By Hazel Henderson © 2011
Scenario for discussion at the Reunion of Pioneer Asset Managers
Convened by Susan Davis, President, CapitalMissions.com
Ethical Markets Media, Saint Augustine, FL, November 18-20, 2011
Related Article: Can Jeremy Grantham Profit From Ecological Mayhem?
Looking back from 2020, the initiatives that transformed our global economy were interlocking at all levels from global to local that worked together, creating the momentum that succeeded! The transforming and downsizing of finance at the global level helped solve the ‘global casino’ problem by enacting a financial transaction tax of less than 1% on all transactions. This cut down on high-frequency trading and speculation without affecting long-term investors while raising revenues which helped finance the transition. At the international level, there were also various agreements including raising the capital requirements for banks, higher margins to reduce leverage and other such changes in our financial architecture. These had been proposed for years but no one grasped the nettle until continuing financial crises following those of 2007-8 forced these reforms.
By 2010, many experts had signed the Transforming Finance statement. So began the shift away from the poverty-exacerbating global casino, for example, the speculation in oil and commodities which drove up fuel and food prices, leading to deprivation and hunger. The global casino was the prime driver/flywheel of environmental destruction and human poverty, so those agreements had to be put in place by the UN and the G20. After the financial meltdowns of 2013, widespread civic demonstrations led to the cancellation of trillions of un-repayable government debt, student loans and the resolution of many big banks, the failure of many commodity and other ETFs, illusory credit default swap markets – wiping out their over $600 trillion of notional value, much of which could have netted out to zero in any case.
Changes were also taking place at a national level. It was imperative to change the GDP national scorecards which were based on totaling cash-based output of goods and services and business models based on externalizing environmental costs from balance sheets of corporations. As those externalities were internalized in triple bottom line accounting at the corporate level, statistics and indicators including GDP were conformed at the national level. The old GDP did not include asset accounts, so public infrastructure and investments in education, public health and environmental quality were ignored. This had caused huge mis-allocation of capital and mis-pricing of sovereign bonds, especially in European countries, and all assets, goods and services. After the financial crises of 2013, the GDP gave way to new national scorecards similar to the Calvert-Henderson Quality of Life Indicators launched in 2000, Canada’s and Britain’s Index of Wellbeing and the OECD’s Better Life Index. There were many such different models beyond macroeconomics that were not totally based on money indicators as was the GDP. All the key indicators could actually be gathered and publically displayed on websites, so macro-economists’ aggregation and averaging methods were no longer needed. These more transparent multi-disciplinary systems views of real national progress became known as “dashboard” indicators and were available to all citizens online.
Back in 2003, Brazil led the way with its first International Conference on Implementing Indicators of Sustainability, followed in 2007 by the European Parliament’s Beyond GDP conference both of which convened many hundreds of statisticians of sustainability and quality of life (www.beyond-gdp.eu). In 2010, the Canadians created the Canadian Index of Well-Being, with the British following in 2011. In March 2011, a powerful coalition of 34 nations created the OECD’s (Organization of Economic Collaboration and Development) dashboard called the Better Life Index.
By 2014, after the Great Jubilee of debt write-offs, nations’ budgets began to be seen for what they really were: metaphors for their peoples’ values and their societies’ cultural DNA. These budgets were vehicles for debating national goals and priorities and mechanisms for translating their numbers into scorecard systems for implementation in all sectors of society. After the end of the futile war in Afghanistan in 2014, even generals had admitted that most problems there could not be addressed militarily. The estimated $3 trillion cost of the US wars in Iraq and Afghanistan (Stiglitz, 2008) had created budget commitments that would continue for decades in care for wounded veterans and their families. Gradually, governments came to be judged by their citizens for their honesty, fairness, transparency and efficiency at delivering basic infrastructure and public services while enforcing laws to protect citizens and the environment.
Launched in the 1970s and 80s was the important parallel work done by social investment asset managers like Pax World, Innovest, Calvert, Domini, First Affirmative Financial Advisors, Rockefeller & Co., Mercer, Green Cay Asset Management, Ariel, Roxbury Capital Management, Triodos and others, joined in by pension funds, foundations and church investors. The social investment industry was propelled forward by the Social Investment Forum in the early1980s; the socially-responsible business industry was launched by Social Venture Network in the mid-’80s; and, the clean tech industry was fostered by the Cleantech Forum in the mid-’90s. Rudolph Steiner’s World Economics and E. F. Schumacher’s books influenced many, including RSF Social Finance for conscious-based investing. In 1991, Capital Missions Company catalyzed the social venture capital industry with its Investors’ Circle, followed by CMC’s eight other networks for social investors in different niches (CapitalMissions.com). By 2005, they were joined by the UN Principles of Responsible Investing, fostered by UNEP’s innovative UNEP-FI outreach to the financial community since the 1980s. CERES, founded by the late Joan Bavaria and Trillium Asset Management and the IIGCC began pushing for shifting investments to low-carbon economies. Climate change was a big driver until it was realized that low-carbon (i.e., low-entropy) re-industrialization was more efficient than fighting over capping and trading carbon (“From Rigged Carbon Markets to Green Investing“).
