challenge of our time:  Systemic transformation of our economy to one that is regenerative by design.  That is what “systemic philanthropy” is all about.  And it will take all shapes and forms, not just traditional project grants.

If you want to check out more of John’s ideas, you can watch this Big Think video below or for even more insight read his white paper on Regenerative Economics.