Carsten Henningsen.

What work do you do?

I am the cofounder of Portfolio 21, a global mutual fund investing for a sustainable future. I am also chair of Progressive Investment Management, the investment adviser to Portfolio 21.

How does it relate to the environment?

Portfolio 21 (the 21 is for 21st century) invests in companies from around the world that understand the ecological crisis and are implementing environmental sustainability in their business practices. These companies are developing cleaner energy sources, resource-efficient production methods, products designed to be reused and rebuilt, benign raw materials, and processes that produce little or no waste.

What are you working on at the moment?

We are heading off to Hong Kong, China, and Japan to visit Asian companies with a sustainable focus.

With Progressive Investment Management, I’m also working on a new project called Upstream 21, which is focused on reinventing the corporate mandate and bringing sustainability to the local community level.

And in my personal time, I’m creating a microfinance community loan program in rural Sri Lanka for a village devastated by the tsunami.

How do you get to work?

I either ride the bus or drive my Volkswagen TDI that runs on B100 biodiesel. B100 has about 80 percent fewer carbon emissions than gasoline, and the exhaust smells like french fries.

What long and winding road led you to your current position?

On my 10th birthday, my parents gave me two shares of Mattel Toys. I would ride my bike to the local brokerage office after school and look at stock quotes with the retired fellows. I decided then to become an investment manager.

During my school years, I traveled to 45 countries and observed the impact of multinational corporations on developing countries. When I graduated, I asked myself how I could have the greatest impact on making the world a better place. I realized that many corporations are larger than some countries. I decided to see if the investment process could be used to influence corporate behavior and policy.

Some 25 years later, I have learned a great deal about corporate behavior, about what works and what does not behind the strategies of socially and environmentally responsible investing.

Where were you born? Where do you live now?

I was raised in Berkeley, Calif., and now live outside of Portland, Ore., on a ranch by the Willamette River.

Who is your environmental hero?

I remember walking up to David Brower after one of his talks and thanking him for his amazing environmental contribution. He asked me, “What are you going to do with it?” I told him that I was going to start a mutual fund investing for a sustainable future.

What’s your environmental vice?

Waterskiing. I need to find a biodiesel boat.

How do you spend your free time? Read any good books lately?

I can’t seem to find free time, but I do balance my work with yoga and mindfulness practice. I also record music, raise two girls, work out, and yes, waterski.

What’s your favorite meal?

Being a vegetarian, I love Indian, Thai, and Mexican dishes.

Which stereotype about environmentalists most fits you?

I’m a white male, and I grew up in Berkeley during the 1960s and ’70s. Before I had money, I drove Volvos with 200,000+ miles.

What’s your favorite place or ecosystem?

I love Hana, Maui, because there is no denying the natural elements — they are in your face, making the connection to nature amazingly obvious.

If you could institute by fiat one environmental reform, what would it be?

Countries would be mandated to live within the bio-capacity of the earth. When I was born in 1960, the world economy was using about half the earth’s annual resource capacity. In 1985, the world economy was consuming all of the earth’s annual resource capacity. Today, we are running a natural deficit of about 20 percent. This rate of consumption is completely unsustainable and silly.

Who was your favorite musical artist when you were 18? How about now?

That was way back in 1978, and around that time, I attended about 50 Grateful Dead concerts. I even got to introduce Jerry Garcia on stage. My favorite band right now is Zero 7 from the U.K.

What’s your favorite movie?

It seems that people either love or hate the film What The Bleep Do We Know!?. I love it.

Which actor would play you in the story of your life?

This may sound strange coming from a white male, but I’m going with Whoopi Goldberg.

If you could have every InterActivist reader do one thing, what would it be?

Find out how much “nature” your lifestyle requires. Take the Ecological Footprint Quiz, and estimate how much productive land and water you need to support what you use and what you discard. Then tell your friends.

Carsten Henningsen, cofounder of Portfolio 21.

