I am going to describe the concept of sustainability in more evolutionary terms as I am baffled by how many top-level financiers I speak with have no solid understanding of the long of evolution and thus cannot accurately interpret the promise of sustainability upon which Responsible Investing, Impact Investing, Corporate Responsibility, and ESG programs depend.
Let me repeat unequivocally; sustainability is an evolutionary oxymoron, a misleading placebo, and an investment false-positive of finance failing to expand the fractal of human ingenuity to produce repeatable human excellence and consistent returns. The reason is straightforward; you cannot yield sustainability from assets that are unsustainable.
So, here is a question from the global head of ESG of a major financial institution that baffled me:
How can you prove sustainability does not exist?
The real answer is I cannot; neither can I prove the Easter Bunny does not exist. I should not have to disprove every humanmade hallucination.
The burden of proof is with those who proclaim sustainability does exist and use it as the basis for their investment thesis. The likelihood of sustainability not existing is overwhelming. Just look at the evolution of humanity, a process of renewal applied to the most crucial asset in producing investment returns.
Key To Evolution
The evolution of humanity is predicated on our renewal, the process of us living and dying to produce an offspring, hopefully, better than ourselves. A process of repetition predicated on our preprogrammed genealogy modified and modulated by our experiences and adaptability during life, in turn, forming the basis for the next generation.
Pretty easy to understand, I surmise. Now compare the aforementioned to the supposition of sustainability below.
Sustainability, by its very definition, means the assets to which investments are applied, never seize to exist. Related to humanity that would assume humans do not die but live forever, producing endless offspring with the same intrinsic capabilities until the end of time. We all know that not to be true.
Despite the grim prospect for every individual, the process of dying, as Steve Jobs described in his Stanford commencement speech, is a necessary process of human renewal. All resources on earth will seize to exist, and in its place will be multiple new variations on a theme until the resources upon which they depend for survival will seize to exist. Nature is a relativity theory of multilevel renewal, as I describe in more detail in the evolution of evolution.
The beautiful discovery derived from human curiosity about the workings of nature is that while we cannot accurately predict the outcome of every instance of renewal, in the same way, you cannot accurately predict what your baby will look like, we can accurately predict that it will either be a boy or a girl. Meaning, as we better understand the principles of nature responsible for our renewal, we can way more accurately predict what the standard deviation of outcomes is going to be.
Parlay that to investing, and you will comprehend how a better understanding of nature’s principles will lead not to an exact prediction of the outcome of every instance but leads to a very accurate standard deviation of investible assets you can wrap an investment thesis around. An investment thesis itself in compliance with the principles of nature. A much better investment thesis than one in blatant ignorance and fundamental violation of nature’s principles that is proving to be a steadily deflating balloon.
Renewal Leads To Predictability
A sustainable allocation or investment strategy based on the false promise of infinite assets cannot accurately discover, support, and promote nature’s inherently finite assets. Only an investment thesis compatible with nature’s principles of renewal can begin to extract the consistency of repeatable value from the natural state of evolving assets.
Sustainability is not just the improper use of semantics, or merely an investment thesis that will fail to produce the expected returns. Most importantly sustainability is an evolutionary fallacy, that by significant investment allocations made to a false and finite promise of evolutionary short, expands the fractal of human ingenuity in a direction, with many asleep in a ruse of false-positivity, known to harm the human prospects of long even more systematically than the vile-maxim induced by its precedent.
Only investment strategies mimicking the principles of nature can produce a gravy train of returns as proven, consistent, repeatable, and predictable as the inevitable expansion of evolution itself.