Why we, Veikko, Maria and Marja founded Lumoin? It was around New Year 2017 we had a realization climate, environment and lives of everyone would get worse and they may not get better for a very long time. Still, what we had was endless discussion in circles going round and round with the distinct feeling of nothing done and anything going nowhere. To paraphrase a famous movie scene, it felt like we were on a metaphorical bad path.
Then I saw it: I saw a mom who would die for her son; a man who would kill for his wife; a boy angry and alone. Laid out in front of him, the bad path, I saw it. And the path was a circle... Round and round... So I changed it.
Can we change our path? Climate change will cause devastating heat waves, storms and water shortages. Loss of biodiversity is loss of species, loss of habitat that support our existence and will bring grievous diseases. On the back of these, there will be a rising wave of collective anger and anxiety that will disintegrate societies and families. This should not be the world we live in.
We are coming against the hard limits of the physical world while we have social problems partially due to
teeth-rattling wealth divides that we see are caused partially by the current socio-economic systems. We should somehow find ways that work people to change the world from within—we can't start from a clean slate.
What if we could create a path of real-world betterment and relief for billions of people? We think we need to find a humane path to regenerate nature. We think this is really important and that it is possible. Thus later around 2017 our vision from here to there was born: humane circular finance.
Humane circular finance
There is a benefit of having articles long coming—hindsight. We can write about our thoughts and framing partially in retrospect. Though also in the ver beginning we wanted to aim for large impact quickly enough so it would make a difference. We cannot do it alone, but can we create systemic capability to do it? Where should the change start? How can we create betterment and relief already now?
We looked around and concluded that a lot of materials and energy are used—as opposed to recycled—in built environment. A lot of our financial assets are tied to built environment and this is how we coordinate our resources. Here must be the largest effect to ordinary people, and in the future even more due to urbanization, a megatrend. So to say
Cities are where the struggle for global sustainability "will either be won or lost" [...] Cities are the spaces where all SDGs can be integrated to provide holistic solutions to the challenges of poverty, exclusion, climate change and risks Maimunah Mohd Sharif, Executive Director of UN-Habitat, UN News.
What if we could create circular economy starting with current financial system and changing it while we go so that…
- We can turn waste and side-streams into stock. Consequently turning urban material, nutrients and energy flows to financial opportunity to everyone, even to the poor in informal sector and eventually stop the erosion of nature.
- Create regenerative, nature-based projects, our agriculture and compensation projects with impact. This way of integrating green, gray and finance we can increase climate resilience and water security while providing livelihoods and amenities for people.
- Enable capital intensive, product-as-a-service circular businesses for small and medium sized businesses (securitization). We can create and sustain jobs and creation of even more complex and stable value chains in the global world where everyone is affected.
Painting solutions with a large brush...
We need a transition plan, a coreography that is self-sustaining and moves to the right direction the right way. A brute force solution—and we wouldn't be here then?—would be someone to dictate all new financing to have insurance against future climate change, but that would probably crash the economy and our lives now. On the other hand, we cannot await for fifteen years for the climate change to crash on us and have a realization to act. Maybe we could jail those who finance fossil fuels as a start? But of course that will not happen (and should not). There is a lucid article on aspects of this problem in The New Yorker called Money Is the Oxygen on Which the Fire of Global Warming Burns.
But there are difficult, familiar problems we can solve and start making progress already now in this current economy. Having solutions, or a framework to create solutions, fit for occassion and we could deploy enough of the global capital in familiar ways to more broadly in society would make a meaninful transition fast enough. But how? As the infamous Andreessen Horowitz wrote: It's time to build.
Lumoin is working to create a plug-and-play architecture to tokenize capital intensive circular as-a-service businesses especially small and medium sized businesses struggle to do. We also retool our project preparation and market sounding methods so we can cooperate and tokenize project finance and material, energy and nutrient flows. Such an architecture requires a protocol that works in a permissionless, or should we say, decentralized way. There will be many competing and opposing ideas, so it should be scientific-based. If this could be created—we naturally believe it can be :)— it would create prediction markets whereby everyone can participate and add value, measure and evaluate what works and what doesn't (and by not quessing or gambling).
Having such vast plans, it is should perhaps be noted we look what others are building and do not think we are alone. We do not need to create all tools and markets by ourselves. We just need to provide our pieces and enable others to build on our pieces too. For built environment we have discussed some at World Digital Built Environment Summit: Financing the built environment of tomorrow sustainably and Material Passports, Circular Economy Models, and Blockchains and have a rough sketch of a protocol at Github. We do have more detailed protocol plans and good set of concrete cases we work to enable, but more of those in later articles.