Henningsen-Picked

How do you respond to Paul Hawken’s claim that the standards for socially responsible investing portfolios have been loosened to the point where they are virtually indistinguishable from those managed without an environmental or social screen? Is Portfolio 21 any different?    — Seth Zuckerman

Paul Hawken’s study on socially and environmentally responsible investing sent a shock wave through the industry. Imagine a green SRI continuum with traditional funds on one end followed by light green funds, dark green funds, and perhaps brilliant green funds. Think of this continuum as a kind of financial biodiversity. There are many entry points on the continuum. Some start with light green. The analogy is like my friends who label themselves environmentalists — some still drive SUVs, some hybrids, some B100 [pure biodiesel], and others have traded their cars for bikes. With Portfolio 21, we are placing a data point farther out on the continuum, and with Upstream 21, we are going even farther.

Paul Hawken has praised Portfolio 21 for its transparency and integrity. Portfolio 21 is different because it invests in companies that understand the ecological crisis and are implementing environmental strategies into their business practices to gain a competitive advantage. Another difference is that we do not invest in oil companies. I believe we have run out of ecological time for the incremental reforms of light green funds.

There are a lot of green mutual funds out there to choose from. Can you tell me what separates Portfolio 21 from the pack? How has your performance compared with others?    — Joel Haskard, St. Paul, Minn.

Like the natural foods industry, the socially and environmentally responsible investing industry has grown rapidly from a grassroots movement started by financial activists to a trillion-dollar industry run by corporations. Paul Hawken has pointed out that unlike the natural foods industry, the socially and environmentally responsible investing industry does not have a nutrition disclosure label on the prospectus. An investor can’t tell how much saturated fat is in a particular fund.

Portfolio 21 is different from most socially and environmentally responsible funds because our selection criteria use environmental sustainability as the driver for inclusion. It is difficult for a fund to be everything to everyone. Portfolio 21 is for people who understand that the ecological crisis with peak oil, climate destabilization, and the earth’s limited biocapacity poses significant risks to companies and investors.

Investors have been pleased with Portfolio 21′s financial performance.

If the economy suffers a major economic downturn, say from the ripple effect of an unprecedented energy crisis (which seems ever more likely these days), what would you anticipate to be the effect on your portfolio’s investments, compared to the major indexes in the U.S. and abroad?    — Steve Morales, Hayward, Wis.

This question requires a lot of speculation. In our opinion, if the energy crisis were ongoing, then we would see many economic structural changes. Renewables would become more competitive and profitable, followed by a decline in oil stocks. Prior to this, we would most likely see higher profits from oil stocks, leading to their decline. Perhaps we are beginning to see this now as peak oil begins to reveal itself. Portfolio 21 does not own any oil stocks and may be at a disadvantage during the first phase of peak oil. However, many of the companies we do own have been working to lower their dependence on oil and therefore may potentially have a competitive advantage in the face of higher oil prices. Portfolio 21 does own energy companies involved in hydrogen, photovoltaic, geothermal, and wind power. These investments would perhaps give the fund an advantage in the second phase of peak oil.

How would one go about founding or working at a green investment firm? What’s your educational/vocational background?    — Stephan Larose, Kelowna, British Columbia, Canada

The field has grown and gotten more competitive in recent years. Earlier this year, Portfolio 21 hired a new sustainability analyst and received an impressive number of qualified applications from all over the world. Many had a background in environmental science or sustainability as well as a C.F.A. or M.B.A. I graduated from the University of Puget Sound and the Netherlands School of Business in international business. I was a bit too impatient and radical to work for an investment company so — against the advice of friends and relatives — I started my own firm in the back bedroom of my house. Starting a service business does not require much equipment, other than a computer. However, like starting any business, it takes a few years of 80-hour weeks before you are making a living wage.

I was one of the people who donated to the tsunami-relief program you were involved with in Sri Lanka. How are things going there? What is the next step to help the area and its people?    — Roland Shanks, Anchorage, Alaska

Roland, thank you so much for your support. As you know, we are working in a small, remote village. We have served about 50,000 hot meals to the children at the village school. We have a bicultural exchange of art and letters between the village children and children here in the U.S. Now that we have stabilized health, nutrition, and sanitation, our next step is starting a microfinance community-loan program to help repair the torn economic fabric of the village.

