pRINCIPLES OF Fiduciary ASSET InvestMENT RESTRAINT – (FAIR)

A concept in development with the r3-0.org
Sustainable Finance Blueprint

( a practical strategy for guiding a naturally thriving growth climax; a kind of “degrowth” to a sustainable society and revolution without a dismantling phase)

Presently the financial capital of the wealthy accumulates without limit. Like a relief valve, applying the natural fiduciary duty of investors to protect the commons, as everyone’s resource, FAIR would require divesting shares of financial capital until our collective over-pressure on our planetary boundaries subsides.

Date                 2020 – 5/25/, 6/30

Title                 Principles of Fiduciary Asset Investment Restraint (FAIR) a financial investment practice to become required for having use of the financial commons.

Topic                Compound investing maximizes wealth extraction & concentration, ignoring the economy’s growing harmful environmental and cultural externalities, and needs to be globally counter balanced and made distributive.

Pitch                Flatten the curve of growing environmental and cultural exploitation, to reach a thriving peaceful economic climax.

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Draft Excel Model: FAIRtestModel.xlsx

Statement     FAIR is an appealing, comprehensive, and eminently fair way to taper the compounding of profits and intense concentration of misused wealth it produces. A duty to serve the commons would encourage investment in the common interests and internalizing of harmful cultural and environmental economic externalities. In brief “Either you do the duty or you pay the duty“.

A portion of investment assets would need to be in qualified impact investments in the world commons. The share of assets and adherents worldwide would increase to reduce the whole economy’s pressure on its planetary bounds, but first starting at 10% of assets and increasing as needed to gradually stabilize investment and remove pressure for economic growth while countering the naturally growing planetary pressures caused by growth.

Need               Finance presently has rules for maximizing profits, ignoring all externalities threatening our future, and while creating global markets causing them, and takes no responsibility for that “tragedy of the commons.” The meaning of Fiduciary duty for managing assets of human clients also became stripped down to maximizing financial returns while ignoring the global consequences.

So responsible investing needs to be universal, starting small and expanding, following principles for responding to 1) the whole range of planetary boundaries under unsustainable growing pressure and 2) the advancement of human culture of self-reliance.

The devil in the details is how to manage it, as there is no entity representing the global commons, So there needs to be a global set of principles and an IPCC-like professional group, the IFIC (International Fiduciary Investment Council), to guide national organizations for impact investing in the commons.

It could start with a globally circulated statement of principles for endorsement by individuals, institutions, businesses, and organizations, like the Equator Principles but to go the whole way in reigning in exponentially growing extractive investing.

Challenge: The proposed “human duty” (to go along with our “human rights”) for investors to devote a share of their assets to serving the common interest, seems simple enough to define and discuss in principle. What is harder to determine is the likely impact of different kinds of for-profit and non-profit grants and investments.  Stating the goal as having investors efficiently use their eye for value to steer the economy to a creative and lasting climax helps narrow the definition.

The hard part is still creating the agencies able to give investors reliable impact ratings, both for guiding their investment decisions and for measuring compliance with their fiduciary duty.  What seems needed is a new kind IPCC type institute, to define standards for independent investment rating agencies.  Once the world realizes that businesses and investors do really need to accept a role in steering the economy in the common interest we’ll find a balance of ways to do that.

Source: series of tweets 05/24/20 … and historically, from the work of JM Keynes, 1935 General Theory, Chapter on Sundry Observations on the Nature of Capital” Chapter – 16 III & IV, describing why the natural financial climax of the economy requires financial savings to climax, and to prevent the very worst effects of capitalism, then require the wealthy to spend rather than save their profits.

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