Cutting subsidies and shifting taxes from incomes and payroll to all forms of pollution gained support (“Introduce Green Tax” Christian Science Monitor). The job of creating green, sustainable business models that didn’t externalize costs was key and driven by indigenous peoples’ movements, civic society organizations including WWF, India’s Chipko Movement, Greenpeace, Friends of the Earth, Transparency International, Oxfam, ICCR and other church groups and many trade unions and their pension funds. Creating ESG (Environmental, Social and Governance) models, triple bottom line measurements which accounted for true costs, was a huge paradigm shift facilitated by the Global Reporting Initiative and promoted by business groups including ASRIA, the Social Investment Forums, Instituto Ethos in Brazil, BALLE, WBCSD, Trucost, BSR, World Business Academy and ASBC and were complemented by efforts in every part of societies and gradual changes in lifestyles as the real prices were revealed.
In a very real way, the space programs since the 1960s had set the stage for humanity’s growing awareness of our blue planet, seen for the first time floating in the blackness of space. US astronaut Sally Ride launched Mission to Planet Earth in the 1980s which birthed the new inter-disciplinary Earth Systems Science and its satellite views of polluted estuaries and growing deserts. This led to GPS, Google Earth and the first UN agreements on climate change in Rio in 1992 and Kyoto in 1998. The Millennium Development Goals and the UN Global Compact followed in 2000 spurred by WWF’s Living Planet Index, the UN Millennium Ecosystem Assessments and the Ecological Footprint, now used in all our product labeling. In 2009, UNEP, ILO and UNDP launched the Green Economy Initiative and the General Assembly endorsed the Global Green New Deal. By 2010, the UN and the European Union’s program of reforming obsolete asset valuation produced TEEB: The Economics of Ecosystems and Biodiversity, so that Nature’s productivity could be calculated and included in financial accounting. This helped deflate the carbon finance bubble exposed in 2011 by the Carbon Tracker report. It is now recognized that carbon was best sequestered in properly managed land and forests (www.savoryinstitute.org) – rather than costly mechanical efforts patched onto fossilized industrial facilities. Nature’s millions of years of innovation and optimal designs were recognized in the shift toward biomimicry led by Buckminster Fuller, Allan Savory, John and Nancy Todd, Gunter Pauli’s ZERI, Janine Benyus’ Biomimicry Institute and many unsung traditional practitioners worldwide.
Once global entities, led by UNEP-FI, UNDP, ILO’s Green Jobs Programme, GRI and UN-PRI, joined with national entities, the SRI industry, venture investors and entrepreneurs, all working together collaboratively, people started re-investing in their own communities. Partly driven by distrust of Wall Street, mega banks and central bank money printing and bailouts, people created local currencies, flocked to local credit unions, farmers’ markets and time banks. The gift economy and innumerable other initiatives combined to manifest the thriving local living economies we have relied on since the global meltdowns of 2013. These, together with the re-localizing of banks and investing, became the mainstay of national economies. E. F. Schumacher, whose Small is Beautiful was published in 1973, would have been proud of his legacy. Microcredit had blossomed worldwide since the 1970s with pioneering efforts by the Grameen Bank and the BRAC in Bangladesh, Women’s World Banking network in many African, Asian and other countries, ACCION and others in Latin America. By the 1990s, women-owned businesses were growing rapidly, especially in North America and Europe, tracked by NAWBO, the National Association of Women Business Owners in Washington, DC.
Schumacher College in Britain still teaches this model along with all the new business school courses which followed. They now retrain portfolio managers beyond the obsolete “modern portfolio theory,” “efficient markets,” Value-at-Risk and capital asset pricing models that had proved so disastrous. Education became a right similar to the right to preventive healthcare, free speech and assembly. After the Great Jubilee of 2014, the absurdities of burdening our children with un-repayable debt to acquire often obsolete information was self-evident. Both education and basic healthcare are now included in national asset accounts as investments in human capital. Over-priced universities and for-profit colleges and their degrees found competition from grassroots civic education, action research, experimental problem solving, apprenticing, internships coupled with social media’s information-sharing, online courses and accreditation. Graduating students no longer headed for quick big bucks on Wall Street, but went back to more useful careers in engineering, medicine, teaching and became green entrepreneurs. Many companies also adopted open-source learning models and information sharing.