The experience has taught me several lessons. I’ve had the amazing opportunity to see human suffering at a proximity where it touches deeply with a spectrum of emotions that either opens or tears the heart with compassion for others in need. It exposes our comfortable daily denial and reveals the brutal truth of reality beyond television’s protective screen. Experiencing suffering at this place and, most importantly, having the chance to help relieve some of it begins to answer questions about life’s purpose. And with those answers come more questions. These questions are helping me to examine the purpose and impact of the investment work that I have been devoted to for the last 25 years.

Would you still invest in Mattel?    — Kesa Kivel, Los Angeles, Calif.

Great question. Actually Mattel has been helping with tsunami relief by focusing on children and schools. Relatively speaking, the company would pass the selection criteria of most SRI mutual funds. However, Mattel would not pass Portfolio 21′s strict sustainability criteria. Mattel’s largest customer is Wal-Mart. Does the world really need more Barbies … or any Barbies? The answer to your question is no.

What is the impact of [SRI] funds on the many, many folks who cannot begin to afford an investment and probably never will?    — Ellen Drew, Serafina, N.M.

Let’s be clear: Portfolio 21 invests in multinational corporations through the global market system. This system, and mutual funds in general, do not have the capacity to address most of the world’s challenges. I believe the global markets are unsustainable because they rely on an economic model that expects unlimited consumption and growth from our planet, which has limited biocapacity to provide the resources for that growth. We acknowledge that this system is not set up to “trickle down”; this is one of the reasons that Upstream 21 was created. The majority of the world’s population does not have access to wealth or even capital. The lack of “trickle-down” will lead to more conflict, war, and terrorism as the disparity of wealth increases.

Where do I go in the grad school/career world to help level the playing field for businesses that are greener, more sustainable, create more local jobs, and can compete with the big kahunas? What field tackles this from the best angles? Where lies the power to change our economic system?    — Jane Shepherd, Silver City, N.M.

Bainbridge Graduate Institute, with its innovative M.B.A., will give you the tools to best tackle the angles. There are three approaches to changing the economic system. First, you can work within the belly of the existing system and attempt to influence changes in behavior. Second, you can buck the system and live off the economic grid. Third, you can attempt to create new vehicles that can coexist with the existing system. I have been deeply involved in the first approach, and I can tell you that it is filled with frustrations and compromises. Because of these challenges, I am now involved with Upstream 21, which addresses the third approach.

Any thoughts on how to get universities to divest of socially irresponsible funds and invest in funds that are socially responsible?    — Linus Chen, Decatur, Ga.

For years, university students and some faculty have been inviting me to campus meetings to strategize on this question. The best way to put pressure on universities is to approach them through their alumni. The alumni provide large annual contributions that should be invested in ways that do not cause harm. The same strategy can be applied to churches by mobilizing the support of the congregation rather than negotiating with the investment committee. Get a list of the companies in the portfolio, and pick the three worst corporations to make your point to the people who provide the financial support for the organization. Also, employees can start a grassroots petition to show management that there is demand for an SRI fund option in retirement accounts.

I understand that biodiesel based on virgin soy oil is its own environmental disaster: Soy production is highly reliant on GMO seed, petroleum fuels for cultivation and harvest, and petroleum-based pesticides. What’s your take?    — Charlie Weiss, Portland, Ore.

There are still data gaps in our search for “the truth” regarding the net impacts of biodiesel versus the net impacts of gasoline or conventional diesel. I have been told that the biodiesel I use is a blend of locally collected waste cooking oil and oils from agricultural crops rather than 100 percent virgin oil from crops. Given the impacts of gasoline and the added emissions that war brings to the equation, I believe that biodiesel is a better choice than gasoline. This is a best-of-class situation while I wait for hydrogen (made using photovoltaics to split water) rather than any kind of long-term sustainable solution. Obviously, public transportation or biking is the best choice.