Investing from a Regenerative Mind
Evolving the Role and Practice of investment — Part 1
Banks, funds, corporations, and individuals are increasingly embracing the concept of impact investment, which seeks to use financial capital as a tool for creating improvement in the world. Impact investors generally focus on a particular need — such as ecosystem restoration, poverty reduction, or atmospheric carbon reduction — investing in projects or businesses that they believe can produce a leveraged impact. This approach differs from conventional philanthropy because it seeks a financial return. Impact investors believe that this is the best way to encourage agency and entrepreneurial spirit while ensuring that capital continues to be available for future investment.
Impact investment arises from a genuine desire to make a difference in the world and to generate a profound shift in the way humans inhabit the planet. In general, its intention is either to mitigate socio-ecological damage (operating from the arrest disorder paradigm) or to promote progress for human and natural systems (aspiring to work from a do good paradigm).
We want to offer an alternative approach to impact investment, sourced from a regenerative paradigm, whose purpose is to move beyond small, incremental improvements to achieve whole-systems actualization.
A shift to a regenerative level of paradigm implies much more than a simple change in investment strategy. It actually requires a change in how people think about and understand their experience of the world. It also requires a change in aspiration and orientation toward the work of investment, because regeneration asks people to invest themselves, not just their capital assets. Taken together, this means that it requires developing what we call a regenerative mind.
We use the term mind to refer to the totality of conscious and unconscious mental processes and activities, including emotion, reasoning, habit, sensory perception and so on. Regeneration has to do with tapping into the essence of something, enabling its evolution as a result of manifesting itself in a new way that brings new value to a new context. A regenerative mind consciously engages with the inherent regenerative potential of living phenomena, recognizing in them their inherent wholeness, agency, and potentiality.
A Different Approach to Investment
Sidney Cano is part of DUIT, a company dedicated to the creation of guidelines and platforms for transformational investments within a Latin American business ecosystem. The corporate group has built some understanding about the levels of effects that are possible from its efforts and has intentionally directed investments toward projects and businesses with the potential to serve as instruments for socio-ecological change. It has also found it worthwhile to share what it has learned with others who wish to use investment as a way to make a difference in the world.
For almost six years now, Duit has encountered a diverse range of entrepreneurs and business-owners who are seeking ways to increase the beneficial influences they can have on social and natural systems. They nearly always exhibit a genuine desire to do good in the world: “We want to make a difference,” they say. However, these good intentions are rarely matched by an understanding and a process that is sophisticated enough to effect deep change. As a rule, this is because the desire to do good is rooted in an outdated paradigm, one that sees the world anthropocentrically. People who wish to make the world a better place will naturally define and then pursue what they believe to be right and good. But does a forest, or a pod of whales, or a village in some other part of the world define what is “right and good” in the same way?
The same questions arise regarding investment, which in recent years has been undergoing an evolution in how it is conceived. For example, there is a growing understanding that the term need not be applied only to conventional financial instruments that carry an expectation of financial return. Investment can also refer to the commitment (investing oneself) of something other than money (time, energy, effort) with the expectation of worthwhile outcomes. Antony Bugg-Levine and Jed Emerson, leading thinkers in the field of impact investment, point out that: “If impact investing is what we do, blended value is what we produce. Value is what gets created when investors invest, and the recipient organizations pursue their mission. All organizations, for-profit and nonprofit alike, create value that has economic, social, and environmental components.”[i]
This concept of investment is depicted in the following diagram, which shows a variety of beneficial outcomes that can arise as a result of well-designed business activity. Although accurate from one point of view, this way of describing investment impacts is inherently fragmented, acting as if social, economic, and environmental arenas were separable and could operate independently of one another.
By contrast, impact investment that seeks to work from a Regenerative paradigm is focused on enabling whole-systems actualization. Actualization refers to the process by which the inherent potential within a system becomes manifest or actual. This implies that an impact investment is regenerative when it produces systemic changes or evolution that express new potential for a system as a whole. This is quite different from measuring impacts in terms of shifts in some desirable but narrowly defined metric, such as the number of homeless people who have been provided with shelter.
Redefining impact in terms of systems actualization requires a different orientation to investment. For one thing, it requires looking at systems as wholes rather than as pieces and parts, and it requires understanding the ways that systems are nested one within another. Also, it starts from the nature of a system and asks how it is to evolve, rather than starting from what we want to do to it.
Looked at from a regenerative mind, investment is no longer understood as what one brings in to produce a change (do-good paradigm), but rather what is being called in by a System to enable its own evolution (regenerate life paradigm.)
From this perspective, thoughtful financial investment becomes the means by which a productive initiative (such as a project or business) can serve as an instrument within a system to enable it to bring forward new manifestations of its potential. Investment brings in energy (in the form of money) to create a threshold of disruption that breaks up the inertia of current existence and enables new patterns to emerge. This, after all, is what investment has always been supposed to do, but it has become so narrow in its focus and so fragmenting in its impacts that more often than not it acts as a degenerative force in living systems.
Rapidly changing circumstances (including massive disruptions caused by climate change and global pandemics) are placing new demands on investors, who have a key role to play in enabling society to evolve the capacity to respond. Investors will need to develop their own capabilities if they are to contribute effectively to the increasingly urgent need for rapid, systemic change. At the same time, customers and constituents are growing impatient with business as usual, even calling into question the validity of capitalism as a way to manage economic affairs.
Clearly there is a need to take a more holistic look at what constitutes capital (beyond financial capital, that is) and to what ends capital should be deployed (for example, growing wealth-generating capacity for all living systems.)
[i] Bugg-Levine & Emerson. (2011). Impact Investing. Transforming How We Make Money while Making a Difference. Innovations. Vol 6. M.I.T. Journals. https://www.mitpressjournals.org/doi/pdf/10.1162/INOV_a_00077