All these levels of activity had begun by early in our 21st century to manifest the transition to a fairer global green economy. Despite push backs from the fossilized sectors, their huge historic subsidies, mapped by IISD, were cut, lowering countries’ deficits and releasing the renewable energy sectors to race ahead on the newly level playing field and providing millions of new jobs. In 2015, investors who had started to ramp up solar, wind, geothermal and energy efficiency since 2007 saw these companies becoming competitive with coal. They were already competitive with nuclear by 2010. Algae grown at sea has now replaced food-based ethanol and biofuels. While jobs were lost in the dirty, dangerous fossil fuel and nuclear industries, many more safer jobs were created in the green sectors, which were de-centralized and much more labor-intensive.
While the orchestration of all these efforts around the world was rarely reported by mainstream media, various initiatives drew away their audiences and helped to change reporting. For example, Ethical Markets Media (USA and Brazil) created the Green Transition Scoreboard® that helped drive governments and mainstream pension funds into shifting more of their assets away from fossilized sectors, hedge funds and commodity ETFs toward investing in green sectors. From 2007 to the first quarter of 2011, the Green Transition Scoreboard® totaled more than $2 trillion in private investments. This became the barometer and more than $1 trillion was invested in green deals every year thereafter. By 2010, nuclear power (even before it lost its subsidies) became more expensive than solar PV, and coal lost its edge to wind generators. By 2015, all the new investments had ramped up renewables to become even more cost competitive. Governments began issuing green bonds by 2010 (www.climatebonds.net), and these became the dominant form of such new debt after the Great Jubilee of 2014.
Meanwhile, democracies continued spreading around the world – spurred by the courageous citizens in the uprisings of 2010-2011 in Tunisia, Egypt, Libya, Bahrain, Syria and the examples of leaders such as Aung San Suu Kyi in Burma. Public financing and shortening of campaigns finally got the special-interest money out of politics. Publically funded, independent radio and TV outlets freed the flow of information to citizens and balanced the corporate, advertising-sponsored commercial media – vastly reducing greenwashing and false claims. The EthicMark® Award for advertising that uplifts the human spirit and society was founded in 2004 and began to attract many inspiring ad campaigns. This Award has been presented every year at the socially responsible annual investment conference, SRI in the Rockies ever since 2010.
The tipping point year was 2011, when all these efforts became magnified through the internet’s social networking. UNEP-FI’s Tipping Point Roundtable for asset managers in Washington, DC, spurred the shift of pension fund portfolios to green investments. This convergence of better information and people-power transformed institutional investing and the concept behind GDP-measured growth, which had always been enthroned by Wall Street and governments as the crucial measure of wealth. A new perspective on growth gained sway: that it’s not a matter of growth or no growth – it’s the definition of growth: what needs to grow, what is dying and what must be maintained. We know that cancer cells grow…and that’s bad. In contrast, DNA, the code of life, does not grow, it replicates itself. People had started to focus on other things that are healthier to grow, such as loving relationships, gardens, local trading, compassion, all based on love energy and creativity to complement competitive energy. Governments and investors took note.
Human population growth, which began declining before 2000 in many countries as women freed themselves, became educated and assumed leadership in many fields, peaked at less than the official nine billion projections. This was due to the millions of avoided births prevented by women preferring fewer children and lower fertility. Gender-parity has now been widely adopted at all levels of public and private decision-making from global to local and within families, led by the Nordic countries.
As one example, Ethical Markets Media (USA and Brazil) didn’t need to grow out of its home-base because it replicated instead of physically growing. Its DNA replicates by licensing its content: books, articles, lectures, TV shows, worldwide to its affiliates. Its intellectual property includes the global hallmark the Green Transition Scoreboard®. Ethical Markets is managed by its unpaid founder and coordinated by its one dedicated staff executive. All its distinguished global Advisory Board members and affiliates serve pro bono, and everything else is outsourced. This is the model made famous by Don Tapscott in Wikinomics (2006) and Macrowikinomics (2010).
Competition and secrecy gave way to more cooperation and information-sharing as in the open source movement covered daily by the P2P Foundation. Many companies focused on pure information and thrived. Some companies in Silicon Valley, like MySpace, launched on pure information. But when they tried to use advertising to make money, their membership simply began to walk away because that was a year 2000 model that simply doesn’t fly now. The new scorecards which included cooperation, sharing, spiritual return, ecological return and social return, were taking off and changing business models. Based on the new understanding of Charles Darwin’s great work, illuminated by David Loye’s Darwin’s Lost Theory of Love (2000) and The Darwin Project, cooperation, bonding and sharing were recognized as the human propensities which contributed most to our species’ evolutionary success, along with our competition and creativity (“21s Century Strategies for Sustainability,” Foresight, 2006).
