The global economy is now at a tipping point – emerging from the 300-year fossil-fueled Industrial Era to the cleaner, greener information-rich renewable energy societies which I predicted in my The Politics of the Solar Age in 1981. Although prominently reviewed in the New York Times and based on six years of service on the Technology Assessment Advisory Council of the US Office of Technology Assessment, the National Science Foundation and the National Academy of Engineering – my book went unheeded until recently. The health and environmental damage of reliance on fossil fuels led me to found Citizens for Clean Air in New York City in 1964 and persuade local media to carry an Air Pollution Index on weather reports. Technology assessment research deepened my understanding of the scientific realities now entering public awareness: our planet Earth is awash in energy – that free daily photon shower from the sun. We now need to accelerate our methods for efficient capture and use of this gift of Nature which green plants innovated in photosynthesis – providing food for humanity.
While waiting for the politics to reflect the coming Solar Age, I became a patient, well-informed, long-term investor, delving deeper into why economics and finance were missing this transition – obscured by fallacies of “efficient markets” and “rational actors.” I avoided this herd behavior by becoming an early investor in Jeffrey Leonard’s Global Environment Fund, whose world view matched mine: find companies in efficient, renewable technologies, minimizing throughput of energy and materials used in producing national output. This confirmed my view that GDP gives a Grossly Distorted Picture of a country’s progress. My understanding expanded after founder Wayne Silby’s invitation in 1982 to join the Advisory Council of the Calvert Group of socially responsible mutual funds. By 2000, I and Calvert launched our Calvert-Henderson Quality of Life Indicators as an unbundled dashboard of 12 systemic trends in national progress (www.calvert-henderson.com).
Changing the scorecards of success both at the company and national accounts levels became my passion. Calvert deepened my understanding of the role of finance in technological innovation. Both public and private finance can play leadership roles: public investments created satellite communications, the internet, the inter-state highway system and many civilian spinoffs of military budgets, while the private sector innovated in chemistry, biotech, the worldwide web-based economy and a whole range of efficient, renewable energy and materials technologies. These latter innovations were largely ignored by Wall Street due to those fallacies in economic textbooks and their EMH underlying most financial models: CAPMs, Value at Risk, Black-Scholes-Merton Options Pricing as well as security analysts’ asset allocation “buckets” which still lack a sustainability sector. Solar, wind, geothermal, whose annual potential exceeds total reserves of fossil fuels, are lost in their Energy sector ( still dominated by oil).
Energy efficiency was lost to investors’ view until Bloomberg and FTSE began noticing their rapid paybacks of 12-24 months, obscured by textbook economics ignoring the “externalities.” The FTSE’s EO Energy Efficiency Index highlights these investment opportunities – now increasing as subsidies to fossil fuels are cut in many countries and making such cuts is on the agenda of the G-20.
Calvert, Pax World, Domini and other SRI funds pioneered, along with Alice Tepper Marlin’s Council on Economic Priorities, the new metrics of ESG company valuation. At the UN, Dr. Elizabeth Dowdswell, head of UNEP, pioneered UNEP-FI, bringing global financial groups into awareness of how economies are dependent on nature’s ecosystems. Thoughtful financiers pondering their persistent crises are learning from ecologists how to correct financial models, while recognizing that finance is a part of our global commons (www.transformingfinance.net).
Out of UNEP-FI, many initiatives have now joined the global Green Transition: UN-PRI with 800 firms with assets under management of $25 trillion; the UN Global Compact with 5300 signatory companies to its 10 Principles of Global Corporate Citizenship, the Green Economy Initiative with UNDP, ILO and the new TEEB analyses of the value of ecosystems and biodiversity as material to asset valuation. In the private sector, SwissRE, CERES, the GRI, REN 21 and WWF joined in pioneering new metrics, while new stock indices and market letters covered the emerging green sectors, companies and investors. Among individuals, our research with Globescan shows the growing awareness of the value of environmental considerations to overall wellbeing.
By 2003, I had decided that it was time to launch Ethical Markets Media to help reform markets and grow the green economy globally. My green investments were flourishing. Pioneers Matthew Kiernan, founder of Innovest, Nicholas Parker, founder of Cleantech, Jeffrey Leonard and all the daily news of the Green Transition needed a special media voice. As I posted all the daily news on Ethical Markets, I saw the need to track all the private investment in green sectors to give a clearer overview of this global sustainability sector. So, I created the Green Transition Scoreboard® and selected only those technologies and companies I knew would meet the long-term criteria of sustainability. Thus we deliberately omit many investments we believe are mistaken (see page 3).
It’s time to end fossil fuel subsidies which would cut deficits and return billions annually to taxpayers and allow the green sectors to compete on a level playing field ( HYPERLINK “http://www.globalsubsidies.org/” www.globalsubsidies.org). Today, 70% of all US federal subsidies go to oil, natural gas and coal and another 15% to ethanol – not to mention the hidden subsidies to nuclear. As James Fletcher, former NASA Administrator told our Technology Assessment Advisory Council in 1976, if all of these subsidies over past decades had instead gone toward solar, wind, all renewables and efficient energy, the US economy would have been 100% powered by these renewable sources by the mid-1970s. Our Green Transition Scoreboard® now tracks this technology evolution through these investments, shifting from the past to the future. The World Social Forum has been saying since 2000, “Another world is possible.” The Green Transition Scoreboard® details this new 21st century economy and how we are moving toward this cleaner, greener sustainable future.
Creator, Green Transition Scoreboard®
President, Ethical Markets Media (USA and Brazil)
Author, Ethical Markets: Growing the Green Economy (2006)
Solar Irradiation versus established global energy
resources Solar Generation 6, EPIA 2011
Beyond GDP: International Public Opinion on Measuring National Progress 2010, Globescan and Ethical Markets Media, January 2011