Regenerative Wealth
What if we could make money by making the world a better place for everyone?
In today’s world, money makes money. If you have savings, you expect to get paid an interest on them. If you hold stocks & shares, you are only doing so for the return on investment (ROI). Many people buy houses and rental lets to make an income on them in the long run. There is a whole movement (called Financial Independence) that focuses on accumulating enough money to live off the returns. We’ve turned money from what it is — a store of value — into an income generating tool. This is fantastic…..if you have money. And it is this simple principle that allows many wealthy people to not have to work.
In the above formula, only the return on investment is considered. We put in £100, we get £105 back. But where did those £5 come from? And how much more wealth was generated/ destroyed?
Luckily many investors are starting to ask these questions. A combination of the damages companies do to the earth as they extract value, but also the decline of ROI has people looking into alternatives. When Shell is offering 10–15% ROI, it’s easy to look the other way at how the money is being made, but as returns from big banks, companies, stock markets and savings are hitting all time lows, we are finally free to start moving our capital to more sustainable or regenerative investments instead.
Today, banks are attempting to greenwash themselves and offer sustainable investment opportunities, because they can see the emerging trend. Millennials are looking at investments as a reflection of who they are, and the principles they believe in. Resource Generation is a company that helps people who have inherited wealth (and held in the form of oil/coal shares) to divest from those industries and into regenerative alternatives. Ethical investment opportunities are popping up in every investment fund, and they are outperforming traditional investments. It’s estimated there is already over $17 trillion in sustainable and responsible investments as of 2020, with more to come.
As global understanding of wealth creation has improved, it is natural that we want our money to do good i.e. make the world better, or at least not make it worse i.e. bankrolling fracking, oil extraction, deforestation, arms, drugs, violence etc. But while sustainable — to continue at the same level for a period of time — and ethical — investing in companies whose business is not considered harmful to society or the environment — are steps in the right direction, we should be focused on trying to build regenerative wealth investments.
What is Regenerative Wealth?
The concept of regenerative wealth is built from other disciplines — including regenerative agriculture, permaculture, finance and economics. Regenerative wealth doesn’t just look at ROI in terms of money, but also looks at all the other wealth created from investments — job creation, benefits to local communities, improvements in the ecosystem, improvements to health, society and environmental challenges. A lot of wealth can be created for a lot of people if we start looking beyond the basic monetary returns, and instead look holistically at how to creatively fix problems that exist, and fix them in a way that leaves everyone and everything better off.
What are Regenerative Wealth investments?
Companies that focus on regenerative wealth are not often talked about in mainstream media but they are out there and they are offering great returns. For example, Triodos bank, has a crowdfunding section of the company offering a range of investment opportunities focused on creating positive change, while offering returns of 4–7%. Greensill have made a profit by rejigging the supply chain finance to allow small businesses to get paid faster for their invoices, and have done the same to salaries, allowing individuals to access their earnings daily at no extra cost. Other companies have made money by buying student loan debts, refinancing it to allow debtors to pay back a lower interest rate and less overall.
The above three examples are related to finance, but regenerative wealth investments exist in every industry. Regenerative agriculture is a set of farming processes focusing on improving soil quality and increasing biodiversity, which in turn helps capture carbon, improves the quality and quantity of harvests, improves watershed and ecosystems leading to improved vitality and reliance for local farming communities. Essentially, the better you make your soil and environment, the better it will be for all stakeholders (and your crops will be of better quality and so will likely sell for a higher price). This applies to everything: companies that attempt to add value to all stakeholders (rather than shareholders) will create wealth for everyone.
New technologies are often at the forefront of regenerative wealth investments, with the biggest ones currently being renewable energy sources. Solar panels are another regenerative wealth investment, with one UK journalist estimating that he can earn £650 per year (or a 7% ROI) just by installing solar panels on his house. Another area of regenerative wealth investments are in creating efficiencies through recycling. Amazon has now switched to using 100% recycled cardboard for their packaging (after the pressure of mounting waste). Companies have popped up buying cardboard from local governments, or even collecting it for free (on behalf of local governments), processing it and selling it to Amazon. The same goes for plastic and glass, as more companies want to produce products with recycled plastic, the demand for businesses to supply recycled plastics has grown. With these companies getting raw materials for free (as opposed to mining or producing them) it’s easy for them to make a profit while reducing the amount of landfill.
Regenerative Wealth is a fascinating area of the economy that too few people address. A lot of money can be made through making the world (or even a tiny corner of the world) a better and more efficient place, and so in 2021 I plan to explore the idea in more detail with case studies and real life examples of fixing problems, making money and doing good. I would love to hear from readers about companies or individuals they know of that are creating wealth for all stakeholders, and if you are interested in or have any examples to share, feel free to follow me or send me a message.
