In May 2016, I was asked to introduce Katherine Collins, founder and CEO of Honeybee Capital and author of ‘The Nature of Investing’, at an event in Amsterdam. The event, also called The Nature of Investing, was well-attended by a wide group of people – from regulators to students to investor professionals. All of whom were keen on hearing her dissection of the current financial system – a system that has become disconnected from its intended purpose but can be reconnected by mimicking nature’s attributes.

purpose of investing
“Bees go out into the world to gather data…the best investors I know go out into the world, observing, interacting, gathering information.” – Katherine Collins

The purpose of investing

After having read her book ‘The Nature of Investing’, I was very pleased to meet Katherine. I felt we had much in common. Outside of our love of investing as a profession, we also share a similar vision whereby we see investing as a connected and mutually beneficial activity, one which is focused on creating real value, adding to the quality of life, and not solely on financial returns. As it stands today, the investment business has gone off-track. The investment instruments once invented to assist with our financial decisions, such as currency derivatives have taken a life of their own, whereby we are disconnected from our actual investments. And as a result, there is now a huge gap between the financial markets and the real economy.

As Katherine says, “when we move deeper into the mechanics of finance, we often end up in the realm of speculation and lose sight of the primary role of investing. Our faith in the system has become stronger than our faith in human judgment. Our faith in individual tools has become stronger than our faith in a connected whole.”

Her analysis resonates with my own experience. Katherine connects real-world finance with the deeply-rooted framework of biomimicry – an alternative framework that looks to nature’s patterns and strategies to create a system that is more connected with the real economy and is more sustainable. This is different from the mechanised and increasingly standardised short-term approach frequently employed throughout the financial industry. In her book, she presents an investment approach that is long-term oriented and inherently resilient and regenerative, bringing investing back to its true purpose: creating value to the benefit of people, society and the environment.

From disconnected to reconnected

The first of Katherine Collins’ key arguments is the need for reconnection. Our investment tools, products and processes have become far removed from the actual world we’re investing in. The investment world today is obsessed with models, minimising risk, and is desperately seeking control through regulation and standardisation. Whereas in the natural world, the way to adapt or evolve and essentially succeed is by connection, flexibility, resiliency, diversity, and adaptation. All of which are not prioritised in our current framework.

“When we move deeper into the mechanics of finance, we often end up in the realm of speculation and lose sight of the primary role of investing.”
Katherine Collins

Katherine Collins: “As an investor, you have to think about your own investment process as well. Do your investments match with your actual investment goals and beliefs? If not, there will be a severe mismatch in what you are doing and what you are trying to achieve. Investing in inclusive finance, for example, while having a short-term horizon does not make much sense.”

From fragile to resilient

Katherine Collins’ second argument is the need for a more resilient financial system. Following the crisis in 2008, financial regulation has gone further and further towards standardisation in an attempt to reduce the uncertainty principle to zero. As Katherine stated in the meeting, “Our efforts to control risk have been in direct conflict with building an adaptive and resilient financial system. Risk is not the same as uncertainty. Risk models cannot cover uncertainty. It is scary to admit, but we are sailing in the sea of uncertainty,” says Katherine.

In nature, diversity rather than standardisation improves resilience. For example if one coffee plant suffers from the leaf rust disease, the rest will suffer as well. However, crop diversification can improve the resilience, thereby diversifying risk and leaving a less vulnerable system. I agree with Katherine that uncertainty always exists and in Triodos Investment Management we try to deal with uncertainty in a way that embraces resiliency and diversity. We therefore think it is important to offer investors the possibility to invest in a broad array of assets – equity, bonds, loans, real estate and private equity – in large, medium and small, listed and non-listed companies, across different impact strategies, such as inclusive finance and energy & climate. Thus they can build a diversified and potentially resilient investment portfolio.

“An investment approach that is long-term oriented and inherently resilient and regenerative, bringing investing back to its true purpose.”
Marilou van Golstein Brouwers

From extractive to regenerative

Katherine Collins’ third argument calls to broaden our perspective, away from a narrow mindset of extraction and more towards regeneration. Investing is so much more than the profit and costs shown in financial statements. As Katherine says, we need to broaden our definitions to include longer term and more multidimensional measures as the first step to creating a regenerative system, not just for finance but for our society and our entire planet. We agree with her and think that both true cost accounting as well as managing and measuring impact are necessary steps in the transformation of investing as we know it.

In this process, we can look to nature to be our valued guide. In nature, regeneration is prevalent throughout our ecosystem, whether it’s in the soil after a volcanic eruption or in our coral reefs following intense bleaching. Nature has found a way to mitigate disaster and build resiliency.

Putting the pieces together

I see many parallels between Katherine Collins’ investment philosophy and the one of Triodos Investment Management.

Applying the principles of biomimicry, life’s principles to investing gives us an approach that realigns and reintegrates our investments with the world around us. By looking to nature’s attributes such as connection, resiliency, and regeneration, we can slowly transform our financial system. Transform it to a system that is reconnected to the real economy, aligned with our values and aspirations, and is in service of society and our planet.

However, it’s not all about what nature would do, but rather what you want your investments to accomplish. How can you apply these principles to your investments?

Marilou van Golstein Brouwers, Chair of the Management Board
Marilou van Golstein Brouwers, Chair of the Management Board

Marilou van Golstein Brouwers
Chair of the Management Board of Triodos Investment Management

Marilou van Golstein Brouwers has been Managing Director of Triodos Investment Management BV since 2003. Currently she is also member of the Board of Directors of the Global Impact Investing Network (GIIN), member of the Advisory Committee of the Mastercard Foundation Fund for Rural Prosperity, member of the Advisory Council for International Development Cooperation (AIV/COS) and Chair of the Advisory Board of Women in Financial Services in the Netherlands (WIFS).

Katherine Collins

Katherine Collins is founder of Honeybee Capital and author of The Nature of Investing. Follow her on Twitter @honeybeecap.
Katherine Collins is founder of Honeybee Capital and author of The Nature of Investing. Follow her on Twitter @honeybeecap.

Founder and CEO of Honeybee Capital

Katherine Collins is Founder and CEO of Honeybee Capital, an independent research firm dedicated to reconnecting investing with the real world. She is author of the book, The Nature of Investing, and her closest neighbors in Massachusetts are several thousand honeybees.

Katherine has over twenty-five years of professional investment experience as portfolio manager and head of research at Fidelity Management & Research Company. More recently she has earned her MTS degree at Harvard Divinity School and studied biomimicry as guides for investing in a more integrated way, in service to our communities and our planet.

An overview on Triodos Investment Management’s vision can be found here.