EVERGREEN DIRECT INVESTING:
CO-CREATING THE REGENERATIVE ECONOMY
"The EDI idea ... is the single most INTERESTING and PRACTICAL
thing I've seen for fostering long-termism on the part of both companies and investors.” —Robert Eccles, Professor, Harvard Business School & Founding Chairperson,
the Sustainable Accounting Standards Board |
Evergreen Direct Investing is an investment architecture that represents both a reengineering and bold repurposing of time-tested techniques. It enables large, perpetual investors with predictable liabilities to partner with enterprise leaders seeking to be free of the tyranny of shareholder value maximization. EDI allows both parties to get back to basics by negotiating a share of the enterprise’s cash flows.
Read John Fullerton's two part series on EDI:
Evergreen Direct Investing: ESG 2.0?
Evergreen Direct Investing: The CEO Perspective
Read John Fullerton's two part series on EDI:
Evergreen Direct Investing: ESG 2.0?
Evergreen Direct Investing: The CEO Perspective
FROM THE EVERGREEN DIRECT INVESTING FIELD GUIDE STUDY
The Evergreen Direct Investing method is an architecture purpose built to bring together large perpetual investors, like pension funds, sovereign wealth funds, and endowments, with values-aligned business leaders, empowering them all to act as co-creators in the rapid transition we must make to a truly sustainable, regenerative economy.
Pension funds exist for a defined purpose and have known contractual financial obligations to fulfill to their beneficiaries, in increments, over time. There is little doubt that today’s boom-bust cycling capital markets, frequently hi-jacked and manipulated by short-term speculators and algorithmic traders who together account for the vast majority of exchange trading, are no longer well suited to deliver the dependable stream of returns that large, purposeful, powerful and perpetual pension investors, who now account for $30 trillion in investable capital, require to fulfill their fiduciary obligations. Meanwhile, Modern Portfolio Theory and the Capital Asset Pricing Model that builds on it fail to account for those “black swan” events that are occurring with increasing frequency in today’s public markets, metastasizing across asset classes and creating correlations across markets in times of stress where none previously existed. Yet Modern Portfolio Theory continues to dictate how pension funds, and their asset managers, allocate capital. At the same time this growing dysfunctionality of the capital markets, coupled with its narrow focus on quarterly earnings and shareholder value maximization, is depriving enterprise of vital strategic investment partners, and limiting business leaders’ ability to undertake the kind of strategic decision-making required to harmonize the long-term interests of people, planet, and profits in the transition to a regenerative economy. But what if one were to take the often unloved mature, stable cash flow enterprises of the mainstream economy, and combine them with certain cash flow sharing investment architectures that have proven successful in other stable cash flow sectors of the economy such as infrastructure and real estate, and apply them to broader categories of enterprise investment, and enlist them for a higher purpose? The Evergreen Direct Investing method, the brainchild of Tim MacDonald, who spent his career as a limited partnership attorney, does just that. It enables large, perpetual investors with predictable, long-tail liabilities and enterprise leaders of the mature, stable-cash-flow businesses that represent a large share of the global mainstream economy to be free from the speculative, growth-at-any-cost tyranny of shareholder value maximization. EDI makes possible a shift to real enterprise investment through negotiated partnerships in which the long-term interests of investors, management, financial intermediaries, and all enterprise stakeholders are truly aligned. Could EDI address investor risk-adjusted return needs and usher in “ESG 2.0” at scale? We think the answer is a resounding “yes!” |
Please share your thoughts about EVERGREEN DIRECT INVESTING here. |