People realized they no longer had to maximize financial returns. As long as all expenses are covered, everything’s fine. The onus then fell directly on how Wall St. and the finance industry had become predatory and were simply making money out of money – pyramiding paper and electronic “assets.” Public support had already dissolved after the series of scandals and the crises of 2007-8. Wall Street got bailed out by taxpayers, as politicians caved in to their big contributors. After angry citizens pushed several governments to default in 2012, finally bond holders, creditors and banks were forced to write off the mountains of un-repayable debts. The European Union consolidated fiscal policies and the ECB issued “Brady bonds” composed of the restructured bonds of its most-indebted members. After the debacles of 2013 and the Great Jubilee write-offs of 2014, finance became realistically viewed as a public utility. Banking went back to its old model of local banks serving local communities, taking local savings and lending these for local needs. Banks simply became intermediaries again, regulated fully by governments. Public banking had provided the model in North Dakota for over 90 years, and by 2012 was legal in 12 states as tracked by the Public Banking Institute, founded by lawyer Ellen Brown, author of Web of Debt.
Global finance in London, Frankfurt, Tokyo, Shanghai and Wall Street was brought to heel and steered to serve their communities again. Excessive trading was listed in medical psychiatry manuals as obsessive compulsive behavior along with gambling and other addictions. All this re-thinking took the pressure off companies because they didn’t have to grow to please Wall Street and old-style securities analysts. This was to the great satisfaction of their investors who no longer wished to make a money killing at the expense of societies and the environment. In 2010, the “B Corp” and similar flexible charters and business models came into being in the USA to allow a focus on positive social impact, becoming legal in the states of Maryland and Michigan. Entrepreneurs began using B Corps and LLCs with provisions that shareholders can agree not to maximize financial returns, similar to Britain’s social enterprise charters.
The gift economy was always about the unpaid 50% of all productive work in industrial countries, including raising children, caring for households, serving on school boards, growing your own food, building your own houses, etc. The contributions of this Love Economy never appeared on balance sheets and, thus, were also missing from GDP national scorecards. This problem became central to the reform of the GDP. In villages in developing countries, economists and analysts finally realized that the official GDP figures ignored the Love Economy which could total as much as 90% of all productive work and livelihoods. Economists learned that this inspiring reciprocity was the basis of sound societies and avoided many problems of the developed world. Videos about these better options were broadcast widely on the publicly funded mainstream TV and radio after 2014. Such TV programs have been aired on the internet since 2005 by Ethical Markets Media, still available at www.ethicalmarkets.tv. Global coalitions including the World Social Forum, since 2000, the Great Transition Initiative, the Green Economy Coalition and others were followed by alternative media like OtherWorldsArePossible.org. All these videos have been circulating widely ever since.
As early as 2011, people came to understand that money is simply a useful form of information, so that we don’t have to carry a pig to market and lead back a cow. Money was a wonderful human innovation but wasn’t “wealth” at all, just information to track and keep score of human transactions. Ever more people realized there is no shortage of money as they have seen how it is printed every day on TV news shows (The Money Fix on www.ethicalmarkets.tv). Traditional societies have known this for centuries. This awareness and the corruption and inflation of money circuits spurred the strong growth of local love economies and the sharing and bartering that is standard in villages around the world. Reform of money-creation and credit-allocation was based on the trust of institutions and governments – leading to the widespread currency innovations at all levels still evolving today.
Planetary leaders including Nelson Mandela, Vaclav Havel, Wangari Maathai, Vandana Shiva and Dr. Michelle Bachelet inspired people, along with visionaries like Ervin Laszlo and philosopher Barbara Marx Hubbard whose books, videos and courses on conscious evolution inspired tens of thousands of people and invited the earth’s population to celebrate the Earth’s birthday on December 22, 2012. This was the day after the cycle or era described in the Mayan Calendar had ended. Previously, it had sparked erroneous fears among populations that the world was ending. Instead, humanity came into the consciousness that ‘we are all one,’ taught in most religious traditions and books, including The Ways and Power of Love (Sorokin, 1954). This orchestration of innovation and higher consciousness, together with countless movements of compassionate action helped humanity to endure the rigors and painful adjustments of the transition. All these efforts manifested the fairer, more ethical global green economy we enjoy today, faster than anyone had imagined.
Hazel Henderson, D.Sc.Hon., FRSA, futurist, evolutionary economist, author of Building a Win-Win World, The Politics of the Solar Age, Creating Alternative Futures and other books, is President of Ethical Markets Media (USA and Brazil), creator of its Green Transition Scoreboard®, co-creater with Calvert Group of the Calvert-Henderson Quality of Life Indicators, updated regularly at www.calvert-henderson.com, and founder and co-chair of the EthicMark® Award for advertising that uplifts the human spirit and society.