Anderson_ ECO_nomics Talk Notes SXSW ECO 2011

8/3/2019 Anderson_ ECO_nomics Talk Notes SXSW ECO 2011

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ECO-nomics: Re-envisioning Financial Services for the 21st Century

A talk by Scott Edward Anderson, The Green Skeptic, given at SXSW ECO, Austin, TX,October 4, 2011. [Note: Slides that accompanied this talk can be found at:http://slidesha.re/qO4Gui.]

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First of all, by way of introduction, let me say that I am neither an economist nor do Iplay one on FOX Business, where I do regular commentary.

And second, to get it out on the table, people always ask me why "The Green Skeptic"?Why are you skeptical about green? Isn't green all good?

I believe skepticism is a hallmark of human nature and if we're not challengingassumptions, sussing out the reality from the hyperbole, we're not using our full capacityas human beings.

I want to tell you a story that may not seem relevant to the topic at hand, but I'll try to tieit back.

When I was 15 years old I was hiking in Letchworth Gorge in upstate New York. Here isa picture of the gorge. A beautiful place. Despite the warnings or perhaps because of them, I was a teenager after all; I got too close to the edge. And I fell. I fell for whatseemed like a long way and a long time, but was in reality maybe just a matter of seconds.

Time dragged, however, like a cartoon character falling off a cliff – think of Bugs Bunnyfalling, eating a carrot, reading War & Peace, and filing his nails. I was remarkably calm,at peace, really. One with the fall, it was a true Buddhist moment.

And then it was over. Somehow there was a branch or root and my arm reached out tograb it – I remember the jerking feeling like a parachute opening…I was safe. I'd fallenbut I didn't die. I had a second chance. After a few seconds of stunned silence, I climbedback up to the top of the gorge.

I feel like our economy -- our very way of life is in a simultaneous state of suspendedanimation and free falling. I don't know whether we're going to go all the way down orwe're going to catch ourselves and scramble back up top…

But it seems clear we're headed for certain disruption. The question is, will we instigatethat disruption or will we let it happen to us?

Whether its "Occupy Wall Street" or "Re-envision Wall Street" something is happeningand we can't just stand by. Will we dive head first or heart first or will we just kick back and…well,



ECO-nomics: Re-envisioning financial services for the 21st CenturyScott Edward Anderson

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Recline…I feel like this image sums it up…it's the "Ultimate Gaming Chair"…built for anation not in decline, but in recline…where products aimed at wasting time andproductivity are valued more than true innovations addressing the real risks of oursociety.

We've lost touch with our creative selves and let others create the world they want us toconsume, whether it is China or Zynga.

How did we get here?

We forgot that eco means house. I'm a poet and words and meanings are important tome. We can't separate economics from ecology – they are joined at the root, as it were.

While eco means house, from the Greek, somehow, I don’t think this [image of suburbansprawl from above] is what they had in mind.

Or this [image of Hummer 3 taking a snow bank]. Have millions of years of evolutioncome to this…REALLY?

We need a Reboot.

We need to challenge ourselves to take back our destiny; to create, to build, to innovateand adapt.

We need to make something.

Like children with a pile of Legos who find ways to build what they want or who buildgnome houses and villages out of material found in the woods or the yard, or adults whomake hand-tossed pizzas or brew their own beer, make their own wine, we need to buildwhat we love and give to the world something purposeful that can have a lasting, positiveimpact.

We need to stop compromising in our lives, letting the perfect be the enemy of the good.

And we need to deliver lasting value, to innovate, and finally, to inspire and be inspired.

So what does this have to do with financial services?

Somehow the innovations in finance over the past -- much of what got us in the messwe're in – were driven by regulatory or credit ratings arbitrage, increasingly complex,opaque, and focused on quarterly results.

Rather, we need financial innovation that is conducive to sustaining economies – to valuecreation rather than value destruction, and that drives a new kind of prosperity.




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And I've been thinking this in the context of financial services as an engine of changebecause we're not going to make real and lasting change – or a new economy – if moneycan’t be made while doing it. All the altruism in the world won’t get us there. There isn'tenough philanthropic capital to make the change that needs to happen.

So what if financial services firms clearly demonstrated their community, social andenvironmental impacts?

What if banks told their customers what they did with their money?

What if customers were rewarded for making sustainable choices?

What if there was a greater connection between money and values, and management wascompensated for maintaining or growing the connection?

What if profit and purpose were more equitably connected?

What if, instead of a triple bottom line, we talked about a single, redefined bottom linethat encompasses all three on an equal footing?

I want to tell you a story about a new bank that is starting up and which I've had thepleasure of working with over the past six months.

Frank Baldassarre is a banker. He has a 30-year career in the banking sector, has doneeverything in the space and survived through good times and bad. He loves banking andhe loves creating value.

Frank saw that banks were losing touch with their communities and customers, withevery merger there were bank errors and long-distance decision making that was not inthe best interest of customers, let alone the world at large.

He saw that high efficiency systems and the people who were adopting them were a goodcredit risk, worthy of a loan. "It's a no-brainer," Frank likes to say. These customers areinherently more forward-thinking and responsible, and they have cash in their pocketfrom savings on energy to repay the loan. And what's more, if they are a commercialentity their workers are healthier, more productive, which also increases theirprofitability.

Frank met Sandy Wiggins, a real estate developer who saw the light – and who wasformerly Chair of the US Green Building Council – the LEED people. He, too, saw thatbanks were part of the problem – they didn't understand, let alone know how to value thesystems and improvements being made.

Together, they realized a sustainable economy needs a different model, so they're forminge3bank – a full-service bank and holding company that has sustainability as part of its




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DNA to build prosperous enterprise, protect the environment, and increase social equity.Ultimately, they determined to build a different kind of bank.

That's disrupting financial services. We need to disrupt financial services if we are goingto fund the activity we want to see.

They are not alone, others are doing it too:

Triodos Bank in the Netherlands has been at it for over 20 years and they have the data toshow that the model works.

Impact Assets was created to catalyze investments and maximize environmental, socialand financial impact.

And SJF Ventures, a VC partnership seeking to invest in companies that can achieverapid sales, strong profitability, and premium exits while having positive impact.

And because disruptive innovation needs to measure different things, but have an equallyrigorous set of standards, we have GIIRS, which rates funds in the impact investing spaceand the Compass Principles developed by the Center for Financial Service Innovations.

All of this – and I'm sure you know of others examples, some may even be in theaudience, speaks to a fundamentally new way of looking at value creation and makingsomething lasting, as well as creative people who are re-envisioning financial servicesand creating a lasting, more sustainable prosperity.

Which brings me back to the beginning of my talk today: we can't change the world if we aren't first prepared to change within ourselves and live the lives we know we canlive, be the people we know we can be, and take the actions we are compelled to take.

When you're free-falling, you have two choices: keep falling to the bottom or grab thefirst available branch and scamper back up to the top to create a new path forward.

So what are you waiting for?

Thank you.

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Anderson_ ECO_nomics Talk Notes SXSW ECO 2011