After decades of pursuing my life’s work helping guide Mother Earth from the Fossil Fuel Age to the Solar Age, efforts of colleagues and RSA Fellows like myself such as Chris Oestereich, Chandran Nair, Michel Bauwens and other pioneers, are driving the necessary change.
On Earth Day, the United Nations held a signing ceremony for the UN Paris Agreement, with signatories pledging to finance and implement programs to limit climate change, aligning with the UN Sustainable Development Goals (SDGs).
On the same day, Ethical Markets Media released its 2016 Green Transition Scoreboard ® (GTS), a report tracking cumulative non-government investments and commitments in growing the green economy since 2007. As of Q4 2015, the GTS totals $7.13 trillion!
Ethical Markets Media (USA and Brazil), Certified B Corporation, is a micro-multinational social enterprise working to reform markets and metrics while helping accelerate and track the transition to the green economy worldwide. Our research team compiles financial data screened by rigorous auditing standards in social, environment and governance, building on research indicating $1 trillion annually until 2020 can accelerate the Green Transition worldwide in conservation, renewable energy, land-use and infrastructure. We strictly define 'green' by omitting technologies such as nuclear, clean coal and most biofuels while carefully assessing rapidly advancing technologies such as nanotech and IoT (Internet of Things). Private investors are on track to meet the $1 trillion per year goal, setting the path for governments and institutional investors to follow.
As president and founder of Ethical Markets, I wrote the detailed overview of the 2016 report, “Ending Externalities: Full-Spectrum Accounting Clarifies Transition Management”. Accounting strategies companies use to ignore social and environmental costs imposed on taxpayers, the public, future generations and the environment are called externalities. Focusing on eliminating “externalities” which the IMF estimates at $5.3 trillion annually worldwide is a top priority, drawing from the work of Chandran Nair, training business executives in Asia, and many others. Companies tracked since 2007 by the GTS are those avoiding negative externalities and focusing on transition management to low-carbon economies agreed on at COP21 in Paris, 2015.
The GTS covers substantial capital investment in areas which my years of research as a science advisor and which the Ethical Markets Advisory Board expertise indicate are strongly contributing to the growing green economy. The GTS tracks Renewable Energy, Energy Efficiency, Life Systems, Green Construction and Corporate Green R&D. Fintech for sustainability, a new subsector, includes peer-to-peer lending and crowdfunding, supported by our advisory board member Michel Bauwen’s focus on peer-to-peer dynamics, in addition to subsectors tracking the system-wide interconnections among information and digitization, water, food, education and health.
The upward trend in investments since 2007 aligns with our recommendation to invest at least 10% of institutional portfolios directly in companies driving the global Green Transition. Updating strategic asset allocation models serves both as opportunities and as risk mitigation.
The Renewable Energy sector is growing strongly as fossil fuel becomes less appealing in light of cost parity of renewables, limiting carbon emissions and driving evolution to sustainable societies. In Energy Efficiency, widespread ripple effects positively impact jobs creation, manufacturing and other metrics tracked by traditional GDP and integral to transition management. Life Systems encompasses broad areas systemically linked, including water, remediation, waste and recycling, green infrastructure and info-structure, community investing and education, investments often overlooked as too small. Green Construction ranges from “low-tech” passive solar buildings to “high-tech” flow 3D printing. For consistency, we omit labor, thus undercounting a form of capital which intrinsically increases the value of green construction. Corporate Green R&D is powered by the automotive industry and also heavily weighted in favor of energy generation, conservation and distribution with a precipitous decline in fossil fuels P&E.
We track nearly a $1 trillion invested in the green transition every year! With great hope and pride, I’m pleased to spread the good news that the Solar Age is here.
I encourage all RSA Fellows to use or ask their investment managers to use ESG (environment, social, governance) criteria in making investment decisions. For guidance, explore Socially Responsible Investing on EthicalMarkets.com.
Hazel Henderson, D.Sc.Hon., FRSA, founder of Ethical Markets Media, is a futurist, evolutionary economist and author of award-winning Ethical Markets: Growing the Green Economy. She leads theTransforming Finance initiative, created the Green Transition Scoreboard®, tracking global private sector investment in green tech, and developed with Calvert Group the widely used alternative to GNP, the Calvert-Henderson Quality of Life Indicators. In 2010 she was honored as one of the “Top 100 Thought Leaders in Trustworthy Business Behavior 2010” by Trust